Smart Sprinkler Maker Rachio Working With Nest, Raising Seed Round

It’s not exactly the season for lawn watering in Denver, but that doesn’t mean Rachio, a local maker of smart sprinklers, is taking a rest. Far from it.

Rachio recently released a new version of its app that allows users to control home irrigation systems with smartphones and tablets. The app is a key component of the startup’s Iro smart sprinkler system, which is for sale at Home Depot, Best Buy, the Apple Store, and online through Amazon and Rachio’s websites, among others.

But along with an improved app, Rachio has bigger news. The startup is now working with Nest Labs as part of its “Works with Nest” program for third-party developers, joining startups such as Dropcam and Pebble and international brands like Mercedes Benz and Whirlpool.

Oh, and Rachio also is in the middle of raising a $3.4 million seed round.

Rachio, which was founded in 2013, features a control box that works with existing sprinkler setups and connects to the home’s Wi-Fi. Users can use Rachio’s app to create watering schedules, operate the system, and check water usage data. Iro also can be set to adjust water output automatically based on the weather and skip turning the sprinklers on if the soil has enough water. Rachio said it saved users 10.6 million gallons of water this summer.

If Rachio is giving owners the ability to have “smart lawns,” its new partner is one of the undisputed leaders in creating smart homes.

Nest is most famous for its smart thermostat that programs itself by analyzing when users turn the heat up or down and learning their patterns. Like Rachio’s irrigation system, it also can be controlled by smartphones. The thermostat is one of the most successful home automation products out there, and Nest’s early success was enough that Google paid $3.2 billion to acquire it in a deal that closed in February.

Having Nest’s stamp of approval is a big deal for Rachio, which just more than a year ago was still working the pitch competition circuit.

“It’s really exciting to be integrated with Nest. They have great brand awareness and great customers, and it’s nice to be referenced with them,” Rachio co-founder and CEO Chris Klein said. He hopes the connection will boost Rachio’s profile and that working with Nest’s engineers will help his team improve their skills.

For now, Rachio works with Nest Protect, the company’s smart smoke and carbon monoxide detector. If Protect detects a fire, it can tell Iro to turn on sprinklers outside the house, which could keep the fire from spreading.

“It’s protecting your neighbors and your community,” Klein said.

Rachio has met with Nest’s software and hardware engineers, as well as its marketing team, Klein said. The relationship with Nest Labs has been focused on helping Rachio understand how to use Nest’s application programming interface. There isn’t a financial or advisory relationship, although Klein believes there will be opportunities for collaboration down the road.

“We’ll explore other ways our products could integrate in the near future, but we don’t know what they are yet,” Klein said.

It should be noted, though, that Nest has acquired two of the companies in the Works with Nest program. The most notable is Dropcam, which Nest bought for $555 million in cash this summer.

Closer to home, Nest recently acquired Revolv, a Boulder-based startup that made smart hubs that control home automation devices. The size of the deal was undisclosed, and Nest immediately discontinued Revolv’s product line. Revolv’s team was reassigned to leading the Works with Nest program.

In the meantime, Rachio also will put the finishing touches on its first big fundraising round. The company is looking to raise $3.4 million. According to an SEC filing, Rachio has raised about $2.5 million, which includes the conversion of convertible notes.

Klein declined to give more details about the round, noting that it has yet to be closed.

Previously, Rachio has raised some angel capital through convertible notes, and its investors include FG Angels, an AngelList syndicate led by the Foundry Group, that Klein said invested $245,000. Denver-based Galvanize Ventures also is listed as an investor on Rachio’s AngelList page.

Rachio has also been able to raise money from less conventional sources. In the summer of 2013, the startup won $65,000 in two pitch competitions sponsored by the Colorado Innovation Network and the Colorado Technology Association.

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