IoT platform provider Tuya files to go public

Tuya, the Chinese company that provides a backend service for IoT device makers, had filed to raise $100 million through an initial public offering. The company, founded in 2014, reported $179.9 million in revenue for 2020 and a net loss of $66.9 million. Revenue was up 70 percent from 2019’s sales of 105.8 million, while Tuya’s net loss decreased by 5 percent from 2019’s loss of $70.5 million.

Tuya offers its customers a platform as a service for IoT devices that handles the connectivity, device software, and even application development if needed. The majority of its customers come from this segment of its business, but it also makes money handling the production and distribution of smart devices sourced on behalf of businesses. The company’s growth has slowed somewhat during the second quarter thanks to the global pandemic, but I’ve also talked to a few companies in the U.S. that had decided to avoid Tuya because it was a Chinese company, and they were worried about the Trump administration cracking down on sharing data with Chinese businesses.

Tuya has faced concern over its Chinese headquarters before, with some consumers worried about its data privacy practices. Tuya went out of its way to develop global hosting with locations in each region to comply with data-localization regulations. It also has dual headquarters in China and California. Its customers include Signify, Schenider Electric, Merkury Brands, and many others. Tuya has over 5,000 customers and more than 100 million devices on its platform, according to the S-1.

Notable shareholders that will benefit after the offering are China’s Tencent Group and NEA. Tuya’s founders and former GE CEO Jeff Immelt are also listed as large individual shareholders. Immelt joined Tuya’s board in 2019. Soon after bringing on Immelt, Alex Yang, the COO and co-founder of Tuya, appeared on the IoT Podcast to discuss its founding, plans, and privacy policies.

Tuya’s closest competitor is Ayla Networks, which has raised about $125 million in funding since its founding in 2010.  Another competitor is publically traded Twilio, which is trying to build out an IoT platform business tied to easy access to connectivity and some device management services, but it isn’t as robust as what Tuya is offering.  There are also dozens of consulting companies that will help product companies develop connected devices, but these tend to also focus on developing machine learning models and specific product features as opposed to simply getting a product online.  Building a connected device and operating it is still difficult to manage, so companies such as Tuya and Ayla are in demand.

And despite the hype around the internet of things, most products aren’t connected yet, representing a huge opportunity for growth for companies that can offer their customers an easy and scalable solution to bring their products online.