I’ve been following the acquisition of Nest by Google with a lot of interest and while there have been a lot of articles about the acquisition I think even the best tech blogs have missed a number of key points about this deal.
- Google Ventures is one of Nest’s major investors. The full details and specifics of Google Venture’s investment into Nest are not public but it has been noted that Google Ventures led two of the rounds of funding for Nest. As a result they are, most likely, a major shareholder and thus when this transaction closes a significant portion of the proceeds is likely heading to Google Ventures from Google (corporate). Google Ventures is run like a fund so this likely means a good return on that investment – but it is also likely the case that this fact helped Google be able to offer more for Nest than many other parties would have been able to (either for an acquisition or for another large round of funding.
- The takeaway shouldn’t be that “home automation is hot”. Whether or not a given “sector” technology investing is “hot” is always a matter of debate, but it should be noted that while Nest is in the home automation space it isn’t only or even solely in that space, nor does that positioning really reflect what Google is likely trying to accomplish via acquiring Nest. Rather I would highlight Nest as being a successful example of a couple of key business trends.