The Transform Technology Summits start October 13th with Low-Code/No Code: Enabling Enterprise Agility. Register now!
In the 2014 movie Transcendence, Johnny Depp plays a super powerful virtual sentient being with limitless power. In one scene, scientists examine a sample of rainwater under a microscope only to realize that it is swarming with intelligent nano-robots. These nano-robots are connected to, and controlled by Depp’s character, allowing him to transform everything in the world.
Perhaps rainwater is not connected to the cloud at the moment, but it seems that almost everything else is either already connected or going to be in the next few years. Gartner, McKinsey, and other research groups all predict that the Internet of Things (IoT) will be a very large market.
And we’re seeing brand new companies spring up to develop IoT technologies — everything from innovative sensors to dedicated platforms and new devices. Israeli companies are following the trend. Dozens of IoT-related Israeli startups have been founded to date, and many of them have pulled in significant funding. To have a more comprehensive understanding of the opportunities within this “Next Big Thing,” our investment firm, TLV Partners, mapped out the local landscape. The map is still a “work in progress,” and we welcome any feedback and comments to help us refine it.
Keep in mind that there are many more IoT-related startups in Israel than are shown here (some sources show over 300 of them). We tried to focus on the most interesting/advanced companies and organize them in an easy-to-read manner.
One major challenge we faced in conducting this research was to determine which companies are part of the ecosystem. Since the Internet of Things has such a broad definition, we had to start with deciding what “things” are. We used this general rule: “IoT includes every connected thing that is not a computer or a smartphone.” We then made sure that the companies are suitable using the Goldman Sachs’ S-E-N-S-E framework. According to GS, five attributes distinguish IoT from “regular” Internet: sensing, efficient, networked, specialized, and everywhere. This strategy helped us put together what we believe is a good list.
We put a lot of effort into making our map as intuitive and easy to read as possible. The result is a 2D chart on which all companies are organized. The X axis divides the “things” (sensors, actuators, smart devices, etc.) into five categories by usage. The Y axis shows where the company puts its main attention: the connected thing itself, the IoT platform, or data analysis for security/business purposes.
Security and privacy concerns have received massive media coverage in the past few months. Just imagine someone hacking into your home network through your refrigerator, opening your connected door-lock and disabling the connected alarm. Earlier this year, two hackers demonstrated how they could wirelessly control a driving jeep and disable the driver’s control over the brake peddle. There is no doubt that IoT security is a major pain point, and we can see more and more companies entering this domain. As you can see, a few IoT cyber security companies are already on the map. Considering the proven skills and experience in the Israeli cyber security scene, it is safe to say that Israeli startups will play a major role in addressing this important market.
Data-related technologies such as root cause analysis and predictive maintenance (PDM) are expected to bring a dramatic change to the industrial sector in the next couple of decades. Last year, a large American manufacturer announced it was able to generate over $1 billion of revenues by using data-related solutions in its production environment. And this is just the beginning. Israel holds significant talent in various data-related domains such as BI and big data analytics, and we expect to see some new and exciting startups addressing the Industry 4.0 space as well as other deep analytics solutions.
Another interesting IoT vertical that Israel has strength in is agriculture. Since the 1950s, Israel has been a major exporter of agriculture technology (agritech). The combination of various renowned research institutions, advanced bio-tech industry, state-of-the-art farms and comfortable climate, makes Israel a great place for agritech innovation. From drip irrigation to biological pest control, the local ecosystem has been the source for some of the world’s most innovative agritech technologies. Agritech IoT is a multibillion-dollar opportunity, and we expect Israeli startups to get a piece of the pie.
IoT poses a big opportunity for Israeli startups, and we are already seeing fast and keen entrepreneurs coming up with smart ideas and solutions. Time will tell how this market will evolve. One thing is for sure – it will be huge, and the greatest entrepreneurs will build big companies around it.
Eitan Bek is a cofounder of TLV Partners, a Tel Aviv, Israel-based VC fund formed earlier this year. He previously worked for 10 years as a General Partner at Pitango.
Roy Leiser is an investment manager at TLV Partners.
VentureBeatVentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative technology and transact. Our site delivers essential information on data technologies and strategies to guide you as you lead your organizations. We invite you to become a member of our community, to access:
- up-to-date information on the subjects of interest to you
- our newsletters
- gated thought-leader content and discounted access to our prized events, such as Transform 2021: Learn More
- networking features, and more