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London-based device maker Nothing has raised $200mn in new funding to continue its push to be a rare challenger from outside China to the dominance of Apple and Samsung in the global smartphone market.
The financing values the five-year-old start-up at $1.3bn, including the new capital raised, equipping the company to explore new kinds of devices driven by artificial intelligence.
Carl Pei, founder and chief executive, said Nothing made $500mn in sales last year, representing a 150 per cent increase from the previous year. He said the group sold a total of 7mn of its smartphones, headphones and earbuds to date. It is on track to hit $1bn in revenues this year, Pei added.
“The reason why I think this fundraising was successful is because of the hardcore numbers that we’re able to deliver in terms of growth,” Pei told the Financial Times.
Nothing has carved out a niche in the cut-throat consumer electronics market thanks to its distinctive hardware and user interface design, as well as more affordable pricing than its larger rivals. While its design team is based in London, its products are manufactured in China and India.
However, its annual sales in the single-digit millions still give it just a sliver of the global smartphone market. Global smartphone shipments rose 7 per cent last year to 1.22bn, according to Omdia, which places the brand outside the top 10 global device makers.
Still, Pei believes Nothing’s growth rate shows that its products are finding a market, especially among younger, design-conscious consumers.
“There are a lot of consumer [hardware] start-ups out there but very few that have delivered these kind of numbers,” he said. “There’s a group of people out there who don’t want to be like everybody else.”
The new funding is led by Tiger Global, the New York-based tech investor whose venture arm was an early backer of Alibaba and Facebook, as well as a prolific investor of start-ups in India, one of Nothing’s largest markets.
Qualcomm Ventures, the mobile chipmaker’s investment arm, and Indian investor and entrepreneur Nikhil Kamath, co-founder of online trading platform Zerodha, are also joining the round.
Nothing’s existing investors include Tony Fadell, the former Apple designer and Nest founder, and Steve Huffman, Reddit’s co-founder and chief executive, as well as Alphabet’s venture capital arm GV and tech investment firms Highland Europe, Latitude and Tapestry.
Patrick Murphy, investor at Tapestry, said Nothing was in a “David versus Goliath” battle but that its “aesthetic and brand positioning — and ability to have the best features at half the price of Apple, without sacrificing the design and the user experience — is really resonating”.
Pei’s long-term ambitions run from robotics to integrating its software into electric vehicles. But its next target is a new but unproven class of “AI native” devices, along the lines of what Sir Jony Ive is developing after OpenAI acquired his company, io, for $6.4bn in May.
“As we interact more with AI, we’re going to come to understand that the more data and context we can feed it, the more useful it will become to us . . . and that will trigger the rise of a new category of devices,” Pei said. “Now, what is the form factor going to be? I don’t think anybody knows.”
This story has been updated to correct Nothing’s valuation