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Risks for Startups Taking Money From Amazon’s Alexa Fund

In mid-2016, Amazon.com made a $100 million offer to buy August Home, which makes locks that can be opened with an app, according to people familiar with the previously unreported offer. August had earlier released an app that worked with Amazon’s Alexa virtual assistant. More importantly, its technology allowed delivery people to easily get into a home, ideal for Amazon’s e-commerce business.

But August turned Amazon down. So Amazon built its own product to compete with August. Last October, the e-commerce giant unveiled Amazon Key, an Alexa-powered system for giving delivery people access to homes. Around the same time, August sold itself to Swedish lock manufacturer Assa Abloy for $150 million. The sale allowed August’s investors to exit at a high price and avoid dealing with the competitive threat posed by Amazon.

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Still, there is always the risk of Amazon seeing a product as strategic and developing its own hardware or software to compete with partners. Said one smart home executive: “To be in the world of consumer electronics now in the age of Amazon is dangerous.”

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