Months ago, I met Sumeet Jain, a new investment director at Intel Capital, at an event at the Rosewood Sand Hill. I should’ve known then that something was up and Intel Capital was poised to jump into the wearable fray.
Jain was wearing a Pebble on his right wrist, a Basis on his left and had a Fitbit in his pocket. Since I also own a Fitbit One, he and I chatted for a few moments about the past and future of connected devices.
Fast forward to today, and yes indeed, Intel Capital is an investor in Basis Science, maker of the heart and health monitor Basis Band that users wear on their wrists. Intel last month joined the company’s latest round of funding, an $11.75 million Series B that now gives the San Francisco-based company more than $23 million in funding.
Basis isn’t alone. Fitbit, Pebble, Sproutling, to name a few, are all well-financed makers of wearables, and they are growing and attracting more venture dollars as quickly as the devices are selling off the shelves. There has yet to be a significant exit in the space, but with large corporations, such as Samsung and Apple, among others, entering with their own smart watches and other devices, I’m sure it’s just a matter of time before we start seeing some consolidation.
Interestingly, although I bump into a lot of VCs, who like Jain, wear one or two fitness devices, there’s still a mixed reaction to the wearable space and to whether investors should be so involved in a hardware sector.
Manu Kumar of K9 Ventures (who by the way is one of the nicest investors I’ve ever met), told me at a cocktail party recently that he would never invest in a wearable. He has nothing against them, but he said his seed-stage focused firm isn’t suited to investing and continuing to back a wearable company with follow-on rounds.
Meanwhile, Jim Scheinman, founder and CEO, Maven Ventures Growth Labs, as well as a speaker at our Venture Alpha West conference last month, said he believes wearables are on a trajectory to outpace mobile devices as the largest platform available. He pegs it happening in roughly two to five years.
In any event, investing in wearables reminds me of the old line that opinions are like noses, something about how everyone has one. Most VCs have opinions on wearables, and likely have one or more attached to their person.
So in this month’s Venture Capital Journal cover story, “VCs try on wearables,” VCJ Senior Editor Mark Boslet (who recently bought a Fitbit Flex) takes a look at the sector and what several VCs have to say about wearables.
As Mark reports: “The smart watch category alone could add up to annual shipments of almost 39 million units in 2018.”
And: “Shipments of smart glasses could top 9.4 million over the coming four years, with real traction beginning in 2016, when 6.6 million units could be produced.”
Among my favorite lines in this month’s cover story is the one from Ajay Chopra from Trinity Ventures, who said, “It is going to be a pretty crowded space on the hardware side. Companies are going to have to run like hell to create differentiation.”
Thankfully, while the investors are running after the companies, their tracking devices will tell them how many calories they’ve burned.
This story first appeared in Reuters Venture Capital Journal. Subscribers can read the original story here. To read the VCJ cover story on wearables by Mark Boslet, which includes a select table of deals, subscribers can here. A sidebar piece on the case for investing in wearables can be found here.
To subscribe to VCJ, please email Greg.Winterton@ThomsonReuters.com.
Photo: A model poses with a Sony SmartWatch 2 at the Sony booth during a media preview day at the IFA consumer electronics fair in Berlin, Sept. 5, 2013. REUTERS/Fabrizio Bensch.