IoT Deals more substantial? Venture Scanner

Venture scanner

The internet of things (IoT) sector has seen vibrant funding and exit activity over the past few years. How have its funding trends evolved over time? On our internet of things research platform, we have analyzed the data through 2017 and can conclude that the investments in IoT have become more substantial over time.

We have come to this conclusion from the following three takeaways:

• Funding amounts are seeing robust growth at the annual level
• Funding events are seeing a decline in recent years
• Average funding per deal amounts are growing

We will illustrate these takeaways with a series of graphics to show the trend of IoT investments over time.

IoT Funding Amounts Seeing Robust Growth Annually

We will start off by examining the IoT funding trends over the years stacked by quarters.

IoT Funding by Quarter – Stacked

This graph illustrates that IoT funding saw explosive growth at the annual level. Specifically, the CAGR in funding amounts from 2012 to 2017 is 45%. In addition, the funding in 2017 was 166% of that in 2016.

We have seen that IoT funding is showing strong growth, but what about the total number of deals?

IoT Funding Events Declining in Recent Years

The following graph shows us the annual number of IoT startup funding deals, stacked by quarters.

IoT Funding Count by Quarter – Stacked

The above graphic illustrates that the number of IoT funding events saw a healthy upward trend till 2015 and declined thereafter. In fact, the CAGR in funding events from 2012 to 2017 is only 15% due to the quick rise and subsequent fall. In addition, the number of funding events in 2017 was 76% of that in 2016.

We have seen that IoT funding amounts are increasing significantly but its funding events are seeing a decline. Let’s see if the trend in average deal size reinforces this.

Average IoT Funding Deal Size Demonstrating Overall Growth

The following graph shows the average funding per IoT deal over different quarters from 2011 to 2017, as well as the trendline.

IoT Average Funding Event Size Over Time

This graphic does indicate that the average IoT funding per deal has experienced steady growth over the past few years. The trendline shows that from Q3 2011 to Q4 2017 the average deal size has grown by approximately 500%. This stable upward trend in average deal size demonstrates that the investments in the internet of things have indeed become weightier over time.

Conclusion: Investments in the Internet of Things Are Becoming More Substantial