Vendors and users have predicted that nothing can stop the growth of IoT (Internet of Things), but new reports say otherwise. The Internet of Things (IoT) has been sharply rising for a while now, but the analyses of it show that its backlash is almost here. GlobalData conducted the study mentioned above which shows that venture capital funding and mergers & acquisitions activity have been suffering oscillating fortunes from 2014 to 2018.
Venture Capital (VC) funding in IoT space decreased in 2017 in terms of value, although it was achieving growth in previous years, 2015 and 2016. The deal value listed a growth of 8.3% in 2018 again, in spite of its loss in volume. In general, VC deal value increased by 10.4% at a compound annual growth rate (CAGR). Even so, deal volume decreased at a CAGR of 9.9% from 2014 to 2018, implying a growing average deal size.
Both U.S. and Chinese companies accounted for two positions each of the top five VC funded companies during the inspected period. The U.S. based firms named Magic Leap and Carbon3D both raised $2.8 billion, and the Chinese ones, namely Xiaomi and Horizon Robotics justified for an entire disclosed funding value of $1.2 billion. A Swedish company, Spotify, made it to the top five as well, having a total published funding value of $526 million.
IoT (Internet of Things) might come to an end even before starting, due to lack of investors
Several projects collapse and failure in the last years have made the investors cautious amidst the idealism for IoT technology and its application across distinct areas, Aurojyoti Bose, Financial Deals Analyst at GlobalData have reportedly said.
So, what diminished the hype around IoT are the project failures and the security concerns, as shown in the declining VC deal volume between 2017-2018. Still, the rise in deal value but the decline in volume indicates the fact that investors are in search of safe bets and favor investing only in minor but promising companies, Bose added.
While this may be true, M&A volume rose at a CAGR of 5.1% in the reviewed period, with an expansion staying true across all the years, except for 2017. In the meantime, M&A deal value decreased at a CAGR of 38.6% during the analyze. The high M&A deal value in 2014 and 2015 was principal because of big-ticket purchases like the $37 billion acquisition of Broadcom Corporation by Avago Technologies, $16.7 billion purchase of Altera Corporation by Intel, and Google’s $3.2 billion acquisition of Nest Labs.
The U.S. accounted for the dominant share in M&A deals with more than 50% contribution of deal volume and about 75% share in the total revealed deal value, during years 2014 and 2018, followed by China, UK, and France.
Jackson Bey was born and raised in Lethbridge Alberta but moved east when he was 22. Apart from running his own consulting firm. Jackson spends his time canoeing the many lakes of Ontario. As a financial journalist Jackson has published stories for CBC Business Online, as well as Buzz Feed and Motherboard. As a contributor to Billionaire 365, Jackson mostly covers markets and trade.