Essential Products, a US-based smartphone maker backed by corporates Tencent, Amazon, Foxconn and Access Industries, and valued at up to $1bn as of 2017, is considering a sale, Bloomberg reported yesterday.
The company has appointed financial services firm Credit Suisse to investigate a sale and has so far attracted at least one interested party, according to people familiar with the matter, who said Essential has also cancelled development of its next product.
Founded in 2015, Essential’s first product was an advanced smartphone designed to work with Android, the mobile operating system Essential CEO Andy Rubin helped to develop. Its features include a magnetic connector system, wireless connectivity and a 360-degree camera.
Venture capital firm Redpoint Ventures and Playground Global, the fund run by Rubin, invested an initial $30m in Essential in early 2016, before the company raised $300m in an August 2017 round that included $100m from Access Technology Ventures, part of conglomerate Access Industries.
The round, which valued Essential at $900m to $1bn, also featured internet company Tencent, e-commerce group Amazon’s Alexa Fund, Redpoint Ventures, Altimeter Capital and Vy Capital. The company’s investors also include Foxconn, the contract manufacturer that puts the phones together.
Essential sold 20,000 phones at their original $700 price, and another 150,000 after reducing that by $200. It had been working on a second iteration of the phone, but has instead switched focus to a smart home device expected to be released in 2019, sources told Bloomberg.
The company has not conclusively moved away from smartphone production, but would likely hire a manufacturing partner other than Foxconn which would make Essential-branded phones on its behalf, the sources said.
– Image courtesy of Essential Products.