Electric Imp Raises $15 Million to Go Big on Internet of Things
Electric Imp is among the companies trying to build the technical plumbing to make the Internet of things work securely and reliably—and make money doing so.
The Los Altos, CA-based startup today said it has raised $15 million in a Series B round, which brought in new investors Foxconn Technology Group, PTI Ventures, and Rampart Capital. The Series A round of $7.9 million in 2012 from Redpoint Ventures and Lowercase Capital was to prove out the product, which is now being used in about half a million connected devices. This round is to scale the company and expand into different markets, particularly industrial companies, CEO and co-founder Hugo Fiennes.
Fiennes, a former iPhone engineering manager, was an early investor in and advisor to Nest, the smart thermostat maker Google bought earlier this year for $3.2 billion, a move which brought much investor attention to smart-home technologies and connected devices. Fiennes, though, declined an opportunity to join Nest early on to pursue a general-purpose technology platform for connected machines.
“They were solving a very specific problem for a very specific user base,” he says. “Some of the industrial stuff we’re doing in the smart grid is much bigger and has the potential to affect orders of magnitude more people than a high-priced thermostat and save much more energy.”
His early investment in Nest gave him a financial windfall that allowed him to be one of the funders in Electric Imp’s Series B round. The money will give it the time to pursue both consumer product manufacturers, such as makers of connected toys, as well as industrial customers, which take more time, Fiennes says.
The company makes a coin-size card that provides Wi-Fi connectivity to a device. Early customers have used it to make an air conditioner that can be controlled by a smartphone and a small tower with a red light made by Budweiser that sits in people’s homes and lights up when goals are scored during hockey games.
Electric Imp decided to use Wi-Fi, rather than other wireless protocols, because it connects to the Internet via a home’s broadband network. It also has cloud-based software that establishes a secure connection between the connected device and the Internet, and provides software updates and a way to manage code and devices.
The cost of the hardware, which includes its own operating system, is about $6 in high volume and will come down next year as chip makers combine both Wi-Fi and microprocessors on a single chip, Fiennes says. Electric Imp charges manufacturers a fee for each of the devices it manages on its network. The idea is that a product manufacturer can leave much of the technology underpinnings, such as managing the network, to third parties to focus on product development.
There are a number of other companies working on hosted platforms for connected machines, including Sunnyvale, CA-based Ayla Networks, Exton, PA-based ThingWorx, and Boston-based Xively. In July, product design software company PTC bought Foxboro, MA-based Axeda, which also makes a cloud-based service for connected machines.
Consumer devices, such as toys or home appliances, can lead to high volumes of products, but Fiennes expects most of the revenue to come from industrial customers, which pay more for higher levels of reliability and will stay connected to the Internet for longer. “Our revenue mix over the long term will probably be over 50 percent industrial simply because an industrial device can be online for ten years,” he says.