Thalmic Labs Raises $14.5M To Make The MYO Armband The Next Big Thing In Gesture Control

Thalmic Labs, the Waterloo-based startup working on an all new form of user input for computing devices with the MYO amrband, today announced the close of its $14.5 million Series A funding round, led by Spark Capital and Intel Capital. The round boasts a lot of others besides, including Formation 8, First Round Capital, FundersClub, and individual investors like Paul Graham, Garry Tan, Marc Benioff and more, and will be used to help spur product development of the MYO, and of other forthcoming Thalmic technologies.

MYO, for those who aren’t familiar, is an armband that measures electrical activity to detect fine movement from a wearer’s arm, making for sensitive, accurate gesture-based control of computing devices, including desktop computers, smartphones and tablet, as well as a range of other possible devices. Thalmic is co-founded by three graduates of the University of Waterloo’s mechatronics (yes, that’s a real word) engineering program, including Matthew Bailey, Aaron Grant and Stephen Lake. I spoke with Lake about his company’s funding, their plans fo the money and the challenges yet to come for MYO, which is still in the pre-order stage, with a launch intended for late 2013.

“[The funding is] going towards further developing MYO and getting to full production with it,” he said. “We’ve been growing the team pretty steadily over the past six months or so, and we’ll definitely continue to do that as we find the right people. So there’s the team, R&D, and production of the product as the three main areas we’re focusing on with this round.”

MYO has had little trouble attracting the attention and imagination of tech enthusiasts. So far, it has racked up well over 30,000 pre-orders, which at $149 per unit, represents total potential sales of $4.5 million. The startup secured a $1 million seed round back in 2012, and is both a University of Waterloo VeloCity and Y Combinator alumnus, and Lake says that despite what he’d been told by friends and advisors before seeking out this new funding, finding interested investors willing to take on a hardware portfolio country wasn’t hard.

“We heard from everyone going in that no one will touch hardware, that it’s not sexy, investors want social/local/mobile software and that’s the focus right now,” Lake explained. “But I think that a lot of it is that it’s the right time for it. There have been several before us, higher profile hardware startups that have done very well, through Kickstarter campaigns or pre-order… I think a lot of them saw that as a sort of a proof point that all of a sudden there are successful hardware startups out there.”

Lake also credited Paul Graham for “beating the drum” around hardware being the next big thing for investors, and about changes in the production process that have resulted in time-to-market and investment required becoming drastically reduced vs. even just ten years ago. In the end, he said investors were eager to come on board, given the company’s early success with pre-orders, and that Thalmic definitely didn’t lack for choice when putting together this round.

MYO has already received a lot of strong support from the community, and videos depicting the armband in action have garnered plenty of views, but strong support and plenty of advance hype doesn’t guarantee success, especially in an area as untested as new interaction paradigms. I asked Lake what he thought about challenges encountered by devices in the same space, like the Leap Motion controller, which delayed its target launch date after realizing it needed a longer beta to work on the consumer user experience.

“That’s something that’s very high on our priority list, if not at the top, the initial user experience,” he said. “One of the reasons that we set up our pre-order campaign as we did, which is not the Kickstarter route in that we didn’t actually take payments upfront… one of the factors there is that our number one bar is shipping the product that we want to ship, and not being in a situation where we’re holding people’s money hostage and they’re pounding on our doors, which might encourage us to ship an earlier or less refined version than we’d be comfortable with.”

MYO has kept the launch date vague and pre-orders, while they involve providing credit card information, don’t result in charges until product leaves the warehouse. This allows Thalmic to ensure that the user experience is where it needs to be to provide the all-important first impression necessary to win customers for life, rather than turning them off the concept of novel interaction paradigms altogether.

It’s still a challenge, and one that not only Leap Motion but also Google, with Google Glass, is also facing. Charting unfamiliar territory, and doing it in such a way that wins inaugural customers over right away, is especially difficult with hardware, where it’s much less easy to iterate quickly and fix early missteps. Thalmic now has an additional $14.5 million in the bank to help it make sure it makes the perfect first impression, however, which will hopefully help buy it the time and talent it needs to come up with the perfect recipe.