Jawbone Secures $165M Funding Amid 50% Valuation Drop and Leadership Shake-up

After a prolonged period of silence, wearable device manufacturer Jawbone has finally welcomed significant good news—a new equity financing round of $165 million. However, it simultaneously faces two major setbacks: a decline in valuation and the departure of its recently appointed chairman, Sameer Samat, who has returned to Google.

The latest financing round was led by the Kuwait Investment Authority (KIA), signifying direct investment from the Kuwaiti government. The terms of this deal were highly unusual: KIA slashed the company’s total valuation from $3 billion to $1.5 billion, while simultaneously granting substantial equity stakes to employees to preserve the value of their holdings.

It is reported that the Kuwait Investment Authority invested $750 million in BlackRock (the largest publicly listed investment management group in the United States) in 2010, and BlackRock subsequently invested $300 million in Jawbone. This round of financing also included other investment firms, such as Sequoia Capital, as well as partial funding from former Chairman Samat.

Samat has been with Jawbone for only seven months. In fact, he originally joined Jawbone from Google. Although he plans to return to Google to work on Google Play—having previously served on the Google Shopping and Google Express teams—his responsibilities will change upon his return. Nevertheless, he will continue to serve as an advisor to Jawbone.

Jawbone’s absence from this year’s CES underscores its recent struggles and slump. Bloomberg revealed that rumors of a $300 million investment from BlackRock Capital were, in fact, more akin to a loan, laden with stringent terms.

Bloomberg also reported that Jawbone was sued by Flextronics, a globally renowned electronic manufacturing services provider, for refusing to pay outstanding debts. Additionally, Jawbone’s Canadian distributor, Avoca Technologies, and a cable manufacturer in Taiwan also filed lawsuits against Jawbone for non-payment of final installments. Shortly after receiving investment from BlackRock, Jawbone laid off 20 employees.

However, in the litigation that has drawn the company’s utmost attention, Jawbone is not a defendant but a plaintiff. Jawbone aims to sue Fitbit, the market leader among its competitors. In one of the lawsuits, Jawbone accuses Fitbit of poaching employees who stole the company’s sensitive commercial data. In another lawsuit, Jawbone accuses Fitbit of infringing upon three patents that Jawbone acquired when it merged with BodyMedia in 2013. Fitbit has also filed counterclaims against Jawbone for patent infringement.

In mid-November, Jawbone laid off another 60 employees, equivalent to 15% of its workforce. The layoffs swept across the entire company, with additional adjustments including the closure of its New York office and a reduction in operations in Sunnyvale and Pittsburgh.

Compiled by: Lv Siyang