Even in 2023, companies can still raise hundreds of millions without any proof of product market fit.
Since co-founding their startup five years ago, ex-Apple executives Bethany Bongiorno and Imran Chaudhri have used a selective stream of buzzwords without mentioning what their company will even do. Their website offers that their technology “improves the human experience” and is “built on trust” and that interactions with it will “feel magical”—all grossly vague phrases you could also use to describe your child’s first lap-sit with Santa Claus at Macy’s.
But this isn’t some seed-stage stealth operation. In the last five years, their company—called Humane—has hired some 200 people across San Francisco, New York, and other cities, about 40% of whom have spent some amount of time working at Apple. With no product to debut or even talk about publicly, the cofounders have raised $241 million from investors like OpenAI’s Sam Altman, the renowned solo VC and ex-Stripe engineer Lachy Groom, and firms like Steve Jang’s Kindred Ventures, Tiger Global, and SoftBank. Microsoft corporate vice president of engineering for design and technologies, Rubén Caballero, Salesforce’s Marc Benioff, OpenAI’s Altman, and PCH International CEO Liam Casey are advising the company.
Yesterday the company said it had raised its latest $100 million in funding and that strategic investors including Microsoft and LG were teaming up with the company—adding to a long list of funding announcements, hiring updates, and promotional videos that lack an actual product. Bongiorno, who is CEO, and Chaudhri, chairman and president, told me this week that they have built a new “mobile compute device” as well as a “new software distribution platform,” but don’t try asking what that means. The product will launch in June, according to a company spokeswoman—on what they hope will be their own terms.
A series of filed patents reveal at least some sense of what the team has been working on all these years. A patent published in Dec. 2022 mirrors the weird teaser video the company published in July and suggests that Humane is using sensory data from a wearable device to perform smartphone activities like writing messages, playing music, or opening Twitter via a projection on a person’s left hand. Here’s what that would look like:
Bongiorno and Chaudhri told me they are building a software platform on both the device and in the cloud, and that the cloud platform will sit on Microsoft Azure and call out to service APIs from other partners. Its device-native software platform will use existing OpenAI models, machine learning models they are developing together, and their own models, they say.
However their product works, it’s simply mind-blowing to me they have raised three major rounds without any kind of stress test as to whether people will actually use what they are building. This is more typical for a seed or Series A investment, where investors are taking a smaller vote of confidence on an idea and a strong team—not for two subsequent Series B (where Humane was valued at $800 million, per PitchBook) and Series C rounds. Humane won’t comment on this round’s valuation.
I sat down with two of Humane’s earliest investors: Jang, who led the most recent round and co-led the seed, and Khaled Jalanbo of Valia Ventures, who also co-led the seed, to try to better understand the appeal.
“Anything where you're building new systems design, all the way from the chipset through hardware, and rethinking how A.I. and applications and services all work together—it takes more resources—that's the moonshot that this represents,” says Jang, who acknowledges this is “not the standard way of building a startup,” but points out how OpenAI was built for seven years before it released the public version of GPT last winter.
Jalanbo says a key strength is this specific team, which also includes Patrick Gates, Apple’s former head of engineering for iCloud, FaceTime, iMessage, and APNS. Bongiorno was director of iOS and macOS software engineering program management at Apple and Chaudhri was director of design, leading design for software and hardware user experience.
“It's truly a one-of-a-kind leadership team that’s shaped the way we interact with technology,” says Jalanbo, adding later: “There's probably dozens of people at that company that, if they were founders, on their own, would have the ability and experience to start companies.”
But not all VC firms are going to take such expensive bets on pre-revenue companies—particularly in this market.
“A company generating a dollar of revenue is massively de-risked to a company generating zero dollars of revenue,” Jett Fein, a consumer tech-focused partner at Headline, told me yesterday as we discussed today’s newsletter. He adds: “I don’t remember a single successful tech company that raised that much capital pre-launch. There’s a graveyard of companies that didn’t have success.”
One that comes to my mind would be the segway scooter, once referred to as “Ginger” during its ultrasecret, overhyped prelaunch—when Jeff Bezos, John Doerr, and Steve Jobs were all touting the project, promising it would change mobility forever. We know how that one turned out.
“Like all companies, until the product is in the market, we don't know,” Jalanbo says of Humane. “But that was a bet we're willing to take. We really want this company to exist. We think the mission is important, and we really love working with a team, and we think that they're really experienced and thoughtful and have got a really great group of investors and strategics around them.”
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
Submit a deal for the Term Sheet newsletter here.
Jackson Fordyce curated the deals section of today’s newsletter.
