Smartphone sales are in decline as handset makers grapple with saturated markets and a tough consumer economic climate. But some are betting on a future where new approaches in design and tech will still find resonance with users. Nothing, the London startup behind the “Phone” smartphone, has closed an investment of $96 million — funding that it will be using to continue scaling its business and lineup of devices, starting with its next smartphone. The Phone (2) — in keeping with its naming scheme — is due to launch in the coming weeks.

Highland Europe is leading the round, with previous backers GV (Google Ventures), EQT Ventures and C Capital also participating. Swedish House Mafia is also getting a strategic stake, one that’s already being put to work. Nothing is teasing features for the new Phone (2), and yesterday it announced that it will have customizable “visual” ringtones, with one of the sound packs for the feature composed by the electronic/house music supergroup.

This investment brings the total raised by the company to $250 million — including two rounds of crowdfunding totaling some $11.5 million. Nothing is not disclosing its valuation. (We’re trying to find out and will update as we learn more.)

The round, critically, is the biggest raised to date by the company — which, before this, closed a $70 million Series B in March of last year. From what we understand, Nothing had no shortage of inbound interest, despite the double pressures of crunch time in the smartphone market and the ongoing startup investment drought.

Part of the reason for that has been its metrics. Sources close to the company confirm to us that it made $200 million in revenues in 2022 and is already on track to exceed that this year. It has also now sold 1.5 million devices — a figure that covers one handset and two editions of its ear buds. Handsets have been the majority of that at 800,000 phones sold, from what I understand. (For comparison, in February, CEO and co-founder Carl Pei told us that the company had shifted 1 million devices.)

“Over the last two years, to be able to do all of that in this market, it’s a testament to what this team can achieve,” Tom Hulme of Google Ventures said in an interview. (Hulme also sits on the board of the startup.)

The new Phone device, which is lined up for a July 11 launch, will be a key part of Nothing’s strategy to grow. The Phone (1) had a limited release — namely, it did not launch in the U.S. — because of radio band support. The Phone (2) fixes that and will be offered in the U.S. market. Initially at least, that launch will not be in partnership with any handset makers, we understand.

In terms of Nothing’s future product roadmap, Pei has told us in the past that there will definitely be more hardware form factors to come, without detailing what those might be.

While some might wonder if Nothing might produce a response to Apple’s upcoming Vision Pro and other efforts in areas of VR and XR, that may not be the next product to come. The startup has a very active community of nearly 46,000 people on Discord who not only chatter about current products but also suggest concepts for what Nothing might build in the future. At least one of these — a smartwatch — was recently shared by Nothing with a hint to “watch this space.”

Another area that Pei recently has been waxing lyrical about is the future of software — similar to many others, he doesn’t like how so many apps these days seem designed to suck up data about its users — so services and apps are other areas where Nothing might be looking to do a little something.

Armed with the new funding, it will also likely be ramping up its talent base in aid of that. The company currently has 450 employees and only recently started to bring on software engineers alongside its team of hardware specialists.

“In just over two years, we’ve assembled one of the strongest teams in the industry and sold over 1.5 million devices worldwide,” said Pei in a statement. “It’s clear that there’s real demand for an innovative challenger in the consumer tech industry, and with this new round of financing, we’ve never been better positioned to realize our vision to make tech fun again.”

The company’s focus and execution will be key for that next stage.

Highland partner Tony Zappalà, who is leading the round for his firm, said in an interview that he’d been introduced to the team a couple of years ago, but he declined to invest initially.

It was before the launch of its first phone, he recalled, and “When I first met the team I thought it was completely crazy to launch a new phone, and I was negatively predisposed,” he said. “But they managed to launch and make a success of it, selling hundreds of thousands of units, and great reviews.”

Investors believe that there is an opportunity for a viable new player alongside Apple and Samsung, the two names that currently dominate smartphones, followed by a very long tail of smaller producers.

“Not everyone wants an iPhone or a Samsung device,” Zappalà said. “Carl’s thesis is that the smartphone market is a huge market, and if you can make a cool product you can still do something really good. This team is doing that based on an interesting connection between design, usability and relationships with users.” He also pointed out that Pei’s background, previously with OnePlus, gives the company a huge advantage in building and manufacturing hardware.