Press and News

Introduction
Given the multidisciplinary nature of the IoT, technological developments in the market require paying great attention to the integration of different innovation capabilities, whether through internal R&D investments or merger and acquisition activities, including the acquisition of start-ups.

2017 Investment
According to Beecham Research estimates, the total funding raised in 2017 by IoT companies was $2.51bn, compared to $2.88bn in 2016, a 13% decrease. Total funding over the last 7 years is estimated to be about $10.5bn.
 
According to data gathered by The DealRoom for the European Venture Capital scene, investments surpassed 860 million Euros in 2016, with a total investment of 1.6 billion Euros between 2012 and 2016. Interestingly, most of these companies are based in Israel (131 out of 458), Paris (103), Berlin (58), London (55), Stockholm (50) and Dublin (22).
 
Funding of IoT Platform companies slowed down compared to 2016, when investment peaked. IoT companies' raising of funding in 2017 was similar to that of 2015, reduced by 17% on average compared to 2016. Investors’ interest has shifted somewhat towards other emerging trends, such as Augmented and Virtual Reality-focused companies, Cybersecurity, and Artificial Intelligence, while investment in Blockchain is gradually picking up.
 
The total value of 2017 M&A activities amounts to $2,2bn, based on publicly available figures combined with our calculations.
 
A similar picture arises when it comes to companies’ internal investment initiatives towards IoT adoption. According to joint research by IBM, ARM and the Economist Intelligence Unit, companies, including OEMs, IT and telcos, agricultural companies, car manufacturers and medical devices makers, who invested in IoT in the last 1-3 years, are expecting a deceleration of relevant investments in the next 2 years, although overall IoT investment will continue to grow. One possible explanation:  Companies are looking to leverage the investments in IoT projects already made during the previous years. 

Driving Innovation Through Investment
There are various ways for a company, of any size, to invest in the IoT. Some companies pursue organic growth through the development of internal departments that follow domestic investment and ventures made by leveraging their own resources. Others acquire businesses that best compliments their portfolio and enhances their market positioning. In the following table, we summarize the various types of investments in the IoT.

Established companies have founded investment arms in order to invest in IoT startups and other specialised companies with the aims of increasing their market intelligence and acquiring potential commercial and innovation partners. Examples include Cisco Investments, which has invested in more than 10 IoT companies, Qualcomm Ventures, which has invested in more than 20 IoT companies, GE Ventures, and Intel Capital, which have invested in over 20 and 40 smaller IoT companies respectively over the last 5 years.

Silicon Labs, a major chipmaker for the IoT and the Smart Home markets specialised in Zigbee short-range IoT communication technology, acquired Sigma Designs, which owns the intellectual property for Z-Wave short-range IoT communication technology, alongside offerings for other semiconductor-based products, such as HD televisions, media processors, Smart Home products and so on.
 
This $282 million acquisition is expected to enable Silicon Labs to expand its IoT portfolio beyond Smart Home and acquire new customers from Sigma Designs' base, including Microsoft, Amazon, LG, Orange, Verizon, Alarm.com and others. 

FogHorn Systems, an Industrial IoT Platform company focused on edge communication technology, was founded in 2014. FogHorn has received a total of $47 million up to Series B funding by enterprises including GE, Bosch, Dell and Yokogawa, among others, as well as from Venture Capital firms such as Honeywell Venture Capital and March Capital Partners.

U.S.Itron acquired Silver Spring Networks to enhance its services primarily in the IoT, Smart Grid and Smart Cities areas, as well as Industrial IoT. Silver Spring’s entrepreneurial culture and its team of engineers and developers played a key role in the decision
 
based Itron is well known for its smart meters and related software and services, used for measuring electricity, water, and gas. Silver Spring Networks is a market leader with its mesh networking used by utilities and in smart grid applications, offering managed services and Software-as-a-Service, as well. Silver Spring Networks was acquired by Itron in September 2017 for $830 million.forbuyout.

ARM Holdings is a multinational company leader in the semiconductors industry and software design, a key supplier of smart devices, processors, microcontrollers and other embedded systems products.  Blu Wireless is developing technology that enables the next generation of mobile networks, such as 5G. Simulity Labs is an IoT security firm, providing software-based security capabilities for devices that operate with eSIMs. 
 
ARM participated in an investment in Blu Wireless, reported to be £10m this year and acquired Simulity Labs in a £12m purchase from its private equity owner Foresight.
 
ARM’s investment in Blu Wireless will allow for the development of newer communications technology products, by combining complimentary technologies. ARM enhances the security layer of its offerings through the cybersecurity technology developed by Simulity, which provides software and operating systems for embedded products, suitable for enhancing security for IoT devices.

Actility, based in France, offers a connectivity management focused IoT platform and works closely with telecom operators and utility companies. Abeeway, also based in France, manufactures IoT tracking devices that combine  LoRaWAN communication and GPS technology. Actility and Abeeway (along with a number of other companies) implemented a major IoT project for the Port of Barcelona, earlier this year in May 2017.
 
Actility acquired Abeeway for an undisclosed amount of money in May, 2017. The acquisition came soon after Actility raised $75 million in a Series D round.
 
This acquisition solidified Actility’s IoT technology stack; the combination of Actility's ThingPark IoT platform with Abeeway's location tracking and LoRaWAN expertise will enhance Actility’s IoT portfolio of applications served, primarily in the logistics and asset tracking areas.

Conclusions

The funding raised in IoT scene amounts to $2.51 bn in 2017, a 13% decrease from 2016.  This decrease can be attributed to:

• A shift in investors’ attention towards other emerging technologies, such as Augmented and Virtual Reality, Cybersecurity, the generic field of Artificial Intelligence and Blockchain; and  
• A need to show results from existing investment.