The Decline of Smart Home Investments: Analyzing the Causes

Over the years, smart home investments have faced significant challenges, with many well-funded companies failing to thrive. Despite the potential of connected-home technologies such as smart windows, lighting, security systems, and kitchens, the market has seen a series of setbacks.

Earlier this month, Brilliant, a smart-home upstart founded in 2015, laid off its entire staff while seeking a buyer. The company, based in San Mateo, California, had raised $64 million to scale its in-wall control system for home automation, but ultimately struggled to sustain its operations.

Similarly, View, a maker of smart glass for buildings, announced its plans to go private and file for Chapter 11 bankruptcy. The company had raised over $1.8 billion before going public in 2021, highlighting the substantial losses in the sector.

Another notable closure was Veev, a former unicorn integrating home automation systems into its building model. The company shuttered and sold its assets to homebuilder Lennar, indicating a broader trend of declining investments in smart-home technologies.

Despite these setbacks, some deals are still being made. In April, Silicon Valley-based Quilt raised $33 million for its electric heat pumps, and Detroit-based Kode Labs secured $30 million for its building efficiency software platform. Smaller deals include OliverIQ’s $5.8 million for its smart-home-as-a-service platform and Perfumeo’s $1 million for its smart-home perfume diffuser.

The ups and downs of smart-home investing reflect disappointing adoption rates for technologies that early entrants expected to catch on more quickly. While 85% of Americans have at least one smart-home device, excluding smart TVs and streaming devices reveals much lower adoption rates for larger appliances and connected thermostats.

To spur further adoption, some startups like OliverIQ and Kode Systems are focusing on simplifying interfaces and integrating multiple home systems into single apps. However, these efforts will likely need to be achieved with leaner budgets than in previous years.