Earlier this year, fledgling startup Quanttus, raised $19 million in venture capital funding following a previous seed round of $3 million. The Cambridge, Mass.-based company, formed by a small group of mostly MIT alumni, is developing wearable devices using various sensors to measure such vital signs as heart rate and blood pressure. Software analyzes the data, allowing customers to take action in response. That's pretty good for a year-and-a-half year old company still in stealth mode.
So it goes these days in the world of the "Quantified Self", which is one part of the fast-growing Internet of Everything (IoE) market. Over the past six years or so, there‘s been a minor avalanche of startups selling devices that rely on sensors to track such health-related matters as the number of calories you've burned or steps you've taken, wirelessly transmitting that information to smart phones, where you can see your latest vital statistics. Other products take that a step further, monitoring the type of movement you're making (say, whether you're slouching).
But, while many of these startups have gotten their first funding boost from crowdfunding sites like Kickstarter, they're also increasingly attracting a lot of attention from venture capitalists looking to cash in on the interplay between wearable technology and the IoE. And some of the investors are pretty big names. Quanttus, for example, raised its funding from Khosla Ventures and Matrix Partners. "It's a very interesting area," says Stan Reiss, a general partner at Matrix.
Certainly, recent data shows an upswing in venture funding. As of the third quarter of last year, quantified-self startups raised $318 million across 43 deals, an increase of 165% in funding and 40% in deal flow, according to CB Insights. The trend has only continued this year. "Venture capitalists want to have Quantified Self in their portfolios," says Matthew Wong, a research and data analyst at CB Insights. "We're seeing significant investment."
How come? For one thing, there‘s the increased access and popularity of smartphone devices, giving the ability to easily open, log and track daily health and wellness data with a click of a button. Another reason is innovation in sensor technologies leading to a host of new wearable devices that can sense everything from movements to how well you're sleeping. Then, of course, there's the ever-rising interest in Big Data analytics.
Like Quanttus, most of the deals have been in early-stage investments, according to Wong. Take Palo Alto-based Lumo BodyTech, which sells devices worn either as a pin or around the waist used to help improve a user's posture. Poor alignment often is the culprit in causing or exacerbating back pain, according to co-founder Monisha Perkash. Both devices have sensors that vibrate when you slouch and track such information as the calories you've used. Founded in mid-2011, the company raised about $1 million in a seed round, according to Perkash. Then, a mere nine months later, after running a successful Kickstarter campaign through which the company pre-sold 16,000 devices, Lumo raised another $5 million in a round led by Madrona Ventures.
Similarly, Bellabeat, a Mountain View, Ca.-based startup founded a year ago, sells a device and app with which pregnant women can listen to and record their baby's heartbeat, then share the information with friends through an app. It also tracks such things as how often the baby kicks and pregnancy weight gain. After recently graduating from a Y Combinator accelerator program, the company easily raised seed funding from a combination of venture funds and angel investors.
That's not to say there haven't been some later stage investments, too. Last year, for example, seven year old Fitbit, a pioneer of the Quantified Self movement, which sells wristbands and clip-ons for tracking such things as distance travelled and calories burned, raised $43 million in a Series D from True Ventures, Foundry Group, SoftBank Capital, SAP Ventures and Qualcomm Ventures. That brought the total raised to $66 million.
Of course, it hasn't been completely smooth sailing for these startups. Fitbit, for example, recently voluntarily recalled its Fitbit Force activity tracker wristband after customers reported cases of skin rashes. And the jury is out about just how much appetite a large swath of customers will have for such products. "There's a question of whether these startups can grow to be $20 million or $400 million companies," says Gene Dolgin, senior manager with Endeavor Partners, a strategy firm in Cambridge.
Dolgin sees the biggest growth potential in the enterprise market, where employers and insurers buy the devices for employees. Many startups have plans to expand their platform in a variety of ways. For example, Bellabeat wants to extend the product to help medical providers better manage their patients' health.
For Matrix Partners' Reiss, however, the Holy Grail will be the ability for these products to change behavior. "Maybe you'll learn you need to get more sleep or go for a walk more often—and you'll really do it," he says. "If that happens, this can change the health landscape."
The contents or opinions in this feature are independent and do not necessarily represent the views of Cisco. They are offered in an effort to encourage continuing conversations on a broad range of innovative technology subjects. We welcome your comments and engagement.
We welcome the re-use, republication, and distribution of "The Network" content. Please credit us with the following information: Used with the permission of http://thenetwork.cisco.com/.