IoT Insider May 26, 2017

START-UP FINANCING REALITIES

New analysis from Crunchbase on 15,600 US-based technology companies founded between 2003 and 2013 is a stark reminder of how tough it is take a company from seed stage to a big exit using other people's money. As the chart below illustrates, 60% of companies don't even get from seed stage to Series A. Another 18% or so don't get to Series B and then it starts to flatten out. One wonders how this looks for companies just focused on the IoT space. We expect follow-up rounds will be less likely where there is not a solid business model showing long-term recurring revenue.

 Source: Crunchbase

Source: Crunchbase

FOCUS ON ANALYTICS IN AUTO

We are seeing signs that analytics/machine learning/AI are increasingly important at old industrial giants. Like many of the big auto companies, Ford Motor is preparing for a global downturn in auto sales and just announced layoffs for 1,400 people by September. Specifically excluded is anyone working in analytics and information technology. The auto giant also signaled some of its future intentions in technology with the sudden replacement of CEO Mark Fields, who made the company money, but was essentially a car guy. The new guy Jim Hackett is less of a car guy, more of a tech guy and more capable of managing an old company through the coming disruption of AI/machine learning/IoT. 

GROWING ROLE OF THE CAMERA IN AI

According to TechCrunch, artificial intelligence needs visual data, not just words, to have human skills. Quipped the "Internet of Eyes", this points to a future where all inanimate objects will have the ability to see. One of the first to experiment with this is Amazon with its Echo Look which will allow customers to buy products via selfies rather than typed searches. Amazon will use the visual data to teach their artificial intelligence algorithms to learn our favorite clothes, styles and products. Google is expected to follow soon with a camera on their Assistant which will probably communicate with Nest and Dropcam. 

CAN UBER REALLY DO TRUCKING?

With all of its recent travails, you wouldn't think Uber was ready to disrupt another entire sector of the economy. But the company just launched Uber Freight with the brazen idea that it can take on the complex world of trucking. Uber Freight is an app which matches trucking companies with loads, in theory reducing the wait time between loads and reducing the empty miles between drop off and pick up. Uber also says its going to speed up load payments to within a few days to help truckers manage cash. While it is true that there is still a lot of inefficiency in long haul trucking, there has been a lot of improvement over the last decade with satellite tracking of trucks, sophisticated routing optimization software, and digitization of freight invoices. Most of Uber's initial opportunity will be with smaller independent trucking firms which don't have access to load optimization tools. These don't represent the bulk of irregular route truckload carriage.

DEALS

  • Agricultural drone developer American Robotics has snagged $1.1 million in seed funding from angel investors including Brain Robotics Capital LLC. Founded by alumni of Carnegie Mellon and Stanford, the company intends to use aerial imaging to help farmers reduce damage to crops from drought, disease, and pests.

  • High-flying smart fitness bicycle maker Peloton has raised another $325 million in a Series E round valuing the company at $1.25 billion. Expect to see a lot more of their $1,000-plus sensored machines in homes and fitness clubs. 

Contact us with tips/ideas: dryder@lumenitix.com

IoT Insider May 18, 2017

ALEXA AND THE FUTURE OF AI

If Amazon's Paul Cutsinger is right, voice technology and artificial intelligence will soon rule as the primary interface with devices and computers. "We need to focus on how things sound, not how they look, " he told the audience at the recent Kairos Global Summit. Cutsinger also talked about "ambient computing" in which today's simple interactions (such as "Alexa, turn on the lights") will be replaced with rich and layered discussions. But he warned that we will need to change the communications methods for it to work because the words we use for speech vs writing are different. That's where AI comes in. A device like Alexa will be taught new skills to make written words more conversational.

NEW ANGLE ON VALUE OF DATA

Mark Cuban described Amazon at a recent CEO Summit as "the world's greatest startup" because they were "leveraging their data to build more startups." There's a lesson here for all the IoT companies with great designs on making a ton of money with data. The money isn't in the platform to collect the data or even in the raw data itself: it's in the knowledge of the inefficiencies in a process or system and how to improve it with rapid access to the right data.

DEALS

  • Sensoro, a Seattle-based IoT sensor device and network technology startup, has raised $18 million in Series B funding from Bosch, Sumitomo and Tsing Capital.
  • Chemical giant BASF has acquired ZedX Inc., a Pennsylvania-based agricultural tech firm specializing in analytics around agronomy ZedX has developed agronomic weather, crop, and pest models which can optimize crop production. One example is a model which looks at weather and environmental conditions to identify the right window of application for a BASF herbicide
  • Farmnote, a Japanese startup in livestock monitoring has raised $4.6 million. Investors included industrial giant Sumitomo Corporation. Farmnote has developed a wireless device which cattle wear and sends information about each animal’s activity in real time. Farmers get alerts when cattle are unwell, ovulating, or giving birth.
  • ADM Capital Europe has held a $100 million first close on its first fund focused on agritech businesses in Europe, Australia and Asia, according to Private Equity International. The total fund size target is $500 million.
  • Rabobank has launched a food and agriculture-focused venture capital fund, via its Rabo Private Equity platform. www.rfaif.com

HOW MACHINE LEARNING IS IMPACTING RETAIL PRICING 

Increasingly sophisticated machine learning algorithms are being used to constantly adjust pricing in both brick-and-mortar stores and online retail sites. Pricing spreads on one item can vary more than 50% in less than 24 hours based on perceived supply and demand. A detailed article in a recent issue of The Atlantic explains retailers are being forced to use these tools to set optimal pricing because their already tight margins are under more threat from consumers' easy access to pricing information. Retailers are collecting immense amounts of data on transactions and combined with metadata (temperatures, day of the week, seasonal factors, etc) to price optimally. Many of the models they use will adjust pricing rapidly in response to real-time feedback. Not surprisingly, economists and data scientists have moved to the top of the recruiting list at all major retailers.  One economist told The Atlantic the current data technology is giving them  “the ability to experiment on a scale that’s unparalleled in the history of economics.” 

Please send tips/ideas to us at dryder@lumenitix.com

IOTI April 21, 2017

DEALS OF NOTE

  • Australia-based Freestyle Technology has inked a $5.8 million contract to roll out an IoT water management solution for the  South Korean municipality of Gochang. The five-year contract will equip 24,000 homes with an end-to-end system of smart water meters, communications equipment and cloud-based software to detect water leaks and recommend courses of action. It was a key win for the Australian firm, competing against several Korean suppliers over a two-year bidding process. 
  • Silver Spring Networks has been selected as a major IoT provider by NRTC, which represents more than 1,500 rural electric and telephone utilities and affiliates in 48 states, serving around 20 million homes and 50 million residents. Under the agreement, NRTC will offer Silver Spring’s high-performance, multi-application Gen5 platform to its electric utility membership. The agreement will allow NRTC to offer reliable two-way advanced metering infrastructure (AMI) and other future smart grid and related applications.

  • Narrative Science, a Chicago-based pioneer of natural language machine learning has raised $11 million in Series D funding. The company's Quill product is designed to "humanize" data, turning numbers into a story which is actionable. Demand for these tools will increase as the flood of IoT data increases and companies need it interpreted quickly and clearly.

CHART OF THE DAY

In its June 2016 mobility report, Ericsson sees a clear path away from cellular-based IoT over the next four years.

 Source: Ericsson Mobility Report, June 2016

Source: Ericsson Mobility Report, June 2016

MEANWHILE, BACK ON THE FARM

Hungarian researchers have just published a study which outlines a low-cost way to monitor animal location and activity for agricultural applications. Dual-band GPS can do the job, but is too expensive. The researchers explain how to do it with low-cost local sensors using differential equations. The only catch: To be accurate, animals need to be stationary 8-10 minutes at a time. The researchers estimated cows were stationary 40-80% of their grazing time.

MACHINE LEARNING VISUALIZED

What do you get when you put an MS in Statistics from Stanford and a visual arts genius in one room?  This great tutorial on machine learning. Using a scrolling technique to illustrate mathematical concepts and data organization is brilliant. The data is no longer static: it's a living creature.

As always, contact us with tips/ideas:  dryder@lumenitix.com  or DM on Twitter @lumenitix

IOTI April 17, 2017

OPENING SCOOP

The latest move by tech players Cisco Systems, Bosch Ltd, Foxconn Technology, and Gemalto to use blockchain to secure and improve IoT provides added momentum to this technology path. They have engaged with blockchain startups Consensus Systems, BitSE and Chronicled Inc to develop a shared blockchain protocol. Around 40 banks are already members of a blockchain consortium run by startup R3 CEV and IBM and Hitachi are part of a consortium led by the Linux Foundation.

DEALS OF NOTE

  • The $23 billion merger of Vodafone India with fellow Indian mobile carrier Idea Cellular creates the largest telecom in the world's second largest mobile market. They will compete with current leader Bharti Airtel and Reliance Communications, owned by Indian tycoon Mukesh Ambani who has been spending big to build out a network. The added competition will also drive down cost of cellular-based IoT service.

  • Australia-based Fleet had a $3.8 million Series A round as it gears up to build a network of nano satellites to service IoT. The company was co-founded by Flavia Tata Nardin, an Italian-born space scientist who cut her chops working for the European Space Agency. One of the investors is Atlassian cofounder Mike Cannon-Brookes who believes the company can help bring multiple devices and technologies together "to work as one." 

CHART OF THE DAY

Gartner's Hype Cycle chart below is being trotted out more frequently now among technology investors as everyone tries to figure out where a particular product or service is at in the cycle. Clearly you don't want to be investing into anything on the downside of the "Peak of Inflated Expectations." Most believe IoT is well and truly in the "Trough of Disillusionment" looking for a way up to the "Plateau of Productivity." We believe that plateau will be reached more quickly in certain market segments where there are larger data "black holes" and the value of new real-time data is greatest. Stay tuned to future IoT Insider editions to learn more...

We welcome tips and feedback.  Send to dryder@lumenitix.com or DM on Twitter @lumenitix

IOTI April 7, 2017

THE START OF SOMETHING GOOD

Welcome to the first edition of IoT Insider. Changes are coming to the nascent IoT industry with increasing speed. There will be winners and losers as the networks evolve, hardware standardization takes its course, and business models take shape. The industry is ripe for innovation from gutsy, entrepreneurial startups. Yes, there is hype and overselling. We plan to help you sort through this and try to predict which solutions and business models have the greatest chance of success.  If you like what you see here, please subscribe and tell others about it. We also welcome feedback, tips on deals and startups. Shoot us an email at dryder@lumenitix.com or DM us on Twitter @lumenitix. 

DEALS OF NOTE

  • GE's plans to sell off its consumer lighting business is sad if you are an Edison nostalgia buff but makes business sense. There's a lot more future margin selling smart devices and their Predix industrial IoT platform than light bulbs.
  • Giant French electrical supplier Schneider Electric is dumping ag information company Telvent DTN for around $900MM. Schneider has been piecing off parts of the Telvent business ever since it acquired the Spanish company in 2011. It paid $1.5B and has since made $1.2B selling off the bits it doesn't want. It's keeping a portfolio of technologies and software for advanced grid management, pipeline management, geographical information systems and SCADA - essentially the parts you need to build an industrial IoT powerhouse.  
  • A new $6.5MM Series A round for Oz ag IoT startup The Yield will help put Tasmania on the map in the US tech world and advance hyper-local environmental sensing technology and analytics. With increased volatility in weather, there's a growing need for measuring and managing to micro-climates. The initial market will be in high-value specialty ag operations, but there may be a broader market later in cropping where producers are chasing added yield. 

FOLLOW THE MONEY

Bain and Company's analysis below suggests the real money in IoT will be in cloud hosting/apps/analytics. We don't have to wait until 2020 - the commoditization of hardware has started already. But the reality is you don't have IoT without the device and that device needs to be ultra-reliable. That takes some ingenuity in the area of power management and wireless technology. We expect the better solutions will rise to the top and command higher margins, particularly in tough applications. 

 Source:  Bain & Company

Source:  Bain & Company

BY THE NUMBERS

It's been happening faster in other parts of the world, but now we have reached tipping point in US on use of operating systems. The dominance of MS Windows has finally been broken by Android. Data from StatCounter below shows the steady decline of Windows from an astounding +80% share in 2012 to just 38% today. With expected growth of mobile and Android's dominance there, we see the Windows trajectory continuing downwards. Apple's desktop platform (OS X) is also headed down but it's mobile platform iOS is rising, although at a much slower rate than Android. Take note: if you are developing IoT apps, prioritize compatibility with Android.

We welcome tips and feedback.  Send us an e-mail at dryder@lumenitix.com or DM on Twitter @lumenitix.