Smart Home Tech Companies Received $500m VC Funding, Thermostats Leading The Pack

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The popularity of smart home technology is soaring, as evidenced at the Consumer Electronics Show (CES) in Las Vegas this month. It has now emerged that the companies behind the technology have been funded to the tune of $550m as they seek the next technology ‘rockstar’ to replace dwindling smartphone sales.

The smart home industry attracted $550 million in venture capital investment between 005 and 2014, fuelling the first wave of acquisitions in the space as early stage consolidation occurred. Google’s acquisition of Nest and Dropcam, was followed by Samsung’s purchase of SmartThings, which now acts as the glue behind their connected home offering. The funding cycle peaked in 2012, and we’re now seeing the fruit being bared from this capital investment.

As a result of the money flowing in, the sector is growing fast with plenty of new market entrants as well as new product niches. What began as a niche around thermostats which you control via an app (IE Nest) has grown to encompass security systems, motion detectors, smarter appliances and much more. As more products come out to attract more consumers, the consumer appetite is growing, with 56% of Brits intending to buy their first smart home gear in 2016.

However, cost remains the biggest barrier. Smart home appliances replace thermostats, kettles and other household goods which we all have already – making it a luxury upgrade. With an average smart home upgrade costing $6.7k according to Lux Research, this is no mean investment for the consumer.

The concern, or even roadblock depending on your view, on the sector is this high cost of adoption. According toAlex Herceg, Lux Research Analyst and the lead author of the report titled, “Smart Homes: Chasing the Elusive Dream, “Over the past 36 months, we have seen a dramatic shift in the number and capabilities of smart home devices but hardware cost reductions have not kept pace with this scale-up,


The Lux research threw out a number of other notable findings;


Wink has the most partners overall, with 18, positioning it as a surprising early leader

Nest has the most start-up partners (18), and the strongest functionality

Smart thermostats are the ‘killer’ app, with the most competition amongst companies. The energy savings, green credentials and relative affordability (bang for the buck) make this the most popular first ‘smart’ investment, not least because it actually has an ROI

You can get more insights in the the LUX report, titled “Smart Homes: Chasing the Elusive Dream,” Intelligent Buildings Intelligence