At ARM TechCon 2015, Eric Klein offered his perspectives during a keynote on what venture capitalists are looking to fund in IoT as well as some of the technology challenges that are slowing down innovation. Klein is a partner in Lemnos Labs, an early-stage hardware investment fund based in San Francisco, CA.
Klein shared what ideas have been overdone in the consumer market: smart watches, step counters, smart home hubs, thermostats, and anything that helps you grow “food” in your homes. Frankly, venture capitalists (VCs) are looking for new ideas in the consumer market.
So what kinds of ideas are most likely to get funded? Products for the industrial/enterprise market are very appealing to VCs. Klein shared what is getting VCs excited in the IoT industrial/enterprise market saying, “Businesses will pay for efficiency gains.” He gave an example of a waste management company that could reduce its fleet of trucks by 1/3 just by adding sensors to dumpsters. Klein added, “There are multi-billion and trillion dollar opportunities still untapped.” These are the kinds of products that VCs are getting behind—ones that can significantly drive down costs and/or add revenue opportunities. Another reason to consider a product in this market: enterprise and commercial companies have money to pay for your product.
Klein closed his talk with a list of what VCs look for in the projects they fund:
- Team, team, team: smart passionate folks who believe in the idea so much it is contagious
- Understanding of the target market value chain: what part of the dollar are you going to get
- Proven ability to create a physical product and complex systems: what have you made
- Plan to get to profitable unit economics: have a clear path to opportunity
Perhaps the biggest challenge to the IoT entrepreneur is not the “big idea” or even funding, but instead it is the lack of toolkits to help link the IoT device into a network, analyze the data, and keep it secure. IoT entrepreneurs are forced to become network, data, and security architect experts. “Without these tool chains,” Klein said, “it’s no wonder why they fail.” He called on the ARM TechCon audience to create prototype to production chipsets and vertical reference designs to remove the roadblocks to IoT entrepreneurial success.
In the second part of the presentation, Robert Clark, senior director of IoT product development for the Oracle Cloud Platform, explained what his company is doing to address and remove some of these roadblocks to IoT success.
According to Clark, Oracle is very focused on industrial IoT. He noted that the company is also looking at solutions in assets tracking in the supply chain and ways to optimize how your assets travel.
For Clark and his team, the burning questions were: How do I collect data? How do I analyze it? And, finally, how do I integrate it with enterprise infrastructure? These were basically the same issues that Klein identified as potential stoppers to IoT innovations.