Nucleus raises $5.6M in Series A funding led by Amazon’s Alexa fund

Nucleus, the home intercom system which started shipping in August, has closed $5.6M in Series A Funding.

The round was led by Amazon’s Alexa fund, which invests in promising startups that incorporate Alexa’s technology into their product (Nucleus recently added support for Alexa voice functionality). BoxGroup, Greylock Partners, FF Angel, Foxconn, and SV Angel also participated, as well as Joe Montana’s venture fund Liquid2.

Before Nucleus launched the company had a hypothesis that a smart home intercom would appeal to basically everyone – not just tech-savvy early adopters who wanted a cool gadget in their home.

So in addition to launching on Amazon the device has also been on display in 500 Lowes hardware stores, which has allowed Nucleus to be seen (and purchased) in person by people who wouldn’t traditionally be looking to buy an IOT connected device. The device was purchased by users in 47 states just in the first month of going on sale, which is a testament to their ability to gain market share outside of the East and West Coast tech hubs.

It helped that the company’s main type of customer isn’t someone who starts out looking for a smart device. Jonathan Frankel, co-founder and CEO of the company, explained that many Nucleus users are people who were originally searching for a home intercom system. But once they discover that a traditional voice-only system costs thousands of dollars (and has 10x less functionality than Nucleus) they are usually pretty psyched to buy Nucleus instead.

The other main type of user is someone trying to keep tabs on or stay in touch with a distant relative, and normally will buy a device or two for their own home and a device for the family member they are trying to keep tabs on.

Between these two groups the average user is buying 3-4 devices each. The price is also discounted from $249 to $199 as soon as you purchase two or more which also probably helps encourage people to spring for an extra (or two).

The company plans to use the new funding to ramp up product development. Nucleus has also announced plans today to acquire Ily, a home phone / intercom system that was crowdfunded earlier in June. The company explained that the acquisition will give them access to a new team of engineers already well versed in the home intercom space – something that should help the company quickly roll out new features to users.

Since the device updates automatically OTA and in the background, it’s easy for the development team to push out new product updates pretty frequently, something they already have started doing.