Reports indicate that Jawbone, which was founded 18 years ago and once had a valuation of over $3 billion, is going into liquidation. Though the company has been praised on matters of design and strategic advantage, the company has been having financial struggles in the recent past.
In recent years Jawbone has been focusing on its UP wristbands but this has faced serious competition from the likes of Huami and Fitbit. Smartwatches developed by Samsung and Apple have also reduced its market share. Fumbled product launches and the poor quality of its products have also made matters worse for Jawbone.
Venture capital firms
Having raised funds amounting to hundreds of millions, the liquidation of Jawbone will see venture capital firms in Silicon Valley such as Kleiner Perkins Caufield & Byers, Sequoia Capital and Andreessen Horowitz lose money.
Jawbone which is based in San Francisco, California, was started in 1999 and initially went by the name of Aliph. Its first products were Bluetooth headsets designed for mobile phones. Jawbone later expanded its product line by introducing health-tracking wristbands and wireless speakers.
Looking for a buyer
In the past couple of months Jawbone had been looking for a buyer. One of the entities that Jawbone approached was Fitbit, a rival in the fitness-tracking business as well as a target in a lawsuit the former filed accusing the latter of stealing trade secrets and patent infringement. The two tech firms did not reach an agreement since Fitbit was only offering a price which Jawbone considered too small in light of the fact that the Jawbone had been valued at $1.5 billion in a fundraising round a year earlier. In that fundraising round the valuation of Jawbone had been reduced by over half since just two years in 2015 it had been priced at $3.3 billion.
The insolvency proceedings are believed to have been started last month after Jawbone failed to get a buyer. Sherwood Partners was recently appointed by the tech firm to handle the liquidation process. A BlackRock-managed fund, which two years ago led debt financing worth $300 million, is expected to be one of the creditors poised to be first in line in getting any proceeds that will materialize once Jawbone’s remaining assets are sold.
Jawbone is not the only hardware-focused tech firm to go under in the last few months. Late last year for instance, the pioneer of smartwatches, Pebble, had to sell to Fitbit some of its technology assets. Also Hello, a maker of sleep trackers, announced last month that it was closing down.