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Dropcam sees $12 million in new funding, better software

The cloud-based surveillance system gets a new Android app and money to expand operations and focus on software engineering.

Dropcam HD (click to enlarge).
David Carnoy/CNET

Dropcam, the company behind the popular home surveillance system, has picked up $12 million in its second round of funding, suggesting that investors have a lot of confidence that an even better product is on its way.

Menlo Ventures lead the round of investments -- announced today, along with an improved Android app -- with existing investors, including Accel Partners and Bay Partners. The company funding totals $17.8 million. Not bad for a company started to address dog poop.

The camera comes with a cloud-based DVR system that records video footage when it picks up on sounds or movements. Users can monitor the video from a computer, tablet or smartphone. At $149, its latest Dropcam HD product is an affordable surveillance system that also boasts easy setup.

Mark Siegel, a managing director of Menlo Ventures, said the simple design and ease for consumers is what drew him to the product in the first place. When he looked at other home surveillance systems, prices started at $279 and the devices had no mass appeal.

Siegel called the Dropcam an "amazing piece of hardware," but software development will improve features and allow users to incorporate Dropcam into their lifestyles.

"I think the user experience is good today, but it's miles away from where it could be," he said, adding that he wants to see a Dropcam that gives users an easy way to share their video clips.

Dropcam CEO Greg Duffy at his San Francisco offices CNET/James Martin

The company, which said it has laid the groundwork for more advanced motion detection and email and push alerts, has plans to expand its software engineering team and build its sales and marketing teams.

CEO and founder Greg Duffy said the company wants to be a "mini Apple" in that he wants the company to always continuously improve its product and user experience.

"When you buy a Dropcam, that's the worst that it will be," Duffy said. "It will keep getting better."

So far, the company has followed that mantra. The Dropcam has seen leaps and bounds in hardware and software quality since it launched in 2009. The Dropcam HD, which debuted in January and sold out in three weeks, according to the company. It features night vision and two-way talking.

Today's announcement comes with more improvements, including less false alerts. Since the camera uses artificial intelligence or "computer vision" to detect changes in an environment, it was picking up on things that probably wouldn't alarm a person normally, Duffy said. This included a shift in lighting, like a cloud passing by.

"Our latest algorithm is able to distinguish many lighting changes from real motion, which is a very difficult computer vision problem," Duffy said. "And this is only the first step. While we have a long way to go to be on par with a human."

Additionally, the Dropcam's new Android app is designed to be faster, with a new interface, push notification, compatibility with older operating systems, and the ability to turn night vision on and off.

Duffy said it's about making the users happy and ensuring that Android users are getting the same quality experience as iOS users.

"Rewriting the whole thing just to make users happy is kind of indicative of what kind of company we are," he said.