Keen Home — Smart Vents for My House
A company trying to raise its Series A on SeedInvest
SeedInvest is a platform that allows non-accredited investors to make some risky bets on start-up companies looking to raise funds from Angel investors or raise a Series A from normal people like myself. I’ve written previously about some companies on SeedInvest and I thought I would do another, but take the time to dive a bit deeper if I think it’s an interesting investment. I don’t have enough money to do this type of speculative investing and I’m not an investor in the company described herein.
Keen Home is selling a system of connected vents that can sense temperature and then either open or close based on the desired temperature for the room. The smart vents can talk to each other if you have the hub and they can all be controlled from your smart phone. Keen Home seeks to reduce your overall heating and cooling bill (electric and gas) by ensuring that the right vents are open at the right time. A typical starter pack costs around 200 dollars.
The Cost of Goods Sold (COGS) is 39 dollars for I’m guessing 1 vent with a retail of $85 and let’s assume a 10% retail commission. Which means about 36–37 dollars per vent or about 42% return per vent. They have 2.3M in sales to date and based the profit from just COGS (which includes labor and manufacturing costs) means they only have about 960,000 in profit for the past 12 months since product launch based on looking at the slide above.
They sustained loses of just under 3 million between 2014 and 2015, but this was likely during the product development stage. Without more investment it is unlikely that the company will succeed. Further, the company is single soured on critical components as shown below in reading more of the disclosure.
Single sourced parts, components, or raw materials is also quite troubling. If one supplier runs out of stock or goes bankrupt the whole business is at risk of slowing down or not being able to meet demand.
Further, a Google Patent search indicates that Keen Home has not filed any sort of IP and because this is both hardware and software I think they are prone getting copied. There is already a filing that discloses Keen Home as prior art. This patent claims that is solves the “ghost noise” problem of smart vents and claims the disclosed invention allows for “quiet” operation.
This patent further goes on to disclose 2 other competing technologies from EcoNet Controls and Activent. EcoNet appears to already play in other Smart Home areas such as automated water valve shut offs and is entering the smart vent market. Activent appears to only be operating in the smart vent market. EcoNet Controls’ current water valve shutoff product seems like it doesn’t have a big market to me, but I can envision a world in which they have a whole eco-system of Internet of Things devices.
Will McLeod is a co-founder and Chief Product Officer who has successfully started a smart-glass company that found an exit.
Nayeem Hussain is a co-founder and the Chief Executive Officer who has worked previously for various companies that did not participate in product development. He also currently runs a distressed Real Estate business and has done so for the past 7+ years and operates out of the Philadelphia, PA metropolitan area.
The actual vent itself appears to be completely flat and it seems unlikely that it would fit into houses with older vents that do not conform to Keen Home’s pre-determined shapes. I don’t think I could fit Keen Home smart vents into my own house which was built in 1951 in Louisville Kentucky.
Other than that it seems as if the product is simple enough in that there are few areas where it can fail once installed. From a home improvement standpoint there may be things that should be done before installing these vents such as insulation of basements, roof vents, better windows, and energy efficient window coverings such as blinds, curtains and window films.
Because there is no IP protection it seems very likely that other companies such as Samsung could come in and either copy or outdo Keen Home or at least compete for any existing market that is developed. The company needs to become profitable, but if sales continue to rise then I think there is some good potential. My home suffers from being too hot upstairs in the summer and too cool downstairs in the winter. I could probably fix it by insulating my crawlspace area and installing better roof venting. A smart vent idea would be the last on my list.
I’m very concerned with single sourced components as well. They need multiple suppliers as soon as possible or to improve and simplify design.
My last concern for Keen Home is how long do the batteries last, are they rechargeable, or are they disposable and easily replaced?
Overall it seems like an interesting company to invest in and I would hope that they move towards an exit in a few years provided they can become profitable. I would imagine a sale to Samsung, Amazon, or any company that has existing Smart Home ecosystems. Most likely they fail. Hardware is a very tough place to be a start-up due to it being extremely capital intensive and dependent on a robust supply chain.
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