With Tado announcing 1m units of its smart thermostat sold last week, a thought occurred to us. As Big Tech muscles its way into every corner of the smart home, it is increasingly surprising that Amazon lacks a smart thermostat in its arsenal.
Amazon’s acquisition of such a company has long been overdue, but the tech giant has inexplicably held off. Following its acquisition of Ring and Blink, a thermostat seems to be one of the final pieces of the smart home puzzle – and one of the most obvious advantages that its chief-rival Google has, which gives Google almost direct access to the utility market.
There are two smart thermometers which Riot believes are the most likely acquisition targets – Ecobee and Tado. Both have received significant investment from Amazon and/or the Amazon Alexa Fund within the past few years and therefore already have a relationship with the giant.
Ecobee is the slightly more mature business and in terms of spec, has slightly more integration with Amazon – Alexa is already installed on its smart speaker thermostat. However, Tado’s offering is arguably slightly more advanced, albeit less simple to install, and could potentially provide a more serious threat to Nest if Amazon were to acquire it.
Overall, it seems like Ecobee would be a more convenient acquisition, but Amazon could very easily acquire either. Ultimately, whichever company Amazon goes for – an event which seems near inevitable – the thermostat itself will have to be good enough to provide serious competition to Nest.
Ecobee is a Toronto-based smart thermostat firm. Founded in 2007, the company is well established in the sector and has just under 500 staff. Amazon has been a significant investor in Ecobee’s $149.4mn total funding, leading the two largest – and most recent – rounds, since 2016. The two companies already had somewhat of a mutual fondness, with Ecobee installing Alexa into its thermostat a few months earlier, which doubles as a smart speaker.
With Ecobee talking publicly of its desire to take on Nest, a partnership with Amazon seems like it would be a mutually beneficial development. The company’s CEO, Stuart Lombard, has previously expressed that the company does not want to “out-Google Google” in terms of scale. However, Riot finds it hard to believe that given the opportunity, Ecobee would turn down the chance to scale up massively.
Lombard instead argued for “a strategy built around focus and innovation to deliver more innovations to the market faster” than Nest. This has proved successful in the past – when Nest launched add-on temperature sensors for multiple rooms in late 2018, Ecobee had already had this feature for years.
Ecobee hosted two venture rounds in 2007 and 2010, raising a total of $8.6mn. Tech Capital Partners and Relay Ventures contributed to both. Series B funding followed in August 2012, which saw $7.5mn raised and one investor, Just Energy, received a 15% fully diluted interest in Ecobee.
Another venture round took place in August 2016, raising $35mn. This saw the entrance of Amazon’s Alexa Fund, a venture capital initiative to further development in AI, voice technology, robotics, and the IoT. At the time, this marked the largest investment the Fund had made into a company. Other investors were Thomvest and Relay Ventures.
The Alexa Fund was also a leading investor in Ecobee’s two Series C rounds in 2018, which saw a total of $99mn raised. Amazon is clearly keen to be involved somehow.
If not Ecobee, Amazon will likely try to acquire Tado. Founded in 2011 and employing around 170 staff and to date, the German company is slightly behind Ecobee in its development. Tado has raised $111.3mn in funding and much like Ecobee, Amazon has become a key investor as of late.
Tado arguably has a competitive edge when it comes to spec. Aside from sensing the temperature of your home, Tado also responds to changing weather and your location – i.e. it can turn on when you are ‘x’ miles away from home. It is also one of the more adept systems on the market, claiming compatibility with over 95% of heating systems.
Tado can connect to the digital serial interface of thousands of different brands, allowing it to ‘modulate’ heating services, rather than simply turning things on and off, using geofencing, open window detection, and integrations with Alexa, Assistant, and Siri.
On the flip side, Tado is far more difficult to install then Ecobee, with a scheduled service installation mandatory, which certainly makes its offering less convenient – a term which Amazon is perhaps to synonymous with to look past it.
It was announced last week that Tado had just reached the milestone of 1m units sold. This news struck us as long overdue, judging by how long the company has been going. An investment from Amazon would certainly help the firm scale up.
Tado’s first two years saw the company raise $4.9mn from three funding rounds. Target Partners has been investing in Tado since Series A, while Shortcut Ventures has been a constant investor since Series B.
Series C and D followed the next two years, raising $14.9mn and $17mn, respectively. Series D saw Statkraft Ventures come on board, among others. Series E raised $22.8mn in April 2016, creating new investment from Siemens. By far the largest round was Series F in October 2018, raising $56.9mn. This saw the first investment from both Amazon and the Alexa Fund, alongside five other investors, including E.ON.
Another contender, although far less likely, is French firm, Netatmo. Founded in 2011, the company has around 270 staff and raised $38.4mn by 2015, before being acquired by Legrand in November 2018. This acquisition undoubtedly makes serious interest from Amazon less likely. Legrand is unlikely to give up its acquisition to easily, and Amazon is unlikely to fight for it when there are two standalone smart thermostat companies for the taking.