Estimote, a beacon company whose small, wireless sensors and accompanying software provide indoor location technology to some of the largest retailers as well as 65 percent of the Fortune 100, has now closed on $10.7 million in Series A funding. The round will help the business scale to meet the needs of its current customer base, around half of which is retail, as well as fund R&D efforts related to what’s next.
On that front, Estimote says that it will soon launch its next hardware product – something that will expand the company beyond beacons.
The new round was led by Javelin Venture Partners, and included new investors Homebrew, Box Group, Digital Garage, Commerce Ventures, and a group of strategic angel investors, including Josh McFarland, who just sold TellApart to Twitter. Existing investors from Estimote’s seed round also participated.
Beacon technology is not something the everyday consumer thinks about, but it’s changing the way they interact with the world around them, while using their smartphone.
For example, TechCrunch previously heard that Estimote was the beacon provider to Target, which has been rolling out the innovative sensing technology to its 1,800 stores around the U.S. (The company will not confirm this on the record.)
In Target’s case, its smartphone application works hand-in-hand with beacons placed around the stores – like on back walls or high on end caps – in order to provide information and recommendations to shoppers, along with deal alerts. It does so by using multiple Bluetooth low energy (BLE) beacons to triangulate the shopper’s location, combined with data from the smartphone’s sensors. Consumers, meanwhile, are opting in to sharing their location by way of the retailer’s app – and perhaps more importantly, are seeing the value in doing so instead of being fearful about giving up their privacy.
But for Estimote co-founder Steve Cheney, the promise of beacons is not simply in pushing coupons to nearby shoppers.
“If this technology was just used for push notifications, and just for coupons, we would have never started this company,” he says. “Marketers who talk about coupons…it just makes me tired.”
Instead of simply pushing offers to shoppers, Cheney’s vision for beacon technology in retail involves blurring the lines between e-commerce and brick-and-mortar retail. In some cases, that’s a store taking advantage of the “showrooming” trend to their own benefit – meaning, a consumer wants to preview a large purchase item in the store, like a TV or washing machine, but then pushes a button on their phone to have it shipped to their home.
In other cases, beacon technology could be combined with other tech to make for a better in-store experience. For example, you could push a button to have a store associate meet you in the aisle.
Or, imagine being able to snap a photo of the precise screw you need to buy from the hardware store, have the app match it to one in the local store’s inventory, and add it to your shopping list. When you arrive at the store, you could then be directed to the right aisle and bin where the screw is located thanks to the in-store beacons.
This may be a real possibility in the near future – Cheney notes that Estimote is now working with several of the top retailers in the U.S.
In addition, Estimote has over 50,000 smaller, developer customers who toy around with its product. This serves as “lead gen” for its larger software-as-a-service business, says Cheney. Some developers return with the chance at bigger contracts in tow, while others help test the product, informing Estimote what needs to be fixed, or what use cases they have in mind.
That helps the startup determine what to build next.
And it seems like Estimote already has something in the works, as it turns out. Though still light on the details, Cheney says the next product will tie into the existing product line and its cloud platform, but will involve a new physical layer.
“The future of retail is not just the sensor on the wall. It’s your smartphone and screens you look at, and it’s things that occur in your natural environment,” he hints. The product will be one of many Estimote has planned. The team expects to release one new hardware per year.
As more companies adopt beacon tech, Estimote has been growing, with each quarter larger than the last. Though the startup doesn’t disclose revenues, it’s seeing “many millions” in revenue per year, and – most importantly to its new investors – is seeing strong return customer revenue.
“Return customer revenue has increased on average 40 percent quarter-on-quarter over the last 8 quarters dating to Q4 2015,” notes Cheney.
With the additional funding, Estimote also plans to grow its team of 50 based in New York and Krakow, Poland, to include new hires in product development, engineering, R&D, as well as on the business side, and in sales. It also plans to open an office in San Francisco.