Smart luggage keep shutting down for airline regulations

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Smart luggage keep shutting down for airline regulations

Unread post by bimjim » Fri May 18, 2018

https://pitchbook.com/news/articles/sma ... egulations

Smart luggage startups keep shutting down in wake of airline regulations
Dana Olsen
May 17, 2018

Raden has become the second VC-backed smart luggage company to shut down this month.

Raden posted a note to its website earlier this week announcing it has ceased operations due to airlines placing stricter regulations on batteries in luggage, stating the policies “severely impacted the usefulness of our products, their value to our customers, our business performance and ultimately the ability the continue operating.”

Bluesmart, which, like Raden, made battery-powered suitcases that allowed travelers to charge devices on the go and track their luggage, announced its own shutdown at the beginning of May. The company sold its technology to Travelpro, another luggage business. In a blog post, Bluesmart wrote that the non-removable battery ban put the company "in an irreversibly difficult financial and business situation.”

Beginning earlier this year, several major US airlines put in place new policies on batteries in luggage. American Airlines, Delta and Alaska Airlines are among the carriers that adopted regulations stating that passengers must remove batteries from checked luggage and carry-ons and place them in separate plastic bags due to potential fire hazards.

Raden’s suitcases have removable batteries, which means passengers can still use them—but the regulations render moot some of their other selling points, like the ability to track luggage in baggage claim. The policies were an even bigger punch to Bluesmart, which did not make its batteries removable.
A look at VC funding for smart luggage makers
Founded in 2015, Raden had raised an estimated $3.5 million in seed funding from First Round Capital and Lerer Hippeau, among others. Bluesmart, which launched its first product in 2014, had collected nearly $30 million in estimated venture financing from backers including FundersClub, Endeavor Catalyst and Tsing Capital. It had also raised millions of dollars via crowdfunding website Indiegogo. It was valued at $41.3 million in early 2017, before the battery regulations were announced.

Away, a third well-known startup in the space, has raised about $30 million in venture funding, including a $20 million round last May at a $120 million valuation. Backed by investors including Global Founders Capital, Forerunner Ventures and Jay-Z, Away gave early indications that it wouldn't be affected by the new airline regulations. The new policies are banning luggage with non-removable batteries, and since every Away carry-on has a removable battery, we’re not impacted,” Away co-founder & CEO Steph Korey told The Verge late last year.

It remains to be seen whether Away will continue to thrive in the wake of this year's battery policies. After all, Raden's batteries were removable, too.

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