The Internet of Things is the next major phase in computing, following on the heels of the PC and mobile eras. According to one estimate, the IoT will encompass between 20 and 30 billion connected devices by 2020.
Using CB Insights data, we examined investments in IoT startups, including deals and funding, investments by stage, most well-funded companies, and active investors. In the past six years, the IoT space has attracted a cumulative $7.4B in investment over 887 deals.
IoT startups include companies commercializing connected objects, appliances, sensors, and devices, along with supporting infrastructure and software. A few of the categories include medical devices, connected home appliances, and smart building materials.
Yearly IoT funding
Funding to IoT startups has grown at a steady clip, more than doubling in 5 years from $768M in 2010 to over $1.9B in 2014. Yearly deal count soared from 91 in 2010, to 221 in 2014. And, at the current run-rate, 2015 is on track to eclipse last year’s record-breaking funding year, despite the deal count being down significantly from last year.
Quarterly deals and dollars
The quarterly history offers a more detailed look at the rise in IoT funding. There has been $500M in investment in private IoT companies 4 of the last 6 quarters.
Deal count has also grown substantially. In 2010 and 2011, deal count hovered around 25 in each quarter. In 2014 and 2015, the count has jumped to a range of 34 to 65 deals each quarter. The top funding quarter was Q2’15 with $626M in funding, bolstered by a $75M Series B to drone manufacturer DJI Innovations, and a $45M Series F to mixed-reality gaming company Orbotix.
Deal and dollar share by investment stage
The shares of IoT deals by investment stage have held relatively constant, with a trend towards early stage deals that peaked in 2013, with Seed and Series A deals combining for 62% of deal share. That share has since retreated a bit to 53% in 2015’s first three quarters.
Mid-stage companies generally saw about one quarter of deals between 2010 and Q3’15, but climbed up to 20% in 2015 year-to-date. And late stage deals accounted for between 7% and 14% of deals.
In terms of dollar share, however, deals don’t skew toward the early stage.
Mid-stages deals account for the greatest dollar share in every year except 2012, and so far in 2015 mid-stage accounts for 52% of IoT funding. In 2014 and 2015 YTD, late-stage funding (Series D and Series E+) accounted for 22% and 31% of dollars, respectively.
Most well-funded companies
The most well-funded companies represent a diverse range of categories, including IoT infrastructure, cloud platforms, and consumer wearables.
The most well-funded company was View, maker of an internet-connected smart window and environmentally-friendly building glass. View recently raised $150M in a Q3’15 Series G round.
View was followed by Proteus Digital Health, a company that makes ingestible sensors to measure medication adherence and physiological responses. Proteus most recently raised $52M in a second Series G round in Q3’14.
The third most well-funded company was Jawbone, a wearables and smart electronics maker. The company most recently took on a $300M debt round in Q2’15.
See the full list, below:
| Rank | Company |
|---|---|
| 1 | View |
| 2 | Proteus Digital Health |
| 3 | Jawbone |
| 4 | Sonos |
| 5 | Jasper Technologies |
| 6 | SigFox |
| 7 | Trilliant |
| 8 | Alarm.com |
| 9 | Anki |
| 10 |
Inrix |
Active investors
Intel Capital tops the list as the most active investor in IoT startups, followed by Qualcomm Ventures. Both companies’ venture arms have been active investors in wearables startups, which as IoT devices are typically powered by small chips.
This year, Intel Capital led a round to BodyLabs, a maker of 3D body-scanning sensors, and also invested in Sano Intelligence, a biometric sensor developer. Intel Capital has also invested in wearables companies and made bets on IoT infrastructure startups like Stratoscale, Bocom Intelligent Network Technologies, and SigFox.
Next most active was Qualcomm Ventures, which recently invested in the drone company 3D Robotics, along with Whistle Labs, maker of a dog wearable. Qualcomm Ventures also invested in sensor networks developed by Panoramic Power, Placemeter, and Streetline, which all aim to harness the IoT to measure traffic and increase the efficiency in public spaces.
The third-most active investor was Foundry Group, the Boulder, Colorado-based early-stage venture fund. Foundry Group has made multiple bets on IoT-related hardware investments: Fitbit, LittleBits, and MakerBot. (Fitbit went public in June at a valuation of $4.1B, and MakerBot was acquired in Q3’13 at a $403M valuation.)
| Rank | Investor |
|---|---|
| 1 | Intel Capital |
| 2 | Qualcomm Ventures |
| 3 | Foundry Group |
| 4 | Khosla Ventures |
| 5 | Andreessen Horowitz |
| 5 | Kleiner Perkins Caufield & Byers |
| 5 | True Ventures |
| 8 | New Enterprise Associates |
| 8 | Sequoia Capital |
Drilling into just early-stage investments we see many familiar names on the most active investors list. Once again, Intel Capital is the leading early-stage investor, followed by Khosla Ventures, which notably invested in enterprise IoT companies including Helium and Quanttus. In third was Foundry Group, which notably invested in the Q2’15 seed round for ivee, a home voice assistant.
| Rank | Investor |
|---|---|
| 1 | Intel Capital |
| 2 | Khosla Ventures |
| 3 | Foundry Group |
| 4 | Andreessen Horowitz |
| 4 | First Round Capital |
| 6 | SV Angel |
| 6 | True Ventures |
| 8 | CrunchFund |
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Feature image credit: Maurizio Pesce. Creative Commons license Attribution 2.0 Generic.
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