Last updated: November 13, 2013 5:25 pm
The long-promised “smart home” of the future took a step closer to reality this week – and it is starting not with an internet-connected fridge but a WiFi-enabled egg tray.
Two start-ups targeting the connected-home market have raised tens of millions of dollars in funding this week, as technology investors eye the smart home as the next big opportunity in consumer electronics after the smartphone.
Quirky, based in New York, said on Wednesday that it had received $79m in an investment round led by General Electric, as well as existing venture capital investors such as Andreessen Horowitz and Kleiner Perkins Caufield & Byers.
The deal builds on an existing partnership struck in April between GE, which is pushing its vision for an “industrial internet”, and Quirky, which combines ideas from its inventor community with in-house development skills to create new consumer products.
The first results of that effort launched last week, including a $70 “Egg Minder” that alerts Quirky’s smartphone app, Wink, when the eggs run out or go bad, which it works out based on how long ago they were put in the tray.
“We have been talking to a number of folks and watching this space starting to gain some momentum,” said Beth Comstock, GE’s chief marketing officer. “With Quirky it’s the combination of the hardware and the software together . . . We are at this really interesting tipping point.”
Quirky’s funding round follows a $12.5m fundraising by SmartThings, a competitor, from Greylock Partners and Highland Capital Partners, which was announced on Tuesday. Last year, SmartThings raised $1.2m on Kickstarter, the crowdfunding site, for its kits for connecting physical objects to the internet.
“Everybody has a smartphone; that’s massively changed in the past couple of years,” said Josh Elman, a partner at Greylock, who joined SmartThings’ board. “Now everyone is going to want a smart home. We are right at the cusp of that.”
SmartThings’ chief executive, Alex Hawkinson, said in a blogpost that the funds would go towards making its products easier to use, expanding distribution and working with more developers to become the “definitive open platform” in smart homes. The two companies are taking different approaches but share the same aim: to become the “operating system” for connected devices in the home. Like SmartThings, Quirky hopes its Wink app will become a hub for other manufacturers’ connected devices, but it plans to make more of its own gadgets too. Quirky has put in orders to its supply chain for $45m worth of products, it says.
The investments come at a time of renewed interest in a market that has had false starts for much of the past decade, despite attempts by the likes of Samsung to embed internet smarts in their appliances. US retailers such as Staples and Lowe’s, and telecoms groups like Comcast, are starting to market connected products and services for mainstream customers.
Nest, a Silicon Valley company founded by ex-Apple employees, last month launched a $129 smoke detector that can be controlled from an app, building on the success of its “Learning Thermostat”, which has been a hit with the early-adopter crowd. In January, Nest raised $80m at a valuation rumoured to be at $800m in a round led by Google Ventures.
“There are virtually unlimited possibilities when you start connecting products together in the home,” said Matt Rogers, Nest’s co-founder, in an interview last month. “The trick is finding those discrete uses as opposed to geekware.”
Tony Fadell, Nest’s co-founder and chief executive, added at a GigaOm conference in San Francisco last week: “Just because it can be connected doesn't mean it should.”
Although some connected household products are on sale ahead of Christmas, Ben Kaufman, Quirky’s chief executive, predicts that 2014 will be bigger for the smart home, when his company releases a broader range of devices through its GE collaboration – most more serious than the “giftable” egg tray.
“You’re going to see connected products from every manufacturer in the world in the next year or two,” said Mr Kaufman. “This Christmas it will be a few early adopters . . . The fact that regular customers are helping us invent our products allows us to make sure when we build things, they hit a wide audience.”
Manufacturers large and small are making the same bet. Mr Elman said that Greylock, which typically focuses on consumer and enterprise software investments, has received a “ton of pitches” from start-ups targeting the “internet of things”.
“What excited me about SmartThings was this team was focused from beginning to end on a core software platform for the internet of things – from the ground up,” he said in an interview. “I have trouble thinking that other companies without that laserlike focus will get to the same ability.”
Mr Elman, who previously worked at LinkedIn, Facebook and Twitter, said the ubiquity of smartphones and the falling cost of hardware and wireless technology made a smart-home investment “finally make sense”. “In many ways the internet of things feels like social networking did 10 years ago,” he said.
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