It has been my contention that many companies are under pressure to provide an exit strategy to their boards as the hype in the IoT has created the expectation that now is the time to acquire or be acquired.
Some of this is because IoT is not the darling of venture capital. VCs have half a trillion dollars in about 175 unicorns. The primary view for most of these unicorns, with few exceptions, is that their software is the advantage.
When it comes to IoT, the word that is most often used to describe our software is platform. It’s hard to believe that platforms in IoT are a differentiator when we have more than 400 of them.
At our recent IoT Evolution Expo in Fort Lauderdale, Fla., I moderated the Money Matters session. James Turino of DrakeStar and Michael Crawford of Q Advisors both provided slides that you can download from the event website. Turino pointed out that we had more than $39 billion in M&A last year and 137 deals that place over $2.5 billion in financing. Crawford’s analysis was more directed to the question of what drives the investment. Are investors interested in the ability to analyze, capture, manage, or transmit IoT solutions? His analysis shows that while all of these are high value, the ability to analyze has the greatest number of transactions and value.
Since the event, I had the chance to talk with Greg Mischou and Adam Tilow of Woodside Capital about how they view the marketplace. They shared some information with me that I have altered for this analysis. While the Woodside Capital numbers exclude some transactions that Drakestar saw as part of IoT, we gain insight into where investments are being made at the corporate level.
One striking factor is that many companies are being shrewd in their investments to gain incrementally from the use of IoT. The Industrial Internet is dominated by these transactions.
Meanwhile, the adventurous spirit is in consumer IoT opportunities. That is dominated by transactions from Facebook, Google, and Under Armour. The semiconductor space has always been a bit of a nightmare to explain and manage. Often supply and demand is out of whack and causes consolidation on the ebb and flow. You don’t have demand, you become acquired. You have too much demand, you acquire.
IoT is at the stage where lots of expansion seems imminent, but it’s unclear if the impact on transmitting is fully understood.
LTE 5G implementations and LoRa dominate the conversations, but lots of alternatives exist. And as deployments increase and processing costs continue to reduce, the role of the network is going to change. My expectation is that the service provider sector may soon have its own brave new world investments.
The important thing to note is that the news may seem like it’s all about the shiny and new, but smart money is making smart investments.
Edited by Ken Briodagh