Android Creator’s Phone Startup Raises $300 Million
As it readies first batch of products, investment values smartphone upstart at almost $1 billion.
Essential, a startup run by the creator of Google's Android, added $300 million to its war chest as it looks to break into the highly competitive field of consumer electronics.
The financing round valued Essential at $900 million to $1 billion, according to an analysis by Equidate, which runs a market for private company stock. Essential submitted paperwork on the new investments in late May, a few days before co-founder Andy Rubin unveiled the first two products: a high-end smartphone and an Amazon Echo-like gadget for the home. Investors in the deal weren't disclosed. A spokesman for Essential declined to comment.
Essential emerged from Playground Global, a tech incubator Rubin formed after leaving Alphabet Inc.'s Google in 2014. Rubin, a pioneer in mobile tech, ran the Android unit at the search giant for nearly a decade. The new financing round created a separate class of shares with more voting rights, suggesting Playground Global has considerable control over Essential, according to Equidate's analysis.
With his new startup, Rubin returned to an industry now cluttered with manufacturers in Asia, as well as Google itself, all fighting to fend off Apple Inc.'s iPhone. Many of those manufacturers, like China's Xiaomi Corp., have risen and fallen quickly after dealing with slim operating margins and a constant wrestle with Google over control of the software.
Before the latest financing, Essential raised $30 million from Rubin's Playground Global and Redpoint Ventures last year. Other investors include venture firm Altimeter Capital, Tencent Holdings Ltd., and Foxconn Technology Group, according to the Essential website.
Rubin also went to SoftBank Group Corp. and negotiated a deal to include Essential in the firm's nearly $100 billion technology fund, but the investment was nixed after Apple joined the fund, according to a report in the Wall Street Journal. At the Code technology conference last week, Rubin confirmed the SoftBank talks and said the deal didn't happen because another investor that was a potential rival joined the fund and would have become an Essential backer. He didn't name Apple. "I just went to other investors," Rubin said. "I'm lucky to have good support from people that want to support these crazy, big, audacious things."
In addition to the Essential Phone, which costs $699, Rubin's company showed off an internet-connected Home speaker with a screen, which competes with similar devices from Amazon.com Inc., Google, and, as of this week, Apple. While the phone uses Android, Essential built a new operating system to support the home gadget.