For this quarter’s funding analysis, let’s examine how average funding in the internet of things (IoT) sector is evolving. The graphic below shows the IoT average funding across all deals over time by quarter.
As the graphic demonstrates, internet of things average funding deal size in Q1 2019 was at $42M, which increased by 69% from the $25M in the same quarter last year. The average funding deal size has demonstrated robust growth, with the average funding last quarter around 8 times larger than it was 5 years ago. The top three funding events in Q1 2019 include a $1.3B round into OneWeb, a $600M round into Horizon Robotics, and a $245M round into Niantic.
This blog post examines the different components of the internet of things (IoT) ecosystem. We will illustrate what the categories of innovation are and which categories have the most companies. We will also compare the categories in terms of their funding and maturity.
IoT Home Is The Largest Internet of Things Category
Let’s start off by looking at the Sector Map. We have classified 2,257 IoT startups into 20 categories. They have raised $81B from 3,651 investors. The Sector Map highlights the number of companies in each category. It also shows a random sampling of companies in each category.
We see that IoT Home is the largest category with 332 companies. These companies create connected devices focused on residential segment usage. These devices include home security, home automation, and energy management systems. Some example companies are Eero, Leeo, Tado°, and Netatmo.
Let’s now look at our Innovation Quadrant to find out the funding and maturity of these categories in relation to one another.
The Pioneers Quadrant Has the Most Internet of Things Categories
Our Innovation Quadrant divides the IoT categories into four different quadrants.
We see that the Pioneers quadrant has the most number of IoT categories at 9, accounting for 45% of all IoT categories. The IoT Utilities category has the highest average age, and the IoT Lifestyle and Entertainment category has the highest average funding. On the other hand, the IoT Tags category is low on both average funding and age.
The internet of things (IoT) industry has seen 3,580 investors and $79B total all time funding. Let’s analyze which IoT categories have the most number of investors actively financing the startups. The graphic below highlights IoT categories based on the number of investors in each category.
As the graphic demonstrates, IoT Health Care has the highest number of investors at 810, with IoT Software Platforms right behind at 803. In addition, the average number of investors across all IoT categories is 385. IoT Health Care companies create connected devices that track health metrics or help improve health well-being. IoT Software Platform companies build backend software systems that provide infrastructure for IoT companies.
As we make our way through Q1 of 2019, let’s look back on 2018 and analyze how funding in the IoT sector compares to previous years. The graphic below shows the total annual IoT funding amounts over time.
As the graphic demonstrates, 2018 was a record year for IoT funding at $26B. It represents a staggering 94% increase from the previous year’s funding. In addition, IoT funding grew at a CAGR of 54% over the past 5 years. Some of the largest funding events in 2018 include a $12.8B round for JUUL, a $1.1B round for View, an $820M round for UBTech Robotics, and a $550M round for Peloton.
The internet of things (IoT) industry has seen $77B in total all time funding. Let’s analyze the investors making bets into IoT and identify the most active firms.
The graphic below shows IoT investors based on their number of investments into the sector. If an investor participates in two investment rounds in the same company (such as a Series A and Series B), that would qualify as two investments for this graphic.
As the graphic demonstrates, SOSV has made the most bets in the IoT sector with 145 investments. Techstars follows with 82 investments. Examples of companies that SOSV invested in include Leap Motion, Particle, Nura, and Bloomlife. It’s interesting to note that Intel Capital, Qualcomm Ventures, and GE Ventures are on this list, as sometimes they operate as corporate investors in this space. Let’s see which investors make their way onto this list in 2019!
Now that 2018 is complete, let’s see how exit activity for the internet of things (IoT) compares to previous years. The graphic below shows the total annual IoT exit events over time.
As the graphic demonstrates, 2018 saw a dip in IoT exit activity compared to the previous year. The 47 exit events in 2018 represent a 23% decrease from the 61 exit events in 2017, which was the highest year on record for exit activity. However, IoT exits are still on a general upward trend, with a 5-year CAGR of 31% from 2013 to 2018. Let’s see if the IoT exit activity in 2019 will jump back up to the 2017 level.