INSIGHT: Internet Of Things Comes Of Age As Investment Tops USD1bn

We’re entering an age where everything is set to sync, communicate and collaborate with the entire world around us. Welcome to the age of the ‘Internet Of Things’. In the past 18 months investment in IoT has exploded and big players like Apple and Google are starting to set out their stalls in the space.

As a newly-emerging sector there are plenty of issues still in need of resolution. In particular, there is the need for an industry standard form of communication between devices to emerge - otherwise consumers will end up with houses full of smart appliances that aren’t speaking the same language. It’s may still be finding its feet, but once the internet of things gets steady on the starting blocks it’s potential is massive, with Berg forecasting annual sales of USD9.4bn by 2017.

The wholly-connected future feels closer than ever and with money to be made, investors are continuing to pump capital into the sector. StrategyEye tracked more than USD1.1bn in VC dollars being invested across 85 deals in the past 18 months. That covers all things connected - from smart shirts to clever keyboards to the networks pulling it all together and beyond. We expect funding to keep flowing in thanks to dedicated, internet of things-focused funds from Intel, Microsoft, as well as a joint fund between Google and Valley heavyweight Kleiner Perkins. photo iot_infographic_final_zps850c771b.png

Connecting The Dots

For consumers, the internet of things means we’ll be able to connect our phones to everything from cars to fridges to dogs, making life easier. However, for businesses the real value lies in all the data passing from one device to the other, relaying constant flows of information – that's why Google is so interested.  Helping firms lay down the infrastructure to shift that precious data from one device to the other is Jasper, an internet of things software company that provides enterprises with cloud platforms to connect every part of their business. The company raised USD30m this July from Benchmark Capital and Temasek Holdings and counts 1,000 clients.

Also helping companies get ready for the connected future is London-based startup EVERYTHNG which raised USD7m to help brands and manufacturers to make their products smart, connected and trackable. Of course the company doesn’t just make a companies’ products smart, it also helps them understand what valuable data can be garnered and how to use it. Jasper and EVRYTHNG show that the internet of things is very much an emerging space and investors like their efforts to assist businesses in it.

Smart Home

The smart home space will be a competitive one. It will put startups against giants and blur the lines between traditional appliance manufacturers and ambitious tech firms. Google is looking to make its Nest subsidiary the central point for all its users home automation needs by opening up the devices API, while Apple will roll out its Smart Home platform in the Autumn.

With Berg predicting 36m smart homes in Europe and the US by 2017 there’s a lot of money to be made. Needless to say there are startups hoping to break into consumers’ homes. LIFX raised USD12m in June from Sequoia for its smartphone-controlled light bulbs, SNUPI brought in USD7.3m January for its leak and damaging detecting wall sensors and smart doorbell Doorbot took USD1m in December.

One of the big advantages of smarter home appliances will be the potential for energy saving and improved efficiency of our homes. That also translates onto a bigger scale, where enterprises can save big sums of money through energy monitoring, with Lucid grabbing USD8m to track energy using appliances. photo androidwear_zpsbcbba34c.png

Wearable Tech

While consumers aren’t rushing out to buy new connected air conditioners and washing machines just yet, wearable devices are seeing significant levels of consumer uptake. The health sector is an important one in the internet of things, with connected health and fitness devices attracting significant amount of funding this year. In fact the wearable tech space attracted nearly USD500m in funding over the last 18 months, according to our data.

While disruption from new Android and Apple smartwatches is expected by the year’s end, the space's current leader in terms of funding is Jawbone. Raising a total of more than USD350m over the past 18 months and reaching a valuation of almost USD4bn, the company’s fitness tracking UP wristband is one of the space's leading products. The company is built around Bluetooth-connected devices, also producing wireless Jambox speakers, and as the industry develops it’s worth watching where Jawbone looks to apply its Bluetooth expertise.

Also in the space, digital health device manufacturer WiThing raised USD30m last July and smart shirt maker OMSignal snapped up USD10m this June.

Consolidation To Continue

For all the VC funding that’s flowing into the internet of things, it was Google’s acquisition of smart thermostat and smoke detector Nest that really ignited everyone’s attention. The search giant snapped up Nest and its teams of Apple designers for USD3.2bn in January. At the time it caused some raised eyebrows and head-scratching, but now as the potential of the smart home space begins to blossom, it looks increasingly like a no-brainer. With Google’s ad-generated cash behind it, Nest recently acquired connected security camera Dropcam for USD555m, as it becomes clear that it’s looking to become the central port for all users’ smart homes.

Overall, the past 18 months have seen USD7.8bn spent across 10 mergers and acquisitions, with the biggest being Zebra technologies’ acquisition of Motorola Solutions. The companies had long been partners, with Motorola’s rugged mobile tracking equipment allowing enterprises using barcodes for shipping to keep track of all their containers. Also in the enterprise space Cisco gave it internet of things capabilities a boost, buying Tail-f Systems for USD175m. As these big established tech firms seek to enter this new frontier we can expect more acquisitions to follow. photo Iottop10deals_zps58cfc9c5.png