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Lytro Raises $40 Million After Leadership Change at Camera Maker

Lytro Inc., the maker of a camera that lets pictures be refocused after they are taken, pulled in an additional $40 million in funding to release a redesigned device and get its technology into smartphones.

Lytro has now raised a total of $90 million from investors such as North Bridge Venture Partners and Andreessen Horowitz. The company will unveil a successor to its current harmonica-box-shaped digital camera in the first half of 2014, Chief Executive Officer Jason Rosenthal said in an interview.

The startup’s technology includes software to change the focal point of a photo or view a shot in 3D. Sales of its first device sputtered, leading to the replacement of founder Ren Ng as CEO. The new product will look more like a traditional camera with a touch-screen display on the back, said a person with knowledge of its development, who asked not to be identified because the details aren’t public.

“The first product was all about getting light field technology out of the lab in Stanford and into the hands of consumers,” said Rosenthal, who joined Lytro in April after working as an operating executive at private equity firm Silver Lake Partners and CEO of social network Ning. He wouldn’t comment on the new product’s design beyond saying, “it’s awesome.”

Light Field

The original Lytro, priced at $399 to $499, was the first commercially available camera to harness technology known as light field photography, born out of founder Ng’s specialty as a computer-science graduate student at Stanford University. The camera’s lens consists of thousands of microlenses, each of which captures a slightly different slice of light. One picture captures so much information that a user can adjust the photo in various ways after it’s been shot, such as shifting the focus from foreground to background.

Apple Inc. co-founder Steve Jobs had Ng over to his home in Palo Alto, California, to see a demonstration of the technology.

Rosenthal said Lytro’s technology has broader uses than a traditional camera, citing its potential appeal for Hollywood filmmakers, medical-device makers or smartphone manufacturers. Because the software allows greater manipulation after a photo is taken, it doesn’t require gear like long-range lenses, he said.

“We’re capturing a much richer data set than has ever been possible before in photography,” he said.

Lytro, based in Mountain View, California, released its first product last year. In the latest financing round, funders include North Bridge -- a new investor -- along with Andreessen Horowitz, New Enterprise Associates and Greylock Partners. Rosenthal wouldn’t disclose the company’s valuation.

Smartphone Cameras

The company still faces challenges to its business -- the device is expensive for an unknown technology, and people are increasingly satisfied taking pictures with phones rather than having a traditional point-and-shoot camera. A rival company, Pelican Imaging, has similar technology and is focused on licensing to mobile-phone manufacturers rather than releasing a camera.

Lytro is one of a batch of startups that are building their own hardware, a much different task than companies that focus on building an iPhone application or website. Unlike at an Internet or software startup, designing and manufacturing a device is more capital-intensive, requiring the company to buy components from different suppliers and then find a manufacturer to build the product on time and within a budget.

Some young hardware companies are gaining traction, like Nest Labs Inc., the maker of an automated thermostat, which was founded by former Apple executive Tony Fadell. Others have been slower to take off, such as education-tablet maker Kno Inc., a startup that was recently acquired by Intel Corp. after failing to find an audience.

Bloomberg LP, the parent of Bloomberg News, is an investor in Andreessen Horowitz.

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