Pebble smartwatch sales surging, profits huge: VC backer

Pebble Smartwatch.
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Pebble, the smartwatch maker that two years ago launched its business with a crowdfunding campaign on Kickstarter, is making all kinds of waves in the world of connected devices, where brands such as Apple, Google, Samsung and dominate.

George Zachary, a partner at Charles River Ventures and the first institutional investor in Pebble, said Wednesday that the company's revenue hit $43 million last year and will double in 2014. Speaking on stage at the Silicon Valley Open Doors Conference he called Pebble the fastest-growing start-up he's ever backed, a group that includes Twitter and Yammer, which Microsoft bought in 2012 for $1.2 billion. Zachary also sits on Pebble's board.

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Tech Yeah! Pebble Steel smartwatch
Tech Yeah! Pebble Steel smartwatch

Pebble is doing it with just 100 employees and about $25 million in venture funding. The Palo Alto, California-based company generates a 52 percent gross margin on its watches, meaning for every $150 device (they go as high as $249 on the website), $78 remains after accounting for the cost of goods sold. Apple's margin currently sits below 40 percent.

According to a report Wednesday from NPD, Pebble has 18 percent of the smartwatch market, which totaled $96 million in revenue since October. Samsung's Gear watch leads with 78 percent, the report said. Pebble said previously that it sold 400,000 watches last year.

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Pebble is one of the first breakout successes from Kickstarter, where companies raise money from fans and supporters often in return for early versions of the product. Another winner is Oculus, the virtual-reality goggle maker that Facebook recently agreed to buy for about $2 billion.

—By CNBC's Ari Levy