Sonos Raises US$130M A Wireless Audio Market Explodes
Sonos who are a clear market leader is now facing competition both from rational wireless speaker makers and those delivering new 24Bit music speakers such as Bluesound and LG Electronics.
At this stage it is not known what the money will be used for with some analysts tipping a new 24 bit audio system in 2015.
Founded in 2002, the US Company whose products are a top seller in retail stores such as JB HI Fi and specialist dealers has raised a total of US $325 million in funding to date.
Earlier this year, the normally private Company revealed its revenues for the first time. They said that in 2013 they had revenues of $535 million which was double the prior year. This year analysts are tipping that Sonos will soon be a billion dollar revenue Company.
According to co-founder Tom Cullen, Sonos is currently operating at break-even.
As well as the user’s own music library consumers who buy a Sonos system can access other sources include Spotify, Pandora, and iTunes, Deezer, Sirius XM, SoundCloud and Google Music.
Sonos declined to comment on the transaction except to say that the equity sale was a secondary offering, allowing existing employees and shareholders to cash in some of their stock as part of an ongoing liquidity programme rather than drawing new capital into the business.
The Financial Times said that the raising sets the company on a path towards an initial public offering in the coming years and that Similar tech fundraisings of more than $100m have led to valuations of several billion dollars for a Company.
The problem Sonos face claim analysts is that they initially had very little competition “now they are having to compete up against at least 30 other wireless audio brands and some of those brands are serious music Companies such as Bowers and Wilkins, Denon and Harman Kardon”.
In Australia hundreds homes now use Sonos’ multi-room wireless speaker systems, which take advantage of domestic Wi-Fi networks to simultaneously stream music from digital music services.
Sonos are also facing new competition from cheaper Bluetooth speakers that work with free wireless streaming technology such as Apple’s Airplay, which is built into every iPhone.
The Financial Times reported that earlier this week, Beep Devices, a start-up company selling $99 devices that bring Sonos-style wireless capabilities to existing, offline speakers, raised $4m in angel funding from investors including Y Combinator, Zappos founder Tony Hsieh and Alexis Ohanian, co-founder of Reddit.
Sonos was a pioneer in the “connected home” but the company plans to remain focused on music, despite the growth in wireless thermostats, security cameras, light bulbs, smoke detectors and other internet-connected domestic paraphernalia.
Its existing backers, who have already invested more than $200m before the latest round, include KKR, Index Ventures, Redpoint Ventures and Elevation Partners.
John Maeda, the former MIT and Rhode Island design professor who is a partner at Kleiner Perkins Caufield and Byers, and Julius Genachowski, the former US Federal Communications Commissioner Chairman and now director at Carlyle Group, are among those serving on the company’s board.