Carl Pei's Nothing raised $96M led by Highland Europe before the Phone (2)'s launch, taking the company's funding to $250M; sources say 2022 revenue was $200M
Smartphone sales are in decline as handset makers grapple with saturated markets and a tough consumer economic climate.
Context & Ripple Effects
Nothing had already used a $70M Series B to build smartphones with Qualcomm and expand in London, moving from earphones into the far more capital-intensive handset market. Earlier reporting also put 2022 revenue above $200M, a sharp increase from roughly $24M in 2021, alongside plans for a more premium Phone (2) aimed at the US.
The new financing arrives as the company shifts from establishing its first phone to funding the next product cycle in a weak smartphone-sales environment. It matters because it pairs reported commercial traction with additional capital before that expansion test.
First-order effects
- Nothing’s total funding rises to $250M, giving it more resources to execute the Phone (2) launch and the previously outlined premium, US-focused push.
- Highland Europe becomes the lead investor in a $96M round, while Nothing’s reported 2022 revenue provides investors a concrete—though source-reported—measure of its sales momentum.
Second-order effects
- The Phone (2) now becomes a more consequential test of whether Nothing can translate its early growth into a premium handset business, rather than relying on its initial device launches.
- Additional financing can strengthen Nothing’s position with the suppliers whose confidence Carl Pei had previously identified as important in building the company’s hardware supply chain.
Third-order effects
- If similarly funded challengers can combine device revenue with repeated financing, smartphone competition may become less about entering the market and more about sustaining the capital, supplier relationships, and product cadence needed to remain in it.
- The pattern also underscores that hardware startups face a higher bar in a declining handset market: sales traction may be necessary to raise capital, but financing remains necessary to fund the next launch.
The trend: Nothing is part of a broader trend in which consumer-hardware challengers use demonstrated revenue and successive venture rounds to finance expansion into more demanding product segments and markets.