Venture capital flows for industrial IoT startups – 2018’s biggest bets on Industry 4.0
A slew of enterprise funds and venture capital has been staked on the enterprise-facing internet-of-things (IoT) sector in recent months, as vendors have got a better grasp of the technology and industrialists have got a better grip of digital transformation at last.
Most investments in the so-called Industry 4.0 (or Industrie 4.0, to stick with the German) space went on software solutions, invariably harnessing artificial intelligence (AI) techniques, designed to enhance decision making and performance on the factory floor, and beget new innovation down the line.
An end-of-year flurry included a record-breaking $320 million funding round for Chinese firm G7 Networks. But the G7 deal was incongruent; its timing was more reflective of the momentum in the market; most investments in the IoT software space were concerned with smaller Series A and B start-up and scale-up funds.
The identity of the investors reveals also the new opportunities and old opportunists.
Certain of the oil majors were present and correct, as well-heeled suitors at the fringes of the innovation dance. The likes of Shell Ventures, Total Energy Ventures, and Chevron Technology Ventures, as well as French electric utility ENGIE, provided the means in 2018 for these IoT startups to go further in 2019. Meanwhile, technology outfits like Chinese cloud provider Tencent, Japanese operator KDDI, and German manufacturing giants Siemens also wrote cheques, and took equity.
Here, we consider some of the most significant deals of 2018.
Osprey Informatics – $2.75 million (December)
Calgary based industrial AI and IoT provider Osprey Informatics raised $2.75 million ($3.75 CAD) in December from Shell Ventures and Evok Innovations, with participation alongside from InterGen Capital and existing shareholders.
The company’s software-as-a-service (SaaS) platform, Osprey Reach, manages remote cameras at a massive scale. It employs AI to analyse images and video, cross data with inputs from other sensors and systems, and deliver actionable insights.
“This strategic investment provides not only capital, but also access to global energy leaders. We are now well positioned to grow our deployments throughout the Industrial IoT,” the company’s chief, Rob Logan, said of the new funding round.
Osprey claims over 30 energy companies in North America use its Osprey Reach platform to reduce operating costs and mitigate environmental and safety risks. The new investment will be used to bring to market additional AI solutions, including methane detection.
G7 Networks – $320 million (December)
The most significant venture round in the enterprise IoT space, ever; Chinese firm G7 Networks completed a $320 million funding round in December, claiming a new record for an IoT ‘start-up’. Investments came from Total Energy Ventures (TEV) International, Tencent, and GLP, among others.
G7 Networks, headquartered in Beijing, specialises in IoT solutions for the logistics sector. Many of China’s largest logistics companies are on its books, along with municipalities, warehousing companies, financial institutions, petrol stations, and vehicle OEMs.
The company has grown with the Chinese government’s policy to digitise the country’s logistics sector as part of its broader efforts upgrade national road infrastructure. “G7 is uniquely positioned at the crossroads of road and technology to build the most robust and widely used logistic system in the world,” the company said.
Its new $320 million investment is geared towards a global view. G7 “stood out” for investors as a candidate with “the largest share and the most comprehensive portfolio”.
MachineMetrics – $11.3 million (December)
Massachusetts based industrial IoT and AI startup MachineMetrics confirmed $11.3 million in Series A funding for its factory analytics solution in December, as part of an end-of-year venture-capital spree. “Now is the internet moment for manufacturing,” said the company’s chief executive William Bither of the deal.
Major backing came from Seattle venture capital firm Tola Capital in the Series A round, alongside lesser offers from Hyperplane Venture Capital, Long River Ventures, Mass Ventures, Hub Angels and Firebolt Ventures – all existing investors in MachineMetrics.
MachineMetrics provides advanced analytics tools to bring predictive and prescriptive maintenance and problem solving to the factory floor., and benchmark machine performance. Its customers include Snap-On Tools, National Oilwell Varco, Gardner Denver, Continental, Saint Gobain, and Shiloh Automotive, among others.
Tola Capital said of the deal: “Manufacturers have to digitise if they want to remain globally competitive. Real-time shop floor visibility is the first step toward digital transformation… It’s no longer a question of if but when manufacturers will adopt this transformative technology.”
Unabiz – $10 million (August)
Sigfox operator UnaBiz raised over $10 million in Series A funding to develop IoT infrastructure and services in Singapore and Taiwan in August. The funding included investments from Japanese operator KDDI and French electric utility ENGIE.
Further investments came from angel investors in Singapore, as well as Taiwanese security management giant Shin Kong Security, a subsidiary of the Shin Kong Group.
UnaBiz said the new funds will deliver “scalable, cost-efficient and high-quality” solutions to address the digital challenges in key sectors, including aerospace, facilities management, food and beverage, logistics, security, supply chain, and smart cities. “UnaBiz will now play a more prominent role in empowering massive IoT and in positioning Singapore as the global IoT innovation hub,” he said.
UnaBiz has launched national networks in Singapore and Taiwan during the past two years. Henri Bong, the company’s chief and co-founder, said the new funding will see the business enter a new phase of growth. UnaBiz claims 200 partners across Asia, connecting devices in over 25 countries and five continents.
Seeq – £23 million (July)
In July, Seattle-based industrial IoT software provider Sees Corporation secured $23 million in Series B funding from Colorado based Altira Group, a venture specialist in oil and gas technology startups. Altira Group was flanked by Chevron Technology Ventures and Siemens-backed next47 in the funding round.
Seeq enables manufacturers to “analyse, predict, collaborate, and distribute” data insights to improve factory performance. Its software runs on Microsoft Azure or Amazon Web Services cloud platforms, or in mixed on-premise and on-cloud deployments.
The Series B fund will bolster Seeq’s international push, notably in the manufacturing sector. “Our collaboration speaks to the need for new analytics offerings for manufacturing customers,” said Seeq chief, Steve Sliwa.
But the company will attack on all fronts: by industry vertical, covering every market from oil-and-gas to pulp-and-paper; by tech vendor, by expanding its partnerships with the likes of Honeywell, OSIsoft, Rockwell, Schneider Electric, and Siemens; and by audience, by going beyond process engineers to also appeal to managers, data scientists, and operational teams.
Falkonry – $4.6 million (June)
California industrial AI software provider Falkonry announced it raised $4.6 million in a Series A funding round in June, taking its total funding to date to $10.9 million. The round was led by Presidio Ventures, the early-stage venture capital arm of Sumitomo Corporation.
Falkonry provides machine learning to brands like Toyota and EDP. Its Falkonry LRS machine learning system, designed for non specialists, uncovers patterns in operational data and renders actionable insights for engineers and managers. It claims to improve throughput, uptime, yield and product quality.
Industrial outfits can realises operational improvements in just three weeks, the company claims. Falkonry has found success in the oil and gas, automotive, semiconductor, mining and metals, power and energy, and industrial equipment sectors.
C3 IoT – $100 million (January)
AI and IoT platform provider C3 IoT announced $100 million of new funding in January. The firm trumpeted its “social and environmental benefits” in the deal announcement, as its ‘transformation’ software is pitched to the healthcare and energy markets.
The round drew funds from existing investors including TPG Growth, Breyer Capital, and Sutter Hill, and new interest from The Rise Fund, which backs social-and-environmental impact technologies. In January, on the back of the deal, C3 IoT said it had posted a record 2017 for orders, and expanded into new industries, including aerospace, discrete manufacturing, and oil and gas.