Boston-based home security company Simplisafe sold a controlling stake in the company to Hellman & Friedman, a private equity firm headquartered in San Francisco. The Wall Street Journal reports that the sale values Simplisafe, a hardware company known for its easy-to-install smart home security systems, at approximately $1 billion.
Prior to Hellman & Friedman’s acquisition, Sequoia Capital invested $57 million into Simplisafe in 2014. Simplisafe co-founder and CEO, Chad Laurans, initially relied upon angel investors, stating in interviews that he found value in bootstrapping his company. However, as the extent of the smart home market becomes evident, smaller companies such as Nest, Ring, and now Simplisafe have all been acquired by large firms.
Simplisafe, founded in 2009, was an early entrant to the market of DIY-inspired, consumer-installed home security systems and expanded the market within the United States. Simplisafe was one of the first companies to provide consumers with the means to install their own systems with various components including video cameras, entry and motion sensors, and smoke detectors that could be bought a la carte. The company provides alarm monitoring and environmental monitoring, allowing Simplisafe to dispatch the police to a customer’s residence and alert you to fires and floods, respectively, for a monthly fee that does not require a contract.
The acquisition by Hellman & Friedman illustrates that the firm believes Simplisafe can compete with industry leaders such as ADT and Vivint for market share. Before Simplisafe’s arrival, the home security market was dominated by systems installed by professionals requiring annual contracts.
ADT, for example, held 4% of market share in the early 1990s while requiring you to sign up for an annual contract and pay for professional installation. Fifteen years later, Simplisafe entered the market allowing users to install and customize their own home security system. Additionally, Simplisafe welcomed customer feedback and created a forum for the company’s customers to converse with one another and improve their line of products. Moves such as these afford Simplisafe the space to advertise that a Simplisafe system can be found in over 2 million American homes.
A job opening for a UK Country Head in Manchester posted on LinkedIn and Glassdoor suggests that Simplisafe now seeks to enter the UK market. Hellman & Friedman’s London office has experience throughout the United Kingdom, some deals include acquiring Web Reservations International Ltd. and guiding the company through both its London IPO and Dublin secondary listing and acquiring and selling Scottish research consultancy, Wood Mackenzie Ltd. Hellman and Friedman has significant experience with the value of deals done at this scale, having acquired numerous multi-billion dollar companies such as Genesys, Verisure, and Getty Images in recent years.
Recent Acquisitions in Home Security
A deal of this magnitude is not unheralded in an industry that is expected to be worth $47.5 billion by 2020. Hellman & Friedman’s investment in Simplisafe comes on the heels of many acquisitions in the smart home space in recent years as the industry grows. In February of 2018, Amazon bought Ring, a smart doorbell with video capabilities, for $1 billion. Around the time that Sequoia Capital invested in Simplisafe, Google bought Nest, a smart home thermostat and smoke detector company for $3.2 billion in 2014.
— TechCrunch (@TechCrunch) June 29, 2018
While Hellman & Friedman bought a controlling stake of Simplisafe, the firm plans on retaining Chad Laurans as CEO, and leaving the managing and operations teams predominantly intact.
The smart home security space is becoming increasingly crowded, but Hellman & Friedman are clearly betting on Simplisafe’s position in the market and the capacity of its existing team in making this acquisition.
Featured image courtesy of Simplisafe