The Internet of Things: M&A Activity Climbing Driven By Home Automation & Energy Management Space

The embedding of Internet-enabled sensors into items ranging from thermostats to parking meters to wearable devices has prompted investors to pour over $750M into the category known as the Internet of Things (IoT). And some of those investments are already paying off. Exit activity within the IoT space has accelerated nearly 45% on a year-over-year basis, with notable acquisitions just last quarter including Google’s $966M acquisition of social mapping service Waze and Jawbone’s purchase of BodyMedia for an estimated $100M.

Spurring the growth in IoT exit activity is the home automation and energy management sub-category (btw, don’t you dare call these clean tech – see note at bottom), which describes companies that provide technologies to control energy, security and other basic functions in homes or commercial spaces. Over the last year, six different companies within the sub-category exited via M&A through Q2 2013. And earlier this month, home automation firm Control4, backed by investors including Foundation Capital, SAP Ventures and Cisco, went public. The chart below shows the pick up in exit activity  to the home automation and energy management space over the past several quarters.

Interestingly, acquisitions in the IoT space trend toward companies that have raised a healthy amount of capital. With the exception of Blackstone-acquired Vivint, which took a $762M debt round in early 2012, the average amount raised prior to exit from 2011 through 2013 YTD has ranged from $25M to $40.5M.

Note: Sarcasm never works well on the web so to clarify, our “Don’t you dare call these clean tech” was intended to be a sarcastic comment. While these companies are definitely what would be considered clean tech, the term has become a bit of a “four letter word” in investment circles so folks prefer not to use the term in favor of other euphemisms. We think it’s a bit ridiculous.