Nest Labs is a smart home device company that has received significant venture capital investments over the years. Founded in 2010 by former Apple engineers Tony Fadell and Matt Rogers, the company is best known for its smart thermostat and smoke detector products. Nest was acquired by Google in 2014 for $3.2 billion and operates as an independent subsidiary under the umbrella of Google’s parent company Alphabet. In this article, we will provide insights into the venture investments that Nest Labs has attracted and analyze the reasons behind its success in securing venture funding.
nest labs received over $800 million in venture funding before google acquisition
Nest Labs raised over $800 million in venture funding across several rounds before being acquired by Google in 2014. The company’s first major funding was its Series A round in 2011, where it raised $80 million from investors including Kleiner Perkins, Lightspeed Venture Partners, Shasta Ventures and Google Ventures. This demonstrated strong investor interest right out of the gate. Nest then raised a $150 million Series C round in 2013 led by BlackRock and T. Rowe Price, which valued the company at over $2 billion. Nest’s final private funding round was a massive $555 million Series D led by Google Capital right before its acquisition. The ability of Nest to attract large checks from top-tier VC firms highlights its impressive product vision and market potential.
nest’s innovative connected hardware tapped into massive IoT opportunity
A key reason Nest stood out to investors was its innovative connected hardware devices for the home. Nest’s first products – the Learning Thermostat and Protect smoke detector – took relatively mundane household devices and made them ‘smart’ through connectivity, sleek design and intuitive software. This tapped into the enormous potential of the Internet of Things (IoT) revolution that was just getting started. Nest’s devices solved real consumer problems like energy efficiency and safety while demonstrating the possibilities of interconnecting the objects in our homes. For venture investors, Nest represented an extremely rare hardware/software company with both great design and truly differentiated technology. Backing Nest gave them exposure to the exploding smart home market years before it went mainstream.
pedigreed founding team inspired confidence in execution
Another major factor that made Nest attractive to VCs was its founding team. CEO Tony Fadell was a former senior VP at Apple who led the team that created the original iPod, while co-founder Matt Rogers had significant engineering experience from Apple as well. Having such accomplished consumer electronics veterans at the helm likely gave investors confidence that Nest could execute on their vision. The technical depth of Nest’s team was also unmatched in the consumer IoT space at the time. Their pedigree and track record signaled that Nest had the human capital required to successfully develop cutting-edge hardware paired with intuitive software.
Nest Labs was an extremely enticing investment opportunity for VCs given its innovative connected devices, massive market potential in the IoT revolution, and experienced team with consumer electronics pedigree. This perfect storm of factors led Nest to raise over $800M in venture funding before being acquired by Google for $3.2 billion – demonstrating the tremendous value that investors saw in the company’s future.