IoT startup scene is more vibrant than ever

The outlook for the IoT market from 2024 onwards is marked by continued expansion and innovation, driven by the evolution of technology, increased global connectivity and the integration of AI and machine learning. Consequently, the IoT start-up scene has become quite dynamic in recent years, with many companies emerging.

According to the new ‘IoT Startup Landscape 2024’ report by IoT Analytics, the global market today has 3,300 active IoT startups – a sharp increase from the 1,205 active startups identified in 2021.

‘The IoT startup scene is more vibrant than ever,’ says Knud Lasse Lueth, CEO at IoT Analytics. Many are ready to become more integrated into our daily lives and industrial processes, offering previously unattainable efficiencies, insights and capabilities.

Among the many insights that can be gained from the report, the following stand out:

• Several large investment rounds for IoT hardware startups.

• Techstars continues to lead the way in investments in IoT startups over the long term. As of April 2024, the US-based venture capital firm had invested in 73 active IoT start-ups founded between 2016 and 2024. This is more than double the amount of investments in IoT startups by the US National Science Foundation – the US federal agency that supports research and education in the fields of science and engineering – which came in second, with 31 investments in still-active IoT startups founded between 2016 and 2024.

• North America has the largest number of IoT startups, but Asia is gaining ground. Of the 3,300 startups identified, 36 per cent are in North America, compared to 41 per cent in 2021. Meanwhile, 24 per cent of IoT startups are in the Asia-Pacific (APAC) region, compared to 16 per cent in 2021, reflecting the diversification of the IoT startup scene.

• More than a quarter of startups focus on the manufacturing sector, but the focus on smart cities and public services is increasing. Although the overall share of active IoT startups targeting the manufacturing sector remains at approximately 36 per cent – still the highest – recent years show a declining trend. In 2023, only 28 per cent of newly founded IoT start-ups targeted the manufacturing sector, down from 33 per cent in 2021 and the peak of 40 per cent in 2017.
  
  IoT is expected to penetrate deeper into other sectors, from healthcare to agriculture and retail. IoT will play a crucial role in the development of smart cities, contributing to sustainability and improving the quality of urban life. From intelligent traffic management to energy-efficient buildings and environmental monitoring, IoT will be key in creating more sustainable and liveable urban environments.
  
  In the manufacturing sector, IoT will further streamline operations through smart factories, increasing efficiency and productivity. In the healthcare sector, the expansion of IoT will lead to more personalised patient care and advanced remote monitoring solutions. Agriculture will see an increase in precision farming techniques, while retail will take advantage of IoT to improve customer experiences and supply chain optimisation.
  
  PitchBook estimates that the industrial IoT (IIoT) market will reach $501.4 billion by 2026.

• Of the 3,330 IoT startups that are currently active, only 175 (5.3 per cent) have a visible focus on AI as part of their IoT offering. IoT Analytics believes that this figure will rise sharply in the coming months and years, as the appetite for IoT innovation in companies is high and innovation in new fields often comes from start-ups.
  
  The convergence of IoT with technologies such as AI, 5G and edge computing will unlock new capabilities. AI will bring smarter, self-learning IoT systems capable of making predictive analyses and autonomous decisions. The proliferation of 5G will provide the bandwidth and speed needed for more complex, data-intensive IoT applications. Edge computing will solve latency and bandwidth challenges, making IoT systems more efficient and responsive.

• The future of IoT will also see a shift towards more user-centred designs, with a focus on improving the user experience and interaction with IoT devices. This will involve intuitive interfaces, seamless integration with other devices and systems and greater personalisation.
  
  In the consumer space, IoT will continue to evolve, offering more integrated and interactive smart home systems. This will include advances in home automation, security and entertainment, driven by user demands for convenience and connectivity.

To summarise, the future of IoT start-ups is one of great potential and transformative impact. However, this future also requires responsible and secure implementation, ensuring that the benefits of IoT are realised while its challenges and risks are managed.