VC Investments In IoT Space To Accelerate

by CXOtoday News Desk    Oct 16, 2014

investment IoT

Internet of Things (IoT) is an evolving space that connects billions of devices on the go and consumers who are looking for intelligence from connected devices, equipment and infrastructure. Inevitably it would attract the attention of Venture capital firms that are flocking in large number to tap into this opportunity.

Venture capital firms are expected to invest over $1.6 billion this year on Internet of Things (IoT) technologies as more devices get connected to the internet, says networking solutions giant Cisco at the Internet of Things World Forum held at Chicago this week.

The US-based IT firm said as many as 13.69 billion devices have been connected through the medium until now this year alone. Cisco Executive VP and chief globalization officer, Wim Elfrink stated that it is estimated that 50 billion objects will be connected by 2020.

According to Cisco, till October 2013, 10.69 billion things were connected which had gone up to 13.69 billion in this October. It is predicted that at present, only 37 percent are industrial consumers of IoT, and the number is expected to exceed 50 percent by 2017.

With the high growth potential in this segment, investment will shoot up, says Elfrink who expects during this year, VC investments into IoT is expected to exceed to $1.6 billion.

In 2013, more than $1 billion flowed into 153 venture deals for companies creating products and services in the IoT space for the full year 2013, according to CB Insights, a venture capital and angel investment research company. Investment deals grew 11 percent compared to the full year 2012, and funding increased nearly 50 percent.

The investment momentum in IoT is driven by a confluence of trends, noted Michael Yang, managing partner at Comcast Venture in the report. He stated those trends include use of smartphones, more extensive and faster network coverage, crunching sets of big data, and the cheaper cost to mass-manufacture certain essential components, such as sensors and accelerometers.

Research firm CB Insights notes some of the most active venture capital and corporate investors in the emerging IoT innovation landscape includes Intel Capital, which has invested in iControl Networks, GainSpan and Arrayent among others. Besides, companies such as True Ventures has made a concerted effort to invest in hardware and IoT startups over the past couple years, along with bigger corporate investors like Qualcomm Ventures and Cisco Investments.

Startups in particular are reaping the benefits of investor who are showing interest in the sector. Two thirds of companies received Series A financing over the past two years, suggested CB Insights reports. The data reveals the number of start-ups in the sector has shot up sharply from just 13 in 2013 to 189 this year.

Despite the growing interesting in adoption and investment in this sector, Elfrink sees data security and education as the area of concern in this sector. “There is an urgent need to overhaul the education system and re-skill people involved in networking,” says the senior official adding that there is also expected to be huge demand for cyber security analysts in the coming months.