Investment stays strong for early-stage IoT startups, says Avnet Abacus
Venture capital investment in IoT startups increased in 2022, despite a drop of 35 percent in overall venture capital markets, according to component distributor Avnet Abacus.
The distributor analysed Crunchbase data for companies listed under the Internet of Things to measure the level of investment activity happening within IoT.
The total amount raised by IoT startups globally was $4.3 billion in 2022, down from $5.6 billion in 2021, but due to a reduced number of investments the average investment round was increased. Also the money invested in early-stage IoT startups – defined by Abacus as those seeking funds in Series A and B rounds – increased.
The total investment in early-stage IoT startups was $2.45 billion in 2022, up 12 percent from $2.19 billion the previous year. The total investment for late-stage IoT ventures was $1.08 billion in 2022, down 54 percent from $2.36 billion in 2021, and 36 percent lower than 2020’s figure of $1.70 billion. Angel and seed investors in the IoT were also proceeding more cautiously last year, providing funds of $261m in 2022 compared to $404m in 2021.
The decline of late-stage funding reflects a lack of confidence in the short-term prospects for companies and the chance for VCs to get paid back with a company sale or IPO. However, the strength of early-stage investment, suggests that VCs have continued confidence in IoT and its inevitable impact.
Average rounds
The IoT companies that got funded in 2022 pulled in $15.9 million on average, up 30 percent from the previous year. European IoT companies drew in even more at $16.7 million on average. The industrial IoT subsector companies’ average funding round reached $16.1 million in 2022, more than double the average investment of $7.3 million in 2021.
“The amount of funding companies receive in any product category gives an indication of how investors view the future for that technology,” commented Sara Ghaemi, technical director of Avnet Abacus, in a statement. “Despite venture capital generally cooling off due to current economic conditions, the research reveals investor confidence is higher than ever for the long-term prospects of companies developing products in the IoT.”
Acquisitions
Acquisitions of companies in IoT worldwide were at their second highest ever in 2022 with 116 companies snapped up, marginally down from the peak of 117 companies in 2021. In the US, 48 IoT startups were purchased in 2022, down from an all-time high of 58 in 2021.
Europe fared even better than previous years with 41 acquisitions making 2022 the continent’s highest year ever for IoT exits.
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