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IoT Startup State Of The Union 2016

Martin Giles@Wing_VC | www.wing.vc

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Before Wing

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Instrumenting The Real World

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Drawing A Parallel Between Electricity And The IoT

TV

AC

RADIO

MICROWAVEVCR

WASHER

DRYER

FRIDGE

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990

ELECTRICITY

100

90

80

70

60

50

40

30

20

10

0

Per

cent

age

of H

ouse

hold

s

Source: The Atlantic

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Media Coverage Is Turning More Negative

Internet Of Things Struggles As Use Of Smart Home Gadgets Flatlines

August 27, 2016

Why Smartphones Are Bringing Down Internet Of Things Revenue Forecasts

August 4, 2016

Intel’s Cloud And IoT-Focused Businesses Deliver Disappointing Growth

July 21, 2016

The Internet Of Things Is More Hype Than Reality For Many Tech Giants

August 16, 2016

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Sliding Into The Trough Of Disillusionment?

INNOVATION TRIGGER

PEAK OF INFLATED EXPECTATIONS

TROUGH OF DISILLUSIONMENT

SLOPE OF ENLIGHTENMEN

T

Expe

ctat

ions

Source: Gartner; Wing

PLATEAU OF PRODUCTIVITY

Time

2013

2014

2015

Feels like we are here

2012

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Thoughts From An IoT Pioneer

“If you had bet against the electrification of the home in the late 1800s, then your bet would have been seriously wrong. And it’s the same situation with the Internet of Things today.”

Tony FadellFounder, Nest

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IoT Startups: A Dive Into The Data

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To Investigate The IoT Startup Landscape, We…

• Looked at the pre-funding environment• Built a database of 2335 IoT deals (Jan 2013 - Aug 2016)• Examined IoT exit data• Interviewed IoT pioneers

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GitHub IoT Repo Growth = Builders Are Building Fast

2013 2014 2015 2016*

9261

4368

934239

10,000

8,000

6,000

4,000

2,000

0

Number of repositoriesContaining IoT keyword

*Annualized

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Kickstarter Shows A Slowdown In Growth

*Annualized

2013 2014 2015 2016*0

20

40

60

80

100

120

140

IoT Projects(screened from flight, wearables, IoT, hardware)

Num

ber o

f fun

ded

IoT

Kic

ksta

rter p

roje

cts

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But There’s Some Positive News From Accelerators

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What Are The Builders Building?

Indust

rial /

Enter

prise

Wearab

lesHom

e

Infras

tructu

reDron

es

Roboti

csHea

lth

Auto

/ Tran

sport

Other0

100

200

300

400

500

600

* To August 31, 2016

Num

ber o

f Dea

ls, 2

013-

2016

*

Source: Wing IoT Analysis

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Industrial / Enterprise IoT Leads The Way In Deals

* To August 31, 2016** Average $ per deal

Indust

rial /

Enter

prise

Wearab

lesHom

e

Infras

tructu

reDron

es

Roboti

csHea

lth

Auto

/ Tran

sport

Other0

100

200

300

400

500

600

Num

ber o

f Dea

ls, 2

013-

2016

*

$4.18M**$5.76M**

Source: Wing IoT Analysis

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There Is A Lot Of Activity In Manufacturing

* To August 31, 2016

Platform Manufac-turing

Building Man-age-ment

Supply Chain /

Logistics

Healthcare Retailing Other Agriculture Energy Const. / In-frastruc-

ture

0

10

20

30

40

50

60

70

80

90

100

Num

ber o

f Dea

ls, 2

013-

2016

*174

Source: Wing IoT Analysis

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Industrial / Enterprise IoT Is All About RoIoT

• Towards Factory 4.0

• Monitoring/Optimization

• Alerting/Predictive Analytics

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What’s Attracting The Biggest Dollars Per Deal?

Other

Wearables

Home

Drones

Robotics

Industrial / Enterprise

Health

Infrastructure

Auto / Transport 7.79

7.65

6.07

5.76

5.25

5.01

4.96

4.18

0.23Average $ Per Deal (M)

Source: Wing IoT Analysis

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What’s Going On In Auto / Transport?

Other

Wearables

Home

Drones

Robotics

Industrial / Enterprise

Health

Infrastructure

Auto / Transport 7.79

7.65

6.07

5.76

5.25

5.01

4.96

4.18

0.23Average $ Per Deal (M)

Source: Wing IoT Analysis

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The Tesla-Uber Effect

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Connectivity First

* To August 31, 2016

Conne

cted V

ehicle

s

Auton

omou

s Veh

icles

Platfo

rm

Traffic M

anag

emen

t

Driver

Assista

nce

Fleet

Manag

emen

tOthe

r

Secur

ity0

5

1015

20

25

3035

40

45

Num

ber o

f Dea

ls, 2

013-

2016

*

Source: Wing IoT Analysis

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The Path To Autonomy

• Connected car = still early days

• Autonomous vehicles = even earlier…

• …but strategic acquisitions in 2016

Acquired by Uber Acquired by GM

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Drones: Hardware Still Rules…

* To August 31, 2016

Num

ber o

f Dea

ls, 2

013-

2016

*

Hardware

Manufa

cturer

Platfo

rm

Mappin

g / Su

rveyin

gOthe

r

Inspe

ction

/ Mon

itorin

g

Film / P

hotog

raphy

Agric

ulture

Secur

ity / S

afety

Logisti

cs0

10

20

30

40

50

60

70

80

Source: Wing IoT Analysis

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… But Who Rules Hardware?

• Hardware + Services common

• Surveying/mapping + Inspection/monitoring

• China wins in consumer hardware

vs

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Some Categories Look Set To Decline in 2016...Nu

mbe

r of D

eals,

201

3-20

16*

2013 2014 2015 2016*0

50

100

150

200

250

INDUSTRIAL /ENTERPRISEWEARABLES

HOME

ROBOTICS

*AnnualizedSource: Wing IoT Analysis

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…While Others Appear Likely To GrowNu

mbe

r of D

eals,

201

3-20

16*

2013 2014 2015 2016*0

20

40

60

80

100

120

140

DRONES

INFRASTRUCTUREHEALTH

AUTO / TRANSPORT

*AnnualizedSource: Wing IoT Analysis

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Scaling and Exiting

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IoT Deals By Funding Size

2013 2014 2015 2016*0

100

200

300

400

500

600

700

800

900

$<2M

$2-20M

$20M+

* To August 31, 2016, Annualized

Num

ber o

f Dea

ls, 2

013-

2016

*

Source: Wing IoT Analysis

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Later Stage IoT Funding Is Growing

2013 2014 2015 2016*0

10

20

30

40

50

60

70

80 $20M+

* To August 31, 2016, Annualized

Num

ber o

f Dea

ls, 2

013-

2016

*

Source: Wing IoT Analysis

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Some Examples Of Recent Later Stage Funding In IoT

$52M

$61M

$90M

$30M

$50M

$45M

Source: Pitchbook, Wing Analysis

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The Number Of Larger M&A Deals Is Rising

Source: Pitchbook

2013 2014 2015 2016*0

20

40

60

80

100

120

140

160

Num

ber o

f Acq

uisit

ions

, 201

3-20

16*

(Pitc

hboo

k’s I

oT, W

eara

bles

, Aut

onom

ous V

ehicl

es,

and

Dro

nes/

Robo

tics v

ertic

als)

* To August 31, 2016, Annualized

Deals Over $200M

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There Is No Shortage Of Potential AcquirersSemiconductor Companies Web Companies

Other Companies Industrial Companies

(Amazon) (Google)

(Google)(Apple)

(PTC) (GE)

(PTC) (GE)

(Intel) (ARM)

(Qualcomm) (ARM)

(Verizon) (Samsung)

(Verizon) (IBM)

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There Have Already Been Some Notable $1B+ IoT Exits

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Platforms And Opportunities

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Platformitis

707"Platform" deals

We found

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Platforms By Category

* To August 31, 2016

Num

ber o

f Dea

ls, 2

013-

2016

*

Industrial / EnterpriseHome Infrastructure Wearables Drones Robotics Health Auto / Transport0

20

40

60

80

100

120

140

160

180

200

Source: Wing IoT Analysis

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Securing The Internet Of Things

Chinese hackers take over moving Tesla from 12 miles away

September 20, 2016

How Hacked Cameras Are Helping Launch The Biggest Attacks The Internet Has Ever SeenSeptember 25, 2016

Mirai IoT Botnet Wasn't Alone in Massive DDoS Attack: Akamai

October 6, 2016

Is IoT Security a Ticking Time Bomb?

September 1, 2016

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Securing The Internet Of ThingsHome InterfacesWearable HealthData/AnalyticsAIPlatformsConstruction and InfrastructureAgricultureManufacturingBuilding ManagementRetail TechnologyEnergy and UtilitiesSupply ChainLogisticsInspection and MonitoringMapping and SurveyingDrone HardwareDrone Fleet ManagementAnti-Drone TechnologyEmbedded Home SystemsHome Indoor EnvironmentWearable Quantified SelfHome – OutdoorsFamily, Kids, and Pet TechnologyAppliancesRoboticsAutonomous VehiclesDriver AssistanceFleet ManagementConnected VehiclesTraffic ManagementConnected Cities

General Security

1277 DealsIoT Security

45 Deals

Global Deal Data Set, 2013-16 IoT Data Set, 2013-16

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Generating Insights From The Internet Of Things

The Internet of Things Will Make Big Data Look Small

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Generating Insights From The Internet Of Things

“What really distinguishes data-first applications…is the virtuous data cycle that they make possible.”

- Peter Wagner, Co-Founder of Wing

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Final Thoughts

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To 2025: Reinventing Entire Industries

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To 2025: Reinventing The Physical World

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Thoughts From An IoT Pioneer

“The real power of the Internet of Things is that it transforms a static product into a dynamic service. Once a thing becomes connected, it becomes part of a much larger fabric of things. We’re still only in the first or second innings of this shift.”

Jahangir MohammedFounder, Jasper

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autonomous vehicles, mesh networks, predictive maintenance, bluetooth, industrial internet, productive workplaces, agriculture, smart sensors, health, operations efficiency, increased efficiency,

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