Juul Labs Inc., a startup that manufactures electronic cigarettes, is raising $ 1.2 billion in a round of financing that would value the company $ 15 billion, people familiar with it said.
Juul plans to use the influx of cash to expand internationally. Outside the US, Juul's flagship is currently available only in Israel, and the San Francisco-based company wants to broaden distribution, said one of the people, all of whom should not be identified because the company's plans are private. The current Juul shareholders include Tiger Global Management and the investment company Fidelity Investments, according to publicly available information. With the new money, the company will be worth more than $ 1
Since its launch in 2015, the Juul has been a resounding success. Vapers appreciate the flat, rectangular product design, the discrete size and the powerful pre-filled nicotine capsules. Sucking Juul creates a similar feeling to smoking a cigarette. According to a Nielsen data compiled by Bloomberg in a Juul investor presentation, Juul had captured 68 percent of the US e-cigarette market last month. The growth of the company has made it a bright spot in an ailing industry. Since January 2017, the share of cigarettes in the smoker and steam market has fallen by almost 4 percentage points. Juul's market share increased by about 3.5 percentage points over the same period.
"Juuls success underscores the possibility that breakthrough technologies are undermining the trusted business algorithm of US tobacco," Morgan Stanley analyst Pamela Kaufman told investors this week.
Tobacco maker Philip Morris International Inc. suffered a slump of 23 percent this year. Rival British American Tobacco Plc and Japan Tobacco Inc. slumped by 24 and 15 percent, respectively. Many tobacco giants have launched their own steam products, which, according to Nielsen, have become slower.
Juul says his job is to help addicted smokers by offering a better alternative to tar-burning cigarettes. Proponents say evaporated tobacco is less harmful than burned tobacco. But Juul has become a controversial investment because Vaping is a popular activity among teenagers and causes addiction in many high schools. A 2017 study in the American Journal of Medicine found that non-smokers were four times more likely to smoke traditional tar-burning cigarettes after about 18 months of steam. Juul says you have to be 21 years old to buy his product and that it does not sell to teens. The company also says it has pledged $ 30 million to combat the use of minors. In April, the US Department of Health said it had asked Juul to release marketing strategy materials to determine if the company was promoting youth. The FDA also asked Juul to investigate potential health effects of steaming.