Private equity deal makes SimpliSafe Boston’s latest billion-dollar startup
SimpliSafe, the Boston-based home security technology maker whose user-installed systems helped reshape its industry, said Friday it has agreed to be acquired by a California private equity firm.
The company, which has its headquarters near Downtown Crossing, said it would sell a controlling stake to the investment firm Hellman & Friedman. The sale valued the company at about $1 billion, according to a person with knowledge of the deal.
It’s the second major deal involving a Boston tech startup in as many days. On Thursday, the retail giant Amazon said it would buy the Somerville online pharmacy PillPack in a deal also reported to be close to $1 billion.
Chief executive Chad Laurans will remain in his role, SimpliSafe said, and it characterized the deal with Hellman & Friedman as one that would largely leave the company’s management and operations intact while giving 12-year-old SimpliSafe more money to expand in an industry it expects will grow.
It also allows for a payout to Sequoia Capital, the big-name Silicon Valley venture firm that invested $57 million in SimpliSafe in 2014.
SimpliSafe, which has been laying the groundwork for an expansion into the UK, said Hellman & Friedman’s presence in London — the private equity firm has an office there — could also be a help.
SimpliSafe has said it is profitable and said it has a growing roster of more than 2 million customers. It has more than 600 employees, all in Massachusetts.
Laurans hatched the idea for SimpliSafe with Eleanor Laurans while the two were at Harvard Business School . They found that people had few options for installing home security systems without hard-wired installations and long-term contracts.
The company developed a kit of devices that now include door sensors, motion detectors, and smoke alarms that users can set up themselves. Today, the sets start at under $300, and users can opt to pay $15 per month for basic professional monitoring services.
A number of other startups have attempted to get in on the self-installed alarm business since SimpliSafe entered the market in 2009. And recently the company has been facing even more formidable competition from Google’s Nest, which offers similar systems. Home security has become an extension of the “smart home” trend, adding computing power and connectivity to household appliances.
Meanwhile, ADT, one of the alarm giants that SimpliSafe was initially looking to beat with its product, has begun offering a kit akin to the Boston startup’s.
In January, SimpliSafe launched a new line of products featuring improved technology and a new, sleek design to stay competitive in the increasingly crowded field.
For some observers, the back-to-back big tech deals in Boston this week represent an opportunity to cut against a blot on the region’s reputation as a tech hub. While Boston is well-known for advances in computing and biotech, Silicon Valley and New York are often seen as the places more likely to create products that everyday users would recognize.
“This has always been one of the knocks on Boston, is that they can’t do consumer-facing,” said Bill Aulet, managing director of Martin Trust Center for MIT Entrepreneurship and an early mentor of PillPack. “It’s not so clear anymore with these types of transactions.”