Sleep is important.

Startups who recognize that are trying to cash in with companies that are either selling mattresses, or mattress-related products, to consumers. Convenience has been a big draw and some companies are even leveraging AI to make sleep a smarter endeavor.

Judging by revenue figures and increasing venture dollars raised, consumers appear to be digging the options. Of the $15 billion mattress market, online sales of mattresses reportedly doubled from 5 percent in 2016 to 10 percent in 2017.

Perhaps the most well-known of the mattress startup bunch is New York-based Casper. The company’s June 2017 Series C round brought in $170 million from investors such as New Enterprise Associates, Norwest Venture Partners, actor Kevin Spacey, and NBA player Kyrie Irving, among others.

The four-year-old company was reportedly in talks to sell to retail giant Target for $1 billion before deciding to pursue a late-stage investment from the retailer instead. Over the course of its lifetime, Casper raised nearly a quarter of a million dollars and reported its revenue had grown to more than $600 million at the end of last year..

The Target deal moved Casper from being a mostly ecommerce play to having a retail component as well.

In an email interview, Casper CEO and Co-founder Philip Krim said his company’s team of 40 researchers, scientists, and engineers at Casper Labs in San Francisco are dedicated “to creating best-in-class products and continuously innovating around sleep.”

“We believe that we’ve just scratched the surface in terms of sleep product innovation,” he wrote.

He declined to discuss whether the 400-person company’s marketing expenses were going up or down in the face of increased competition, saying only the company doesn’t “break down those economics.”

When asked if the company was doing anything to help people avoid their phones and actually get some sleep, he said, “We know avoiding blue light before bed, or always getting that full eight hours, is tough. We’re focused on making sure that you get the best sleep possible, whether it’s for three hours or 10 hours.”

Like Casper, Virginia Beach-based Leesa sells mattresses online with a 100-night “risk free trial.” It has raised $23 million since it was founded in 2014 and its revenue was estimated to have climbed from $80 million in 2016 to more than $150 million in 2017. Both Casper and Leesa ship their mattresses

Now it appears a new type of mattress startup is emerging. New York-based Eight makes what it describes as a smart mattress that uses embedded sensors to collect data and study trends about how people sleep. The four-year-old company has raised $30.1 million since it was founded with investors such as Y Combinator and Khosla Ventures.  It saw sales growth of 350 percent in its first year. Last month, Eight launched a new feature on its app—an AI-powered sleep coach that will tell users things like:

  • “Last night, you slept 40 minutes less than your average this month.”
  • “This week, your REM sleep is lower than average. Try going to bed 30 minutes earlier tonight.”
  • “You’re currently sleeping on average 53 minutes less than the average woman your age.”

The startup’s signature product, the Eight Smart Mattress, tracks over 15 factors of sleep, including heart rate, breathing rate, deep and light sleep, time slept, and tosses and turns. Its analysis of over 200 billion data points collected to date has revealed findings that have been built into the recommendation engine of the sleep coaching feature, according to the company. In just two years’ time, it has tracked over 2.5 million nights of sleep, and is expecting to collect an additional 12 million nights of sleep before the end of 2018. In 2017, Eight collected and processed 500 terabytes of data from over 20,000 people, executed over 200,000 sleep-related smart home actions, and warmed up beds for over 1 million hours.

No Money Under These Mattresses

Not all mattress-related startups are raising venture funds though. For example, Phoenix, Ariz.-based Tuft & Needle and Westport, Conn.-based Saatva Luxury Mattress have been operating for years with no venture funding. And Purple Inc. out of Alpine, Utah, only raised $2 million through an equity crowdfunding campaign in 2016 before getting bought out for $1.1 billion by Global Partner Acquisition Corp.

But for those venture capitalists who are investing in the space, the mattress industry is ripe for disruption.

“Good sleep is one of the most important factors in health and productivity—yet no companies focus on innovating on how we sleep. Eight is the first sleep company which not only monitors your sleep but also proactively helps you improve it,” said Khosla Venture’s investment partner Keith Rabois, who joined Eight’s board of directors, in a March 2018 press release.

It’s safe to say that those companies who can help us sleep better at a reasonable price point have the greatest chances of success.



READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here