Tim Cook-backed shower startup Nebia shows off a warmer, water-saving shower head

I’m not in the habit of getting naked during meetings at startup offices, but this time it felt appropriate.

Nebia, a shower startup that has attracted investments from the likes of Apple CEO Tim Cook and former Google chairman Eric Schmidt’s foundation is back with some new cash (though it won’t divulge how much) and a new generation of its thoughtfully designed shower heads that aim to dramatically reduce the amount of water people use while cleaning up.

After a lengthy chat with Nebia CEO Philip Winter, who discussed all of the nuances of the Nebia’s second-gen “Spa Shower” for which they just launched a crowdfunding campaign today, he asked whether I’d like to try it out. With a couple hours of empty space in my calendar, I said “Why not?” and wandered over to the startup office’s shower showroom.

Shower thoughts

This was probably the most analytical thinking I’ve done in the shower about the process of showering itself.

The shower head in my bathroom at home is pretty standard and basically concentrates the water into a couple dozen streams organized in a circle that are firing at an even pace. It’s nothing fancy, and I couldn’t tell you the brand, but I can say that I spend at least 20-30 minutes in there everyday without exception.

Nebia’s shower is wildly more complicated — as a $499 shower should be — but it’s the combination of different techniques that leads to a shower that feels full and refreshing but is using significantly less water than you’re used to. The customer for this is probably placing a healthier premium on the fact that it’s great for the environment rather than that it’s a spa-type experience; the shower head uses 65 percent less water than your average shower head, the company says.

The Nebia shower is all a very strange feat of engineering and involves the water being “atomized” as they called it, with water droplets being significantly smaller when it exits some nozzles, leading to an enveloping mist, and larger and warmer jets being shot out of the shower head’s center. The big improvement in this generation is that the water is about 29 percent warmer.

How does the shower head even control warmth? Isn’t all the water coming from the same heater? As Winter explained to me, things are a lot more complicated when it comes to how Nebia handles thermodynamics. Smaller water droplets means increased surface area exposed to the room temperature, which means greatly sped up heat dissipation. In practice, this means that the distance the water can travel from the shower head before getting chilly is a much shorter journey than your current shower. To adjust that, Nebia fires the water droplets three times quicker and maintains some larger droplet streams to maintain the heat for longer.

Nebia does a bit of cheating by also having a second shower head firing from the hip. The wand adds to the water being used but still keeps the system using about half of the amount of water that the average shower head uses.

Thankfully, there was also room for a side-by-side comparison as I was able to try out both the gen-1 and gen-2 Spa Shower in the same bathroom. The shower experience didn’t feel wildly distinct, but the difference in water heat when cranked to full blast was notable; my own temperature sensing isn’t quite finely tuned enough to confirm the 29 percent figure, but that doesn’t seem off.

Ultimately, it was the best shower I’ve had in a startup’s office to date, but it was also a shower that didn’t feel as though I was resting my head under a light trickle of cold water like other low-flow showers. It’s a real product, though at this point it’s also a decidedly premium product, even with the $100 crowdfunding discount of the $499 retail price. Beyond the warmer water, the new shower’s easy-install system is now compatible with about 95 percent of American homes, the company says. There’s also a new matte black color option and a little matching shower shelf you can add to keep that high-design look.

The company, which launched out of Y Combinator, has attracted some top investors who seem to be intrigued by the water-saving impact. The company says they’ve already shipped more than 16,000 shower heads and that more than 100 million gallons of water have been saved.

This Series A investment was led by Moen, the faucet and shower head maker that also announced a partnership with the startup. The latest round also boasts follow-on investment from Tim Cook and The Schmidt Family Foundation, as well as some new investors like Airbnb co-founder Joe Gebbia, Starwood Hotels co-founder Barry Sternlicht, Fitbit co-founder James Park and Stanford StartX.

The crowdfunding campaign kicked off today and has already blown past $300,000 in pre-orders (they’ve already sold most of the $349 early-bird deals); the company hopes to ship the first 2.0 shower heads in June.

Tim Cook-backed shower startup Nebia shows off a warmer, water-saving shower head

I’m not in the habit of getting naked during meetings at startup offices, but this time it felt appropriate.

Nebia, a shower startup that has attracted investments from the likes of Apple CEO Tim Cook and former Google chairman Eric Schmidt’s foundation is back with some new cash (though it won’t divulge how much) and a new generation of its thoughtfully designed shower heads that aim to dramatically reduce the amount of water people use while cleaning up.

After a lengthy chat with Nebia CEO Philip Winter, who discussed all of the nuances of the Nebia’s second-gen “Spa Shower” for which they just launched a crowdfunding campaign today, he asked whether I’d like to try it out. With a couple hours of empty space in my calendar, I said “Why not?” and wandered over to the startup office’s shower showroom.

Shower thoughts

This was probably the most analytical thinking I’ve done in the shower about the process of showering itself.

The shower head in my bathroom at home is pretty standard and basically concentrates the water into a couple dozen streams organized in a circle that are firing at an even pace. It’s nothing fancy, and I couldn’t tell you the brand, but I can say that I spend at least 20-30 minutes in there everyday without exception.

Nebia’s shower is wildly more complicated — as a $499 shower should be — but it’s the combination of different techniques that leads to a shower that feels full and refreshing but is using significantly less water than you’re used to. The customer for this is probably placing a healthier premium on the fact that it’s great for the environment rather than that it’s a spa-type experience; the shower head uses 65 percent less water than your average shower head, the company says.

The Nebia shower is all a very strange feat of engineering and involves the water being “atomized” as they called it, with water droplets being significantly smaller when it exits some nozzles, leading to an enveloping mist, and larger and warmer jets being shot out of the shower head’s center. The big improvement in this generation is that the water is about 29 percent warmer.

How does the shower head even control warmth? Isn’t all the water coming from the same heater? As Winter explained to me, things are a lot more complicated when it comes to how Nebia handles thermodynamics. Smaller water droplets means increased surface area exposed to the room temperature, which means greatly sped up heat dissipation. In practice, this means that the distance the water can travel from the shower head before getting chilly is a much shorter journey than your current shower. To adjust that, Nebia fires the water droplets three times quicker and maintains some larger droplet streams to maintain the heat for longer.

Nebia does a bit of cheating by also having a second shower head firing from the hip. The wand adds to the water being used but still keeps the system using about half of the amount of water that the average shower head uses.

Thankfully, there was also room for a side-by-side comparison as I was able to try out both the gen-1 and gen-2 Spa Shower in the same bathroom. The shower experience didn’t feel wildly distinct, but the difference in water heat when cranked to full blast was notable; my own temperature sensing isn’t quite finely tuned enough to confirm the 29 percent figure, but that doesn’t seem off.

Ultimately, it was the best shower I’ve had in a startup’s office to date, but it was also a shower that didn’t feel as though I was resting my head under a light trickle of cold water like other low-flow showers. It’s a real product, though at this point it’s also a decidedly premium product, even with the $100 crowdfunding discount of the $499 retail price. Beyond the warmer water, the new shower’s easy-install system is now compatible with about 95 percent of American homes, the company says. There’s also a new matte black color option and a little matching shower shelf you can add to keep that high-design look.

The company, which launched out of Y Combinator, has attracted some top investors who seem to be intrigued by the water-saving impact. The company says they’ve already shipped more than 16,000 shower heads and that more than 100 million gallons of water have been saved.

This Series A investment was led by Moen, the faucet and shower head maker that also announced a partnership with the startup. The latest round also boasts follow-on investment from Tim Cook and The Schmidt Family Foundation, as well as some new investors like Airbnb co-founder Joe Gebbia, Starwood Hotels co-founder Barry Sternlicht, Fitbit co-founder James Park and Stanford StartX.

The crowdfunding campaign kicked off today and has already blown past $300,000 in pre-orders (they’ve already sold most of the $349 early-bird deals); the company hopes to ship the first 2.0 shower heads in June.

Chinese investment into computer vision technology and AR surges as U.S. funding dries up

Last year 30 leading venture investors told us about a fundamental shift from early stage North American VR investment to later stage Chinese computer vision/AR investment — but they didn’t anticipate its ferocity.

Digi-Capital’s AR/VR/XR Analytics Platform showed Chinese investments into computer vision and augmented reality technologies surging to $3.9 billion in the last 12 months, while North American augmented and virtual reality investment fell from nearly $1.5 billion in the fourth quarter of 2017 to less than $120 million in the third quarter of 2018. At the same time, VC sentiment on virtual reality softened significantly.

What a difference a year makes.

Dealflow (dollars)

What VCs said a year ago

When we spoke to venture capitalists least year, they had some pretty strong opinions.

Mobile augmented reality and Computer Vision/Machine Learning (“CV/ML”) are at opposite ends of the spectrum — one delivering new user experiences and user interfaces and the other powering a broad range of new applications (not just mobile augmented reality).

The market for mobile AR is very early stage, and could see $50 to $100 million exits in 2018/2019. Dominant companies will take time to emerge, and it will also take time for developers to learn what works and for consumers and businesses to adopt mobile AR at scale (note: Digi-Capital’s base case is mobile AR revenue won’t really take off until 2019, despite 900 million installed base by Q4 2018). Tech investors are most interested in native mobile AR with critical use cases, not ports from other platforms.

Computer vision and visual machine learning is more advanced than mobile AR, and could see dominant companies in the near-term. Here, investors love  startups with real-world solutions that are challenging established industries and business practices, not research projects. Firms are investing in more than 20 different mobile augmented reality and computer vision and visual machine learning sectors, but there is the potential for overfunding during the earliest stages of the market.

What VCs did in the last 12 months

Perhaps the most crucial observation is the declining deal volumes over the last year.

Deal Volume (number of deals by category)

(Source: Digi-Capital AR/VR/XR Analytics Platform)

Deal volume (the number of deals) declined steadily by 10% per quarter over the last 12 months, and was around two-thirds the level in Q3 2018 that it was in Q4 2017. Most of the decline happened in the US and Europe, where VCs increasingly stayed on the sidelines by looking for short-term traction as a sign of long-term growth. (Note: data normalized excluding HTC ViveX accelerator Q4 2017, which skews the data)

Deal Volume (number of deals by stage)

The biggest casualties of this short-termist approach have been early stage startups raising seed (deal volume down by more than half) and some series A (deal volume down by a quarter) rounds. This trend has been strongest in North America and Europe, but even Asia has not been entirely immune from some early stage deal volume decline.

Deal Value (dollars)

(Source: Digi-Capital AR/VR/XR Analytics Platform)

While deal volume is a great indicator of early-stage investment market trends, deal value (dollars invested) gives a clearer picture of where the big money has been going over the last 12 months. (Note: investment means new VC money into startups, not internal corporate investment – which is a cost). Global investment hit its previous quarterly record over $2 billion in Q4 2017, driven by a few very large deals. It then dropped back to around $1 billion in the first quarter of this year. Since then deal value has steadily climbed quarter-on-quarter, to reach a new record high well over $2 billion in Q3 2018.

Over $4 billion of the total $7.2 billion in the last 12 months was invested in computer vision/AR tech, with well over $1 billion going into smartglasses (the bulk of that into Magic Leap) . The next largest sectors were games around $400 million and advertising/marketing at a quarter of a billion dollars. The remaining 22 industry sectors raised in the low hundreds of millions of dollars down to single digit millions in the last 12 months.

A tale of two markets

Deals by Country and Category (dollars)

American and Chinese investment had an inverse relationship in the last 12 months. American investors increasingly chose to stay on the sidelines, while Chinese investor confidence grew to back up clear vision with long-term investments. The differences in the data couldn’t be more stark.

North American Deals (dollars)

North American investment was almost triple Asian investment in Q4 2017, with a record high of nearly $1.5 billion dollars for the quarter. Despite 2018 being a transitional year for the market (Digi-Capital forecast that market revenue was unlikely to accelerate until 2019), North American quarterly investment fell over 90% to less than $120 million in Q3 2018. American VCs appear to have taken a long-term solution to a short-term problem.

China Deals (dollars)

Meanwhile, Chinese VCs have been focused on the long-term potential of the intersection between computer vision and augmented reality, with later-stage Series C and Series D rounds raising hundreds of millions of dollars a time. This trend increased dramatically in the last 12 months, with SenseTime Group raising over $2 billion in multiple rounds and Megvii close behind at over $1 billion (also multiple rounds).

Smaller investments (by Chinese standards) in the hundreds of millions have gone into companies Westerners might not know, including Beijing Moviebook Technology, Kujiale and more. All this saw Chinese quarterly investment grow 3x in the last 12 months. (Note: some recent Western opinions about market investment trends were based on incomplete data)

Where to from here?

With our team’s investment banking background, experience shows that forecasting venture capital investment is a fool’s errand. Yet it is equally foolish to ignore hard data, and ongoing discussions with leading investors along Sand Hill Road and China indicate some trends to watch.

American tech investors might continue to wait for market traction before providing the fuel needed for that traction (even if that seems counterintuitive). While this could pose an existential threat to some early stage startups in North America, it’s also an opportunity for smart money with longer time horizons.

Conversely, Chinese VCs continue to back domestic companies which could dominate the future of computer vision/augmented reality. The next 6 months will determine if this is a long-term trend, but it is the current mental model.

If mobile AR revenue accelerates in 2019 as critical use cases and apps emerge (as in Digi-Capital’s base case), this could become a catalyst for renewed investment by American VCs. The big unknown is whether Apple enters the smartphone tethered smartglasses market in late 2020 (as Digi-Capital has forecast for the last few years). This could be the tipping point for the market as a whole (not just investment). However, Apple timing is hard to predict (because Apple), with any potential launch date known only to Tim Cook and his immediate circle.

Steve Jobs said, “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

Chinese investors embraced a Jobsian approach over the last 12 months, with Western VCs increasingly dot-connecting (or not). It will be interesting to see how this plays out for computer vision/AR investment over the next 12 months, so watch this space.