Misfit Wearables, maker of the jewelry-like Shine activity tracker and the less-costly Flash tracker, has raised $40 million in funding from Chinese smartphone company Xiaomi and other investors, as it ramps up product development.
In addition to Xiaomi, new investors include GGV Capital, Shunwei Capital Partners and JD.com, one of China’s largest online retailers. Existing investors Khosla Ventures, Horizon Ventures and Founders Fund also contributed to the Series C funding round.
This latest injection of capital will help startup Misfit expand its footprint in China, says Misfit co-founder and CEO Sonny Vu.
“Xiaomi knows how to scale, they understand supply chains,” Vu said. “People like the stuff that we’ve got, but we need to get more products out, and faster.” And JD.com is already a valuable distribution partner: The Misfit Shine is currently the best-selling activity tracker on the site.
But for Burlingame, Calif.-based Misfit, which sells products in more than 50 countries and has the majority of its employees working in Vietnam and China, the funding isn’t just about expanding its global footprint; it’s also about entering entirely new categories of tech.
The company plans to focus on three categories of devices in the coming months: Its existing activity trackers (which Vu says Misfit never really intended to get into to begin with), “advanced wearables” that go beyond the wrist and products in the connected home space.
Vu wouldn’t elaborate on specific plans for smart home products, but did say Misfit will launch “several smart home products over the next few quarters.”
“If you actually have to wear something 24/7 to get data, it’s kind of a disadvantage,” Vu said. “But if you can just buy something that you plug into the wall, and it works, it can really add value.”
The “smart” home device market — like wearables — is still relatively nascent, but is pegged for growth. Google’s acquisition of startups like Nest and Dropcam have brought attention to the category, and everyone from cable operators to home improvement retailers has a stake in the game.
Still, a recent report from Parks Associates indicated that most U.S. consumers are still in the dark when it comes to connected home products, with nearly half of all connected-home device owners falling into the under-35 age group.
Misfit was co-founded in October 2011 (the name “Misfit” is a nod to Steve Jobs, who died that month) by Vu, Sridhar Iyengar and former Apple CEO John Sculley. Including this latest funding round, the startup has raised over $63 million.
Misfit is not yet profitable, but is “breaking even,” Vu claims, adding that it has not yet gone through its cash pile from the previous funding round.
