Investors in startups haven't fared particularly well betting on smart homes.
Over the years, a growing number of well-funded companies have gone bust or failed to make a killing betting on the adoption of connected-home technologies like smart windows, smart lighting, security systems and smart kitchens.
And the mistakes continue. Earlier this month, smart-home startup Brilliant said it had laid off its entire staff while it searches for a buyer. Founded in 2015, the San Mateo, Calif.-based company had raised $64 million in venture funding to expand its in-wall control system for lights, doorbells, locks, cameras and other home systems.
A month earlier, Vue, a maker of smart glass for buildings, announced it would go private and file for Chapter 11 bankruptcy protection. Prior to its initial public offering in 2021, View had raised more than $1.8 billion in venture funding.
Then, towards the end of last year, Veev, a heavily funded former unicorn that incorporated home automation systems into its panelized building models, shut down its operations and sold its assets to homebuilders and longtime investors. I sold it to a certain Lennar.
Losses pile up. That's probably why U.S. venture investors have largely stopped investing in smart homes and buildings in recent months.
Some deals are still happening
So far this year, Crunchbase has flown less than $100 million to U.S. companies in the smart home and smart building space. This puts us on track to have the lowest annual investment and deal volume in this space in at least a decade in 2024, as shown in the chart below.
But while investment has declined this year, it has not completely dried up.
For example, there were two big funding rounds in April. Quilt, a Silicon Valley company that makes electric heat pumps that can control room temperature, has raised $33 million in a Series A round. Additionally, Detroit-based Kode Labs, which develops a software platform to manage building infrastructure efficiency and energy usage, has raised $30 million in a Series B round.
We also saw some interesting smaller deals at the seed and early stages: Sandy, Utah-based OliverIQ, a smart home-as-a-service platform, raised $5.8 million for its second round of funding, according to a February securities filing, while Cupertino, California-based Perfumeo landed $1 million in seed funding for its smart home perfume diffuser.
Smart home for uninformed residents
The ups and downs of smart home investments coincide with disappointing adoption rates for technologies that early entrants had hoped would spread more quickly.
As it turns out, defining a smart home is pretty simple. That is, a home with lighting, heating, and electronics that can be controlled remotely by a phone or computer connected to the Internet. This product has an easy-to-sell nature because most of us have connected devices and are interested in tools to help with home security, utility bills, and remote control.
But in reality, smart home has not been an easy concept to realize. After decades of technological innovation, it's now estimated that 85% of Americans own at least one smart home device, which isn't bad on the face of it. It seems that.
However, when smart TVs and streaming devices are excluded from the study, adoption rates drop significantly. Only 15% of households own large smart appliances such as refrigerators and stoves, and only 14% own an internet-connected thermostat.
Beyond early adopters
What will it take to accelerate the adoption of smart home technology?
Some people think the problem lies with the interface. According to OliverIQ, today's big challenge is that “consumers have more and more connected devices and too many separate apps to manage them.” The startup wants to simplify your life with an app that manages multiple home systems in one place.
Kode Systems takes a similar approach with a focus on large commercial buildings. The company sells a software-as-a-service model to building managers looking to reduce energy costs and carbon emissions.
Whatever it takes to drive adoption, it appears that startups will need to do it with much smaller budgets than they did a few years ago.
Crunchbase Pro Related Queries
Illustration: Dom Guzman
Stay up to date on recent funding rounds, acquisitions, and more with Crunchbase Daily.