Ultrahuman Raises $70M to Add AI and Gaming

The big picture: Ultrahuman, a smart ring developer, has secured $70 million in Series C funding led by Qualcomm Ventures, increasing its valuation to $365 million. This financing comes 11 months after a US trade decision banned the company’s rings due to a patent dispute with Oura, forcing Ultrahuman to redesign its products to re-enter its largest market. Ultrahuman is now preparing to launch a new ring that will incorporate Qualcomm chips, enabling enhanced on-device processing for features like game control and AI applications.

Why it matters:

• Market Re-entry: The funding and new product strategy mark Ultrahuman’s aggressive push to regain and expand its presence in the critical US market after a significant setback from a patent infringement ruling.
• Strategic Backing: Qualcomm Ventures’ leadership in the round signals strong confidence in Ultrahuman’s hardware innovation and its potential to integrate advanced AI and gaming functionalities into wearable technology.
• Evolving Wearables: Ultrahuman’s pivot beyond pure health tracking to include interactive gaming and AI capabilities reflects a broader trend in the wearables market to offer more versatile and integrated user experiences.

How it works:

• Enhanced Processing: The upcoming Ultrahuman ring will utilize Qualcomm chips alongside existing Nordic Semiconductor chips, allowing for more on-device data processing and reducing reliance on connected phones or cloud services.
• Software-Driven Expansion: An imminent software update for existing Ring Air and Ring Pro models will enable them to function as game controllers and connect with third-party AI applications, expanding their utility beyond health tracking.
• Developer Ecosystem: Ultrahuman plans to open its platform to third-party developers, fostering an ecosystem for new applications that can leverage the smart ring’s capabilities.

The catch: While Ultrahuman reports a strong revenue run rate and increased sales, it remains unprofitable and significantly trails market leader Oura, which holds a 76.4% market share and is valued over 40 times higher. The smart ring market is also seeing increased competition from tech giants like Samsung with its subscription-free Galaxy Ring, and the inherent limitations of a four-gram device in terms of computing power and battery life pose challenges to its ambition of replacing phones for more than just notifications.