Investors poured over $1B into Internet of Things companies in 2013, and while last year saw a fair share of notable, larger financings to IoT companies, early-stage companies dominated deal activity. Since 2012, 64% of deals in the IoT market have occurred at the seed or Series A stages.
And early stage companies offer a sneak peak into where the market is going from a disruption and innovation perspective. In other words, if you want to know what the big emerging trends in IoT are going to be in 18-36 months, it pays to follow the early-stage money and companies. Since early-stage deals offer a strong sense of where innovation in the market is headed, we analyzed CB Insights IoT data over the past three years to examine the sub-industries, investors and company descriptions to give you some insights into what you can expect. Of course, just create an account on CB Insights and start playing with our IoT data directly to stay on top of market trends before others.
The IoT data below.
Early-stage Internet of Things Financing Trend
Between 2011 and 2013, early-stage deals (seed, Series A) garnered $510M across 181 deals. As the chart highlights, early-stage IoT financing activity hit a three-year high in Q4 2013 as investors put over $110M across 27 deals. On a year-over year basis, early-stage IoT funding grew a notable 132% while deal levels rose 24%.
Early-stage Internet of Things Financing Trend By Sub-Industry
Looking at the sub-industries of IoT companies funded over the past three years, we see that the investors have completed the highest number of deals to personal health & wellness companies, followed by companies in the location-based & navigation sub-industry and the healthcare space respectively. Companies helping IoT vendors analyze sensor data have also grabbed early-stage funding – for example TempoDB and OneFold. The chart below details the top 10 sub-industries by share of unique IoT companies that received early-stage funding over the period.
Early-stage Internet of Things Financing Trend By Investor
A range of VCs are actively investing in the Internet of Things companies at the early-stage. Among the most active venture firms over the past three years by unique company are True Ventures and Lerer Ventures. True’s early-stage portfolio cos include Narrative, SoundHawk and Technical Machine while Lerer has invested in companies including littleBits and SmartThings. The chart below highlights the top 10 most active IoT pure-play VC investors (not Corporate VCs, hedge funds, etc which we also track) at the early-stage since 2010.
Early-stage Internet of Things Financing Trend – Keyword Analysis
If we take all the descriptions of early-stage IoT companies from the CB Insights database and analyze their content (and removed stop words), we can develop an interesting visualization that provides a visual view into some of the areas early stage IoT companies are focused on. The larger the word, the greater its frequency (number of appearances) in our early stage IoT data. Among the most common phrases of how early-stage IoT companies describe themselves are, perhaps not surprisingly, ‘connected’, ‘monitoring’ and ‘sensors’.
For more Internet of Things financing and exit data and interactive rankings of top investors, acquirers and financing deals, check out the CB Insights Venture Capital Database. Sign up for free below. A full list of investor-backed IoT companies can also be purchased in the Data Store.If you aren’t already a client, sign up for a free trial to learn more about our platform.