Emerging Tech Research: Internet of Things

IoT market grows, but pure-play startups stumble

The market for internet-of-things technology is estimated to reach $414.9 billion this year, presenting a plump opportunity for VC-backed startups despite significant barriers to entry.

Our H1 2021 IoT Emerging Tech Research VC update identifies potent segments for startups including cybersecurity, edge AI, and predictive maintenance. 

Takeaways

• VC-backed exit value has already more than doubled year-over-year to $30.4 billion, driven by IPOs for IoT-adjacent security companies. But the stock of IoT software company C3.ai has plunged following a record-setting IPO late last year.
   
• Funding for pure-play IoT startups has softened, supporting our thesis that the market is better addressed as a secondary use case for software products than as part of primary value proposition.
   
• Device-level IoT security has emerged as a hot area, with security incumbents making two acquisitions of startups in the space thus far in 2021.