High-end audio maker Devialet nabs 100M from Foxconn, Jay Z, Rubins Playground and more
Make way for anotherstartup that wants to shakeup the world of music and audio technology. Devialet, the Frenchdeveloperof high-end speakers and the IP behindthe sound systems that make them go boom, has raised 100 million ($107 million). This is a strategic growth round that isbringing in a number of high-profile new investors and with them, a lot more audio opportunitiesfor the Paris-based startup.
In the words of co-founder and CEO Quentin Sannie, Devialets ambition is to change how we hear sound from any device. We have developed some very breakthrough sound technology, he said in an interview earlier today, and we think it has the ability to be the reference technology for all audio in the future.
The Series C round, one of the biggest ever for a startup in France, was led by Ginko Ventures, Foxconns European investment arm, and also included participation from Foxconn itself, carmaker Groupe Renault, Sharp Corporation (now owned by Foxconn), Andy Rubins Playground Global (which itself is raising $500 million for a new fund), Jay Zs Roc Nation, andKorelya Capital, aninvestment fund headed byFleur Pellerin (Frances former Secretary of State for Digital affairs) in partnership with Naver and its subsidiary Line.
Other investors in this round include QatarsFuture French Champions, CM-CIC Investissement and BPI France.
Devialet is best known today for two speakers that it has produced (both made in France): the Expert, which retails formultiple thousands of dollars; and the Phantom, a smaller devicethat sells for around a more modest $2,000.
These speakershave won a ton of awards and rave reviews for what is a radical approach to producing sound: Devialet has figured out a way of removing all distortion to produce a giant sound with a strong bass line, fromwhat are otherwise prettycompact pieces of kit. Devialetcomplements this with a slick design and gesture-based controllers.
Some may balk at the price. But audiophiles who hear the speakersfall in love with them, Sannie claims. The product speaks for itself, and we seduce our customers. The Phantom is a very emotional experience. And, if you have the financial means, it seems to also be a very acquisitive and addictive one, too: Andy Rubin has bought160 Phantomspeakers(not just for himself; but to help spread the word about them among his friends).
I am a huge fan of Devialet, he said in a statement. I love the technology and the team. I believe Devialet is the most disruptive company in the audio business. It is my dream to work with Quentin and his team to change the way people appreciate media of all types. I am very proud and happy to take part in this financing.
But speakersis not all that Devialet has been building. While the company will continue to expandits brand with its own hardware, it also has plans to embed its tech to work in consumer electronics and other connected devicesmade by others.
This is where the list of strategic investors will come into play. The plan is to embed Devialets audio tech in TVs made by Sharp, cars made by Renault, music services (think Jay Zs Tidal or Navers Line Music), smartphones, and the many more devicesthat complement and compete with these. If they pull it off, itwill democratise Devialets technology beyond its own high-end, expensive speakers, and make hearing it much more ubiquitous.
You can find sound in more than 3 billion products sold ever year around the world, Sannie said. Whether the partners that Devialet is securing with this investment will be the ones that can catapult its technology into more hands will remain to be seen it will take both successful integrations and then consumers to buy the products. But it is a start.
While we have heard and seen a lot of development in the area of speechrecognition and voice interfaces for AI-based personal assistants, audio services have (ironically) been something of a quiet counterpart. Ifvoice interfaces are a big part of the future of how we will interact with our connected devices (indeed, they already are), you can think of what Devialet is developing as the other side of the coin: the aural experience.
The two are, of course, connected. A personwill know how to change the toneshe or he produces based on what is being heard and sensed: speaking louder in noisy rooms, or more quietlyin an emotional or sensitive situation, for example. The same, in a way, could apply tosmartaudio services.
Devialet is a tech company. We know a lot about signal processing, but the way we are using it is more today to put the signal out, Sannie said. But because of our technology we are able to do the contrary to make something inverseIn an autonomous connected car, the entertainment, the audio experience for the sound, the acoustic even for the silence will be more and more important.
You will have an electric car producing silence and this should be perfect. We will need more entertainment, but we will also need to deliversafety information and driving information to the driver or person in charge.The acoustic experience will have to bea part of this industry. Becausewe are able to provide the sound we can also cancel the sound, and because we can cancel the sound we are also able [single out sounds] like avoice and its commands.
The startup has so far filed 107 patents for its audio codecs, reference designs and other technologies, and its adding more to that each month, Sannie says.
Other areas where Devialet plans to use some of its investment is to continue building up its retail operation.
Today the company has flagship stores in Paris, London and New York City, and it will be adding more of these into key retail locations. The company also struck a plum deal with Apple in 2015 to sell its Phantom speakers in its retail stores. That retail relationship will continue, as any consumer electronics deals that Devialet may sign with its investors or others are not exclusive.
Sannie got very tight lippedwhen I asked ifApple is among those that are working with Devialet on any products. Its a logical question: withits acquisition of Beats in 2014 for $3 billionandreportedinterest in Tidal,Applehas demonstrated that it is also keen to develop high-end audio experiences. For what its worth, Sanniedid note that Apple was aware of the investment as it was being made.
This latest round brings the total raised by Devialet to around $155 million to date, and while Sannie would not discloseDevialets valuation with this round, were still trying to find out. (My guess was $300 million; one source says lower.)
While previous investors Bernard Arnault, Jean-Antoine Granjon, Xavier Niel andMarc Simoncini did not participate in this round, they are remaining on the board with this financing. Others joining them are Caroline Giral of CM-CIC Investissement, and Marc Auberger of FFC as observers.