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IoT is here, and there’s no way to put the genie back in the bottle. Between 2011 and 2016, the Internet of Things startups funding grew by 480%. As more promising tech companies enter the market, we finally have enough evidence to determine what makes or breaks an IoT business. Here’s a list of successful IoT entrepreneurs – and the key factors behind their success.
Conquer the Internet of Things: top 5 startups & their way to success
- Evrythng. A couple of months ago we told you why the Internet of Things development is relatively slow, citing interoperability as the major obstacle. Simply put, connected gadgets often fail to talk to each other unless they are manufactured by one and the same vendor. Evrythng, a software company founded in 2011, aims to bring IoT parts together. According to Niall Murphy, the company’s CEO, by 2020 over a trillion of consumer products will have some form of smart digital capability. The Evrythng platform gives dumb objects a unique software identity and connects them to the Internet. Once connected to the Web, they start generating real time data for new applications and direct customer conversations, enabling businesses to track goods’ movement through supply chains and minimizing user interactions (like connected bulbs that automatically adjust brightness based on the level of natural light in the room). Evrythng raised over $ 8 million in funding from Atomico, Cisco, Samsung and other leading tech companies and went on to become IoT’s best startup of 2014. Now Everythng works with a lot of companies including Coca Cola, Domestic & General, iHome and Diageo. Lesson to be learned here: Evrythng tackled IoT’s biggest problem, came up with a comprehensive solution and still drives innovation. Thnghub, their latest IoT endeavor, turns any gateway (be it a smart TV or home router) into a universal hub for Z-Wave, Zigbee or Bluetooth-compatible devices;
- Invoxia. In 2015 Amazon announced another winner of its Alexa Fund. The award – and impressive investments – went to Invoxia, a French startup that specializes in speech recognition technologies. A couple of months ago Invoxia made headlines when it brought Alexa to Triby (first non-Amazon device ever). Triby uses the Invoxia Vivo Acoustic protocol to capture commands made in natural language from a distance up to 15 feet. The kitchen speaker enables users to make phone calls in a hands-free mode, play music and send messages. Before Alexa, Triby used to be a niche gadget with little commercial appeal. Now you can integrate it with Google calendar to monitor scheduled tasks, book a ride from Uber and orchestrate Alexa-compatible home appliances (including Phillips Hue lights and Nest thermostat). If you think Triby is a rip-off of Amazon Echo, you’d better think twice. Unlike its forerunner, the gadget supports VoIP calls and messages – and actually has a display. Robotics, voice recognition, machine learning and other fields of Artificial Intelligence are trending. Still, you can’t build an AI-powered product unless you have your own R&D center – or address a reliable vendor who has the necessary facilities. Invoxia joined Amazon Launchpad initiative, embarked on a risky project, enhanced Alexa’s functionality and won big;
- OpenSensors.io. By 2050, 70% of the world’s population will live in megacities like Tokyo, London and New York. That means more people will build homes there, commute on a daily basis and…produce even more waste. OpenSensors’ major goal is to improve the lives of city dwellers by gathering and analyzing macro-data on air quality. The UK-based startup was founded by Malcolm Sparks and Yodit Stanton in 2013. Unlike fellow IoT entrepreneurs who focus on hardware and infrastructure solutions, the company’s major is open data. Stanton’s elder child suffers from asthma – a health condition that gets worse because of air pollution. “The things you create out of your own frustration…often work the best”, she says – and we couldn’t agree more. In just three years the company has transformed from a two-person business to a successful tech company that processes over 15 million sensor messages daily with the help of a custom IoT engine. OpenSensors currently works with 10 thousand clients including Cisco, Reuters and TripAdvisor, providing assistance with sensor network management. Although OpenSensors did not engage with venture capitalists, they had a solid bootstrap capital to start with, took some angel funding and decided to focus on sales to keep the business going. The outtake: Big Data analysis enables businesses to forecast event attendance, reduce equipment maintenance costs and monitor suppliers’ performance. It can be a gold mine for a startup that considers entering the Internet of Things market – provided they figure out what their customers want before running out of VC cash;
- Withings. Between 2015 and 2020, the global IoT healthcare market is projected to grow by 37.6%, surpassing $ 117 billion; it’s no wonder so many startups want to grab a share of the pie! Withings, another French company on our list, was founded 8 years ago. The startup received worldwide recognition with its 2009 Wi-Fi scale that conducted body mass analysis and shared users’ achievements on Twitter (if they wanted to). Thanks to the gadget’s success and extensive media coverage, the company raised $ 3.8 million in funding and was able to develop two more products – the iPhone-connected blood pressure tracker with an accompanying app and a baby monitor. Withings’ string of successful IoT products includes the Smart Body Analyzer, connected scale for kids and Aura – a high-tech alarm clock that wakes you up with your favorite music and a personal sunrise. In April 2016 the company was acquired by Nokia for $ 191 million in cash and continues to manufacture smart gadgets under its own brand. The point of the story is, building one hit product probably won’t get you from rags to riches. However, the initial commercial success will give you the precious time to work on your next project – and get some investors on board;
- Insulin Angel. Over 29 million US citizens live with diabetes. Another 34 million will develop the disease within 5 years if they don’t take exercise and change eating habits. If a person is diagnosed with type 1 diabetes, his pancreas fails to produce insulin – a hormone that maintains normal blood sugar. Such patients undergo insulin treatment. Pretty much like other vaccines, the hormone should be stored at a certain temperature (15-25 °C) to remain stable and effective. Insulin Angel, a startup founded by Amin Zayani (suffers from type 1 diabetes) and Steve Miller (father to a son with diabetes), built a smart gadget that monitors the temperature at which insulin is stored and notifies patients if they leave the medication somewhere. The gadget is small (2” x 1”) and looks like a key fob. It uses temperature and proximity sensors and should be kept inside a fridge or medication case. Insulin Angel sends sensor readings to the dedicated Android/iOS app via Bluetooth. Its medication database features 30 most used insulins. The company launched an Indiegogo campaign in April 2015. Although they failed to reach their $ 55 k goal, Insulin Angel took part in the Pioneer Festival, made it to the final four and won a $ 20 thousand prize. The startup successfully entered the pre-production stage and moved to the Betahouse co-working space in Berlin. They currently plan to switch from one-time payments to freemium and enhance the Insulin Angel app with the expiry date reminder and wastage report features. Building smart gadgets is actually similar to mobile app development: if you want to succeed, you should find a problem and come up with an unorthodox solution. Insulin Angel killed two birds with one stone: their gadget can significantly improve the lives of patients with diabetes and help hospitals reduce insulin wastage by over 30%.
Things to consider when getting started with the Internet of Things
Back in 1999 Kevin Ashton described the Internet of Things as some kind of environment where different objects equipped with unique identifiers collect data and exchange it over a network, minimizing or even eliminating human-to-human and human-to-computer interactions.
17 years on, we live in a world of ridiculously safe self-driving cars, smart thermostats and Fitbit wristbands. By 2020, IoT’s global value will reach $ 14.4 trillion. The future is already here, but it’s a beautiful chaos right now.
Interoperability is still an urgent issue, though there’s positive stuff going on out there. The Internet of Things interoperability specification published by BSI and HyperCat will hopefully enable IoT companies to standardize software interfaces and discover sensor data generated by third-party gadgets. Invoxia successfully integrated Alexa APIs into Vivo Acoustic. Intel built an IoT platform where smart gadgets “are aware of each other and their surroundings”.
There are security flaws, too. And don’t forget about connectivity issues. Unlike the Internet, IoT is closely connected with our daily reality and therefore deals with the laws of time, distance and physics. IoT solutions can potentially reduce equipment maintenance costs by 30%, but how are your smart objects supposed to communicate in a humid environment, 100 miles away from a city, with no cell or Wi-Fi connectivity?
We do not discourage you; we simply want you to succeed. In case you’re a startup, the Internet of Things can easily destroy your desire to become a businessman – and leave you with large debts.
Here are some things to consider when building your first IoT product:
- Come up with a viable business idea. Does your future gadget solve any real-world problem? If yes, we’re moving further. Although there’s nothing new under the sun, you can’t impress business angels with another smart thermostat. Before you start building a connected device, you should research your competition, define their strengths and weaknesses and think of features that would help outpace your rivals. Look at Invoxia. Although Triby’s display is small, the gadget is now more competitive than Amazon Alexa. Also, you should think about monetization. Would it be one-time payments or freemium? What is your target market? Do you have production facilities? What about distribution? If you can’t conduct the research yourself, you’d better trust the task to an experienced business analyst;
- Proof of Concept and prototyping are king. In most cases the Internet of Things startups resort to funding. Investors never throw good money after bad, and that’s why you need Proof of Concept and prototypes to convince VCs that your idea is feasible & the gadget performs its intended functions. In case you lack tech experience or the necessary research facilities, you should address a reliable software vendor to do POC and prototyping for you. A good software development company can also prepare presentation materials to help you pitch your idea;
- You can’t bootstrap your IoT business to success. According to Matt Turck, a VC at FirstMark who published a comprehensive article on IoT’s future, it takes startups up to 24 months to complete their first IoT project. That’s two years of research, prototyping, software development and…unexpected expenses. The Internet of things product development costs depend on several factors, including the complexity of a project, hardware price and hourly rates of your vendor. Luckily for you, the Internet of Things is hot right now: in 1Q 2016, IoT startups raised over $ 800 million in funding. Provided your idea is a viable business, you can always get some cash through Kickstarter, AngelList or even LinkedIn. Getting started with a product is always tough, and the Internet of Things market is no exception. Still, there are ways out!
And don’t forget about technical expertise. Although there are skilled engineers and developers behind every IoT project, it certainly makes sense to address a reliable vendor who can put up the IoT infrastructure and build complementary mobile apps, so that you could focus on fundraising, marketing and distribution.