Dropcam 2012 Funding

By John Honovich, Published Jul 16, 2012, 12:00am EDT

Not even a year after getting the biggest funding ever for the VSaaS market, Dropcam has now received a funding round that is twice the size of its last one. In this note, we examine what this means for Dropcam, where the company is today and what they may be able to do in the future.


In June 2012, Dropcam announced $12 million USD funding, 8 months after announcing ~$6 million USD. Prior to 2011, Dropcam had OEM'ed Axis cameras and had a very rudimentary offering. Since then, Dropcam developed their own HD WiFi small form factor cameras with integrated IR for $149 USD (see our review of HD Dropcam).

Along with the announcement, Dropcam mentioned some minor new enhancements including and Android App and improved motion detection.

Product Adoption

In a statment, Dropcam says:

"The response to Dropcam HD has been crazy. We've sold out of our first few shipments - the good news is we now have our manufacturing lines running all the time so the backorder period is over. We sold more Dropcam HDs in the first few weeks of availability than all prior models combined."

That noted, it is not clear how many or how significant sales of their historical models were. However, the new series is better in many key factors (HD vs SD, IR vs color only, streamlined vs generic cube camera, etc.) so a major rise in sales is not surprising.

Earlier in the year, the company acknowledged manufacturing problems in China that they say has since been resolved.

Dropcam's Amazon reviews are overall solid with fairly easy to resolve criticisms. Plus, they are much better than the Stem Izon, perhaps the most direct comparable to Dropcam.

Competitive Analysis

While the core of our analysis from the previous round remains, a few important points are worth emphasizing:

  • Having an extra $12 million will allow them to do things that almost no one else in the market can do. This certainly does not guarantee success but it does afford them the opportunity to build out a fairly deep product line. While Dropcam would not indicate what they are developing, it would make sense for them to offer a greater selection of models (today they only have one), integrate on board storage (today they stream everything off site), further improve motion detection (to enable highly reliable alerting), etc.
  • Unless Dropcam totally screws up, the many 'mom and pop' consumer VSaaS offerings that built their own small scale offering OEMing or re-using existing IP cameras will have an extremely hard time to compete for consumers. Dropcam will likely improve their product advantages with more models, more services, more marketing, etc. making it difficult for bootstrapped VSaaS providers to compete.
  • Dropcam is clearly comfortable and focusing on selling direct to consumers - a move that Axis is too afraid to do - and one that gives Dropcam a huge advantage in going after the home market. It is not hard to see Dropcam (or another outsider with a similar strategy) to become a major player in the home monitoring / surveillance market.

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