Deal activity into the much-hyped Internet of Things category picks up spanning everything from home automation to monitoring & tracking applications to those focused on the quantified self.
Providing services ranging from sensor-driven thermostats to bracelets that can track how you sleep or eat, hundreds of venture-backed companies are now part of a category known as the Internet of Things (IoT). The Internet of Things describes technologies that connect to the Internet and to each other through sensors, wireless networks as well as other “machine to machine” methods. Given the Internet of Things theme covers a broad array of technologies and use cases, it is actually comprised of five key sub-categories as detailed below (with illustrative companies provided for each)
Home Automation & Energy Management – Companies that offer technologies that control energy, security and other basic functions in homes or commercial spaces. This includes companies like iControl Networks and Nest Labs. As we’d already previously detailed, the home automation industry is increasingly getting crowded with an eclectic cross-section of telecom, technology, industrial and private equity firms entering the fray.
Networks, Sensors & Platforms – Companies that provide network, sensor and/or platform-based systems for a variety of applications. This includes companies like GainSpan, Streetline and ThingMagic.
Healthcare – Companies that provide remote patient monitoring or machine-to-machine products for the healthcare industry, specifically for use by physicians or home healthcare providers. This includes companies like Airstrip Technologies.
Monitoring & Tracking – Companies specializing in the monitoring and tracking of different objects and goods. Examples include SepSensor and Cantaloupe Systems.
Quantified Self – Companies that offer tools for knowing your own mind and body, which include Fitbit and Jawbone.
In the last year, nearly $752M has been invested into IoT companies as deal activity into the growing sector climbed close to 28% versus the same period in the prior year. While YoY funding growth dropped nearly 46%, it’s important to point out that a majority of the $810M invested in Q1’12 went to a mega debt financing to to home automation and security monitoring company Vivint, now owned by the Blackstone Group. If we strip out that single mega-deal, funding to IoT also grew by 20.7%. IoT deal activity, meanwhile, spiked in Q4’12 to 41 deals from 21 in Q3’12 largely due to a boost in seed-stage investments.
While venture capital financing into the IoT industry is heavily concentrated at the seed/Series A stages (>56%), IoT is by no means an ‘immature’ investing concept as later stage deals (Series E+) are increasing. Jawbone, for example, which just recently acquired another IoT start-up – BodyMedia – for over $100M, raised its sixth round of funding in 2011.
Geographically, Silicon Valley and Mass. both saw over 19% deals for IoT start-ups in the past two years, with So Cal seeing close to 10% of all deals in the category. Texas saw the most deal growth for IoT start-ups at over 100%, with notable fundings including patient monitoring platform Airstrip Technologies, backed by Sequoia Capital and Qualcomm Ventures and Austin Ventures-backed MapMyFitness.
