Nest Labs ended 2013 by unveiling a new intelligent smoke detector in the fall, broadening its strategy to make "unloved" products in the home attractive.
Now the company may be ready to kick off 2014 with some more big news.
According to a report from Re/code, Nest may soon close a $150 million venture round led by DST Global that values the company at $2 billion. It's possible the venture round could swell further before closure.
"That valuation could be even higher -- with more than $200 million raised on a $3 billion valuation -- for the Palo Alto, Calif.-based Nest, said some sources, with several investors vying for the deal," reported Re/code's Kara Swisher.
Current investors include Kleiner Perkins, Google Ventures, Shasta Ventures, Generation Investment Management, Lightspeed Venture Partners and Intertrust. Those firms are reportedly participating in the latest round behind DST Global.
In the fall of 2012, Nest closed an $80 million round that helped it build up its engineering team and focus on new products in the home beyond the thermostat. Over the past year, the company has made major software upgrades to its learning thermostat, broadened its reach in major retail outlets, formed relationships with utilities to offer residential demand response services, and opened its API to third-party developers.
Since Nest's launch in 2011, it has focused exclusively on selling and improving its learning thermostat. However, last October, Nest unveiled a new intelligent smoke detector and a new approach to the market.
"We are still definitely an energy company. That's one of the legs of the stool," said Matt Rogers, Nest's vice president of engineering in an interview after the launch of the smoke detector. "That said, we are definitely more than a thermostat company, and we're thinking about lots of things than can be reinvented."
Nest's website clearly states the company's broadening goal: "We reinvent things. We take the unloved products in your home and make simple, beautiful, thoughtful things."
This latest round would likely help Nest focus on building new products. It may also need some money to fight off lawsuits from Honeywell and First Alert, which claim Nest used their patented features in its thermostat and smoke detector.
Although Nest was certainly not a first mover in building smart products for the home, its founding team and approach to the market have given it an edge. The company was founded by Matt Rogers and Tony Fadell, two former Apple engineers who helped build the iPod and iPhone. They took the Apple philosophy of simplicity and consumer-centric design and applied it to products that didn't get much attention in the home.
So far, the strategy has worked. The company is shipping tens of thousands of thermostats per month -- and the product was even featured on the Ellen DeGeneres show last month.
Nest is now hoping to do the same thing with its smoke detector. And with another big round of funding reportedly set to close, Nest will likely continue expanding its reach deeper into the home.