Nothing Raises $200mn

London-based smartphone maker Nothing has secured $200mn in new funding, a raise that founder Carl Pei says will allow the company to press its challenge against Apple and Samsung in a global market still dominated by the two giants. The financing lifts the five-year-old start-up’s valuation to $1.3bn and provides capital for the next stage of its growth: designing devices built around artificial intelligence.

Rapid growth for a new player

Pei, who co-founded OnePlus before launching Nothing in 2020, said the group generated $500mn in sales last year, up 150 per cent on the previous year. Since its inception, Nothing has sold around 7mn smartphones, headphones and earbuds, establishing a small but visible presence in an industry where annual shipments exceed 1.2bn units.

Nothing is forecasting that revenues will reach $1bn this year, a milestone that would put it among the largest privately held hardware makers in Europe. “The reason why I think this fundraising was successful is because of the hardcore numbers that we’re able to deliver in terms of growth,” Pei told the Financial Times.

Distinctive positioning

The company has sought to differentiate itself through design and pricing. Its transparent hardware, minimalist user interface and emphasis on community marketing have attracted younger, design-conscious buyers, particularly in Europe and India. Priced well below flagship Apple and Samsung models, Nothing’s devices are pitched as offering strong features without sacrificing aesthetics.

Still, the company remains far outside the top tier of global brands. Research group Omdia puts global shipments at 1.22bn last year, a 7 per cent rise, but Nothing’s share is too small to break into the top 10. Pei concedes that its volumes remain modest compared to established rivals, but argues that the pace of growth shows its products have found a receptive audience.

Backers with deep pockets

The funding round was led by Tiger Global, the New York-based investor known for early bets on Alibaba and Facebook and for backing Indian start-ups. Qualcomm Ventures, the investment arm of the chipmaker, and Indian entrepreneur Nikhil Kamath, co-founder of trading platform Zerodha, also took part.

Existing backers renewed their support, among them Tony Fadell, the former Apple designer and Nest founder; Steve Huffman, co-founder and chief executive of Reddit; Alphabet’s venture arm GV; and European investment firms Highland Europe, Latitude and Tapestry.

Patrick Murphy, an investor at Tapestry, described Nothing’s position as “David versus Goliath” but said its blend of design and affordability was striking a chord. “Its ability to have the best features at half the price of Apple, without sacrificing the design and the user experience, is really resonating,” he said.

AI ambitions

Pei has set his sights on what he calls “AI native” devices. He argues that as consumers interact more with artificial intelligence, they will want hardware optimised to provide data and context to those systems. “As we interact more with AI, we’re going to come to understand that the more data and context we can feed it, the more useful it will become to us, and that will trigger the rise of a new category of devices,” he said.

The form factor is not yet clear. Pei referenced the work of Sir Jony Ive, the former Apple design chief, whose company was acquired by OpenAI earlier this year for $6.4bn. Nothing’s move suggests a similar belief that AI will reshape personal technology, not simply as software running on existing devices but through dedicated hardware.

Operating model

Although based in London, Nothing relies on manufacturing in China and India, tapping into established supply chains and lower production costs. This model has allowed it to scale quickly but leaves it exposed to the same geopolitical and tariff risks that larger rivals face.

Apple, for example, has been forced to accelerate shipments from India to the US as tariffs on China-made devices rise. For a smaller challenger like Nothing, sudden shifts in trade policy could have an outsized impact on margins.

Challenger role

Nothing’s challenge underlines the barriers facing new entrants in consumer electronics. The industry is marked by high fixed costs, entrenched ecosystems and intense brand loyalty. Samsung and Apple account for more than a third of global smartphone shipments and capture the majority of industry profits.

Most attempts to build alternatives in recent years have either struggled to reach scale or been absorbed by larger rivals. In this context, Nothing’s $500mn sales and $1.3bn valuation are unusual achievements, suggesting that niche players can still carve out positions by focusing on design and brand identity.

Future horizons

Pei’s ambitions extend beyond smartphones and earbuds. He has spoken of long-term plans in robotics and the integration of Nothing’s software into electric vehicles, although these remain early-stage ideas. For now, the priority is to use the new funding to accelerate the design and release of AI-focused devices, alongside growing its core smartphone business.

Analysts note that the company’s dependence on manufacturing partners in Asia may limit how far it can differentiate on hardware. Its greater opportunity may lie in software and services that give users reasons to remain within its ecosystem. AI-driven features, if compelling, could strengthen customer loyalty and allow Nothing to charge higher margins.

A European technology brand

Nothing is also notable for being one of the few European-headquartered companies to gain a foothold in the global smartphone market. In a sector dominated by Asian and American firms, it has presented itself as a London-based design-led challenger. That positioning has helped attract both investment and consumer interest, but scaling from single-digit millions of units to tens of millions will require continued capital and execution.

Investor expectations

The company’s valuation of $1.3bn reflects optimism about its ability to sustain triple-digit growth. But the bar has been set high. Global demand for smartphones is recovering only slowly, and established players are investing heavily in AI-enabled features of their own. Apple and Samsung are expected to launch more AI-integrated devices later this year, raising competitive pressure on Nothing’s next products.

For now, investors are backing Pei’s argument that a segment of the market wants alternatives to the mainstream. “There’s a group of people out there who don’t want to be like everybody else,” he said.

Conclusion

Nothing’s $200mn fundraising marks a significant step in its bid to challenge the dominance of Apple and Samsung. With distinctive design, affordable pricing and now a war chest to pursue AI-driven hardware, the company has established itself as a rare outsider with global ambitions. Whether it can move from niche player to mass-market contender will depend on its ability to deliver on growth forecasts, develop compelling AI devices and withstand the pressures of a fiercely competitive industry.