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Ever since the phrase “Internet of Things” or “IoT” was coined in the late 1990s, its definition has evolved over the years as businesses have attempted to commercialize the power and value of connectivity and data. This has also resulted in a challenge for the industry as it tried to define itself on its specific value propositions while becoming broader and more grandiose in its visions. In some ways, IoT has suffered from oversaturation as its hype has failed to live up to lofty promises.
At Fusion Fund, we are strong believers in the power of connectivity and the ability to gather data from that connectivity to power venture-scale businesses, regardless it is branded as IoT or not. We have seen decent success from the consumer/home IoT markets with exits like Ring to Amazon for over $1 billion and Nest Labs to Google for over $3 billion. Private companies such as Samsara and Verkada are doing well in their respective industries and show potential for enterprise and industrial applications.
"The name and marketing terminology may change, but the evolution of technology combined with the drive of entrepreneurs, will continuously bring opportunities for new entrants"
New technologies are being developed and are now coming online, which will power the next class of connectivity/data businesses. 5G will create the infrastructure needed to enable new platforms providing connectivity and data. Everyone has seen the hype about blazing fast internet on 5G networks so one can stream 4K video on the phone. While it is true, 5G enables much faster speeds, much lower latencies, a higher number of connections per node, and improved reliability are arguably more important. As more devices become connected, the network must handle billions of connections that will continuously ping and transmit data. 5G’s properties are a massive improvement over any existing technology, including 4G and WiFi.
While 5G can enable reliable connections, the amount of data being generated today far exceeds what can be properly analyzed and transmitted. It is not practical to send every second of video footage from a camera back to the cloud. Some amount of local compute at the edge must occur. This edge computing technology must be relatively inexpensive, sufficiently powerful, and low power since many of these connected devices must be able to analyze data before sending relevant information back to the cloud, be supported by remote power, and cannot be as expensive as an iPhone. One of our portfolio companies is tackling that very problem by creating a new technology platform that combines 5G connectivity with artificial intelligence-enabled edge computing to power a wide range of connected devices.
Finally, it is critical that businesses secure and protect the massive amounts of data that will be collected and transmitted. Fortunately, 5G is an inherently more secure platform than WiFi, but devices still need their own ability to ensure security and privacy. There are a variety of new companies implementing new technologies, both hardware and software, on devices without further increasing cost, power, or computing requirements. These are not easy challenges to overcome, and we feel this is an area still open for further innovation by a number of new businesses.
Combining all these technologies and capabilities together, one can see greenspace available to innovators to develop new businesses that can grow into billion-dollar businesses. In the industrial space, Safehub places sensors with connectivity and data capabilities on buildings to measure building and ground properties and feeds that data back to property owners/managers and insurance firms, providing critical operational and financial protection data. In the enterprise space, OTO.ai has developed software and technology that enables a device as compact and low power as a headset or hearing aide to provide useful sentiment analysis feedback. This can also be applied to medical and mental health professionals as well as they use these capabilities to diagnose patients.
Connectivity and data will continue to power the generation of new businesses. The name and marketing terminology may change, but the evolution of technology combined with the drive of entrepreneurs, will continuously bring opportunities for new entrants.