7 months ago
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Startup investors have not done especially well betting on smart homes.
Over the years, a growing number of well-funded companies have folded or failed to thrive betting on adoption of connected-home technologies such as smart windows, lighting, security systems and kitchens.
And the misses continue. Earlier this month, smart-home upstart Brilliant disclosed that it laid off its entire staff while it seeks a buyer. Founded in 2015, the San Mateo, California-based company had raised $64 million in venture funding to scale an in-wall control system for lighting, doorbells, locks, cameras and other home systems.
A month earlier, View, a maker of smart glass for buildings, announced that it’s going private and filing for Chapter 11 bankruptcy. Prior to going public in 2021, View had raised more than $1.8 billion in venture funding.
And around the end of last year, Veev, a heavily funded former unicorn that incorporated home automation systems in its panelized building model, shuttered and sold its assets to homebuilder and long-time investor Lennar.
Losses add up. That’s likely why, in recent months, U.S. venture investors have mostly closed the door on smart-home and smart-building investments.
Some deals still get done
So far this year, less than $100 million has gone into U.S. companies in Crunchbase’s smart-home and smart-building categories. That puts 2024 on track to turn in the lowest annual investment and deal count for the space in at least 10 years, as charted below.
But while investment is down this year, it hasn’t dried up entirely.
April, for instance, brought two good-sized rounds. Silicon Valley-based Quilt, which makes electric heat pumps that offer room-by-room temperature control, raised a $33 million Series A round. And Detroit-based Kode Labs, developer of a software platform for managing efficiency and energy usage of building infrastructure, landed $30 million in a Series B.
We also saw some interesting smaller deals at seed and early stage. Sandy, Utah-based OliverIQ, a smart-home-as-a-service platform, raised $5.8 million toward its second financing, per a February securities filing. Cupertino, California-based Perfumeo, meanwhile, scored $1 million in seed funding for a smart-home perfume diffuser.
Smart homes for unsavvy residents
The ups and downs of smart-home investing coincide with sometimes disappointing adoption rates for technologies that early entrants expected to catch on more quickly.
After all, the definition of a smart home is pretty straightforward: A home equipped with lighting, heating and electronic devices that can be controlled remotely by an internet-connected phone or computer. Since most of us have both connected devices and an interest in tools to help with home security, utility bills and remote operation, it has the makings of an easy sell.
In practice, however, the smart home hasn’t been an easy concept to bring to fruition. After decades of innovation, today it’s estimated that 85% of Americans have at least one smart-home device, which doesn’t sound bad on the surface.
However, if one takes smart TVs and streaming devices from the survey, adoption rates shrink drastically. Only 15% of households have a large smart appliance, like a refrigerator or stove, and only 14% have a connected thermostat.
Moving beyond early adopters
What will it take to catalyze more smart-home technology adoption?
Some see an interface problem. Per OliverIQ, the big challenge today is that “consumers have more and more connected devices, with far too many separate apps to manage them.” The startup is hoping to simplify things with an app to manage multiple home systems in one place.
Kode Systems is taking a similar approach with a focus on larger, commercial buildings. It’s marketing a software-as-a-service model for building managers looking to reduce energy costs and carbon footprints.
Whatever it takes to spur adoption, startups will apparently have to do it with a much leaner budget than was the case a few years ago.
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Illustration: Dom Guzman
