The keys to your house belong to startups

Silicon Valley may be the techiest place on earth, but even here, the way people open the front door hasn’t changed much in a century. Most of us still get in by turning a flat metal key in a lock. Visitors ring doorbells, and we peep at them through peepholes. If we’re out, keyless guests are out of luck.

If investors have their way, that status quo will look quite primitive in a few years. So far this year, venture investors have poured more than $200 million into an assortment of companies with businesses and technologies tied to keys, locks and building access. To date, those companies have more than $500 million, according to an analysis of Crunchbase funding data.

Several startups have business models tied to traditional keys, including offering tools to more easily copy and keep track of them. Most of the funding, however, has gone to companies offering digital alternatives to metal keys, including systems that tie in smartphone apps to monitor and control who gets through the door.

“Locks are anachronistic and inconvenient in today’s digital age,” Jason Johnson, CEO of August Home, a developer of smartphone-enabled keyless entry systems, told Crunchbase News. “People shouldn’t have to carry their keys with them all the time when they are only used one to two times a day.”

Moreover, Johnson says, virtual keys give users more control. They get more information about who accesses their home and when. Users can also revoke virtual keys instantly, eliminating some of the worries that come with sharing physical keys.

Why now for keyless entry?

Timing of investments seems tied to projections for consumer adoption more than major technological breakthroughs. Card access systems for buildings and keyless entry for cars, after all, have been around for decades. Smartphone apps for security monitoring are also nothing new. While funded startups are developing proprietary technologies, market timing is motivating backers to put money into scaling operations now.

The biggest round this year went to Ring, a developer of connected doorbells and security systems that closed a $109 million Series D financing in January. August closed a $25 million funding round in July, and KeyMe, which lets people make copies of physical keys using a digital image, closed on $25 million in September. (See a full list of funded startups here.)

Pitches about the virtues of virtual keys hold particular appeal in the e-commerce age. Deliveries become much more convenient when one doesn’t have to wait at home to open the door or worry about leaving stuff outside. The ability to allow limited or one-time access, along with an electronic record of entry, also offers some measure of security.

The growth forecasts look enticing. To a large degree, lock and building access-related investments are an extension of the connected home space, with startups and tech giants alike eyeing everything from doors to appliances to thermostats to sprinkler systems. Forrester Research projects that U.S. adoption of smart home devices will grow at a 42 percent compound annual growth rate over the next five years.

Growing adoption of connected home systems provides a key entry point for key and door tech. As Amazon and Google compete to sell more Alexa and Google Home devices, they’re partnering with a host of companies developing compatible devices. Buyers of connected home systems are also looking for ways to get value from their purchases, and the front door is an obvious place to look.

Traditional meets technical

It’s not clear whether startups will dominate in key and home access innovation. Old-school lock makers, security system providers and tech giants are all competing for market share.

Traditional lock makers, in particular, are investing to keep up with the times. Schlage, a lock maker founded in 1920, has been developing add-ons for locks and smart deadbolts that offer compatibility with Apple, Android and Amazon Alexa. Yale Locks, with a history dating back to the 1840s, also sells smart door locks and alarms and a digital door viewer.

Google’s also planning a big play for the front door. Its Nest smart thermostat subsidiary plans to roll out a video doorbell called the Nest Hello early next year. Amazon has also been exploring smart doorbells to provide controlled access for deliveries.

Startups, however, may derive some strategic benefit from having no legacy product lines to sustain or proprietary platforms they’re obligated to support. Moreover, smart lock systems don’t necessarily require giving up traditional keys.

“The best digital solutions have analog fallbacks,” says August’s Johnson, who says his system is designed as an addition to existing locks, not a replacement.

So maybe we won’t be throwing away the keys just yet. But we will have the option of using them a lot less.

Featured Image: Li-Anne Dias

Published at Sat, 14 Oct 2017 18:00:28 +0000