The venture world is — quite literally — waking up to the potential of applying artificial intelligence to a wider variety of real-world, consumer-driven problems, and today comes the latest development on that front: Eight Sleep, which makes “smart” mattresses and mattress covers (for regular mattresses) that use machine learning and other artificial intelligence-based algorithms to improve your sleep both by changing temperature and monitoring other physical parameters to provide an overall picture of your health, has raised $86 million in a Series C round of funding.
Valor Equity Partners — the firm that has backed the likes of Tesla, SpaceX, GoPuff and many other big tech firms — is leading this latest investment, with SoftBank, Khosla Ventures, Founders Fund and General Catalyst also participating, along with a lot of high-profile individuals who are also users of the product: athletes Alex Rodriguez, Kris Bryant and J.D. Martinez; celebs Kevin Hart; and tech figures Sophia Amoruso, Naval Ravikant and Kyle Vogt.
This Series C brings the total raised by Eight Sleep to $150 million, and the startup has confirmed to me that its valuation is now close to $500 million.
Matteo Franceschetti, Eight Sleep’s CEO, said in an interview that the funding will be used in a few ways.
First, the plan is to double down on building out more technology. Today, Eight’s Pod technology can detect your temperature, heartbeat and breathing and heat or cool a bed accordingly. Tomorrow, that could also include more physical products, additional ambient factors like lighting, and other diagnostics related to you, the sleeper.
Second, Eight Sleep wants to expand internationally, with plans to sell New York-based Eight Sleep products across Europe and the U.K. by the end of this year. After all, it’s not just people in the U.S. who could use a better night of sleep.
Franceschetti — who co-founded the company with Massimo Andreasi Bassi, Andrea Ballarini and Alexandra Zatarain — told TechCrunch that he came to think about sleep and the need to improve it by way of having been an avid and active sports enthusiast.
“I was into the idea of sleep as recovery,” he said. “That is how we came up with the idea of sleep fitness.” Sleep he said, “is not just a waste of time.” Extrapolating that, it’s not just important for athletes, but everyone, to have better-quality sleep.
“The vision for us is to compress your sleep and save your life,” he said. A good six hours, he added, “are better than eight hours that are not.” The company’s original name, Eight, was in reference to those fabled eight hours. Eight Sleep claims that when people use its products, they fall asleep 40% faster, get up to 20% more deep sleep and experience 30% fewer mid-night wake-ups and up to 30% fewer tosses and turns.
(But can it get me to stop worrying about COVID, the economy and societal collapse, whether my kids will be happy in life, and if we remembered to lock the door downstairs? Or maybe all of those just seem less serious when you are actually comfortable in bed…)
While Eight has definitely had a lot of traction with athletes — some 100 stars use it today — it’s hoping that the big boom in quantified self technology — hardware and software built to measure our blood pressure, heart rate, how much we sleep, how much we walk or do other activities, and much more — will mean that it can ultimately have a mass market appeal.
Indeed, that we are living in a world with wearable tech that tracks our every movement is nothing new. And, as computing and communications technologies have become smaller and more portable, and infinitely more powerful, and cloud technology and advances in big data analytics has made the gathering of data and the ability to parse it more sophisticated, we have only seen the possibilities for how that can be used to measure (and potentially “improve”) our lives increase.
Within that, sleep has been a large category of opportunity both for startups and tech companies. Earlier this year, Oura raised $100 million for its fitness and sleep tracking rings; others like Zeit have been exploring how to use wearable technology to address more acute sleep-related issues like sleep strokes.
Larger tech companies are not asleep at the wheel, either. Google recently updated its Nest Hub to track sleep; and even Apple has acquired a sleep tech company, Beddit (that deal was back in 2017, however, and it has been years since that hardware was updated: that could be one sign that Apple was more interested in using some of the technology in some of its other health-related efforts).
All this points to many more developments in a sleep tech market estimated to be worth around $30 billion. Within that, Eight Sleep has been on a roll, with revenues for 2021 currently on track to triple versus 2020 on the back of two main products, a mattress that retails for nearly $3,000 for its smallest size, a queen, and a smart cover that starts at $1,720. (The company does not disclose user numbers, but Franceschetti said that the figures are in the “several thousands.”)
“The sleep tech market is only in its infancy. The opportunity is limitless, as we spend up to a third of our lives asleep. Consumers are increasingly focused on sleep fitness as the understanding of how deeply important sleep is to overall health becomes more widely known,” said Antonio Gracias of Valor Equity in a statement.
Gracias founded Valor and is joining the board with this round, and as with other investors, he seems to have been won over in part by becoming a user: “The first night I slept on the Pod I knew we had to get involved,” he said. “We’ve seen this in our portfolio many times – Eight Sleep’s products and technology are disrupting the sleep market, and its rapid innovation is outpacing the competition as it builds a new sleep fitness focused category that delivers results.”