IoT Start up Report

THE STATE OF THE EUROPEAN& ISRAELI IoT INDUSTRY

INTRODUCTIONSince we started, one of the key aims of the team at Tech.eu has been to track all of the funding rounds and exits in Europe, providing the most comprehensive and accurate record and analysis of the European technology scene.

We do this by meticulously monitoring hundreds of sources, across multiple languages and regions.

During the last 18 months we’ve published multiple reports focused on the funding and M&A markets at a Europe-wide level, as well as country and vertical specific reports.

This report focuses on the European and Israeli Internet of Things (IoT) sector in 2015 and early 2016.

In this report we take an in-depth look at the bigger funding and M&A trends in the IoT sector, as well as an overview of the main deals that have taken place in the region and the company and investors involved.

This report covers IoT activity in 2015 and in the first four months of 2016 (2016 YTD), unless stated otherwise.

The traditional definition of IoT refers to the process of adding sensing and Internet connectivity capabilities to everyday life objects.

However, we believe that the applications of IoT are vast, and affect both hardware and software industries in the fields of:

• Agritech: crop and field management based on the analysis of data collected by sensors

• Automotive: the connected car and related services• Smart city: sensor-related transportation services and

hardware and software combinations for cities to run more efficiently

• Smart home: digital and remote control of homes and services

• Sports & health: wearable technologies and data measurement

• Industrial IoT: sensor-based applications for the enterprise and industrial sector

• Network solutions: development of networks that sustain IoT services

• Developer tools: APIs and software tools to create and manage IoT services

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INTRODUCTION

Examples of companies in each vertical are shown on page 4, as well as throughout the report.

This report is powered by Nokia Growth Partners, (NGP), an independent, global venture firm backed solely by tech giant Nokia. NGP has backed multiple IoT companies across the world and has more than $1 billion in assets under management including its $350 million IoT fund.

This report has also been put together in collaboration with Dealroom.

Dealroom provides rich data, research and analytics on technology companies.

Dealroom tracks over 500,000 companies and 5,000 investors in Europe and beyond, using algorithms and natural language processing. Data is augmented by their community of 7,500+ contributors such as founders, VCs, accelerators, governments and tech journalists. Data is verified by a rigorous internal manual curation process.

We’ve worked to make this report as comprehensive and valuable as possible. Please refer to the end of this report for methodology and disclaimers. For any questions or comments regarding the report we invite you to email [email protected].

This report was written by:

• Jaime Novoa, analyst at Tech.eu• Robin Wauters, founding editor of Tech.eu• Yoram Wijngaarde, founder of Dealroom• Julien Puls, financial analyst at Dealroom

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TO THE MAN IN THE ARENA

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In January this year, we stood in front of the Nokia board pitching to raise what is currently the single largest fund for IoT investments in the world. Much like the entrepreneur pitches to the VC to raise money, the VC pitches to the LP. Having realized not only the investment opportunities that lie in IoT, but the power IoT technologies have to change our everyday life, we knew we wanted to expand our commitment to IoT. With the $350 million of new money that Nokia committed to invest, we are hard at work finding the most promising use cases and entrepreneurs that will unlock the potential of IoT.

IoT creates new opportunities for everyone to get higher awareness of the things around us. IoT will help open “dark pools” of data, information hitherto untapped, whereby we can prevent diseases, use natural resources more efficiently, drive more safely and augment our homes to new comfort levels.

Tech.eu has done a wonderful job in monitoring the IoT activities in Europe and pulling that intelligence into this report. This paper celebrates both the up-and-coming and the already proven IoT businesses in Europe, a market where IoT activity is growing rapidly.

Inspired by the famous Theodore Roosevelt speech, I want to dedicate this report to all the men and women out there who spend their time building companies, who come up short time and time again, who make mistakes but who, at best, in the end experience the triumph of high achievement, and who, at worst, if they fail, at least fail while daring greatly. To the men and women in the Arena. To all those who have managed to raise money for the cause they believe in and those who continue building the companies of the future.

BO ILSOE - Managing Partner Nokia Growth Partners (NGP)

INDEX

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Introduction 2-3

The the man in the IoT arena (Nokia Growth Partners) 4

Index 5

IoT Verticals 6

Key funding takeaways 7

Key exit takeaways 8

Funding analysis 9

Key funding trends 10

Funding by quarter (2015 – Q1 2016) 11

Funding by month (2015 – 2016 YTD) 12

Funding by stage (2015 – Q1 2016) 13

Funding by size of investment (2015 – 2016 YTD) 14

Funding activity by country (2015) 15

Funding activity by country (2016 YTD) 16

Funding by vertical (2015) 17

Funding by vertical (2016 YTD) 18

Nokia Growth Partners 19

Iot Investment heatmap 20

Top 10 funding rounds (2015) 21

Top 10 funding rounds (2016 YTD) 22

Top investors by numbers of deals (2015 - 2016 YTD) 23

Notable funding rounds 24-32

Exit analysis 33

Key exit trends 34

Exits by quarter 35

Exits by month & VC involvement (2015 – 2016 YTD) 36

Exits by location of acquired companies & acquirers (2015 – 2016 YTD) 37

Exits by vertical (2015 – 2016 YTD) 38

Top exits (2015 – 2016 YTD) 39

Notable M&A transactions 40-43

Notable IoT startups 44-54

European IoT landscape: Future predictions 55

What does the future hold? 56

Methodology and disclaimers 57-60

IoT VERTICALS

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Automotive Agritech Smart citySmarthome

SportsDeveloper

toolsHealth

Network solutions

Industrial

Seed Stage

Early Growth Stage

Late Growth Stage

KEY FUNDING TAKEAWAYS

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KEY EXIT TAKEAWAYS

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FUNDINGANALYSIS

KEY FUNDING TRENDS

An accelerating industry

The European and Israeli IoT industry is accelerating. In 2015 there were 84 investments in the space, worth a combined €411 million. In the first four months of 2016 alone, the region has seen up to €242 million invested in IoT companies, across 49 deals.

The latter figures represent a significant year-on-year increase. In Q1 2015 there were just nine IoT funding deals, versus 41 in the same period in 2016.

In the first four months of 2016 there has been an average of 12 IoT funding deals per month, a considerable uplift compared to the previous year, that have combined for €242 million, or almost 60% of all capital raised in the sector in all of 2015, and a 23% year-on-year uplift.

The maturation of IoT companies

As a somewhat nascent vertical and technology, it should be no surprise that the vast majority of IoT investments in Europe and Israel have been quite small, to date, of €1 million or smaller.

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However, over the past few months and quarters, the number of investments in the €1 million to €10 million bracket (as well as Series A and B deals) have increased significantly, a sign that the sector is maturing fast and that a certain number of companies have found product/market fit and have stronger capital needs.

Late-stage investments continue to be rare, and only French company SIGFOX raised more than €100 million in a single round since the beginning of 2015 (€104.5 million).

Building the infrastructure to connect millions of new devices

Germany, Israel and France are the three countries that have shown the highest levels of IoT tech-related funding activity in 2015 and early 2016. Vertical-wise, network solutions (which are key to build the necessary infrastructure to provide connectivity to millions of devices), smart home, automotive, health solutions and developer tools, are the verticals that have attracted most investor attention.

It’s also worth highlighting the significant involvement of corporate investors in IoT investments, such as Cisco (Evrythng, Veniam, Worldsensing), Verizon (Veniam) and Orange (Actility, Veniam), and also Nokia’s acquisition of Withings.

ANALYSIS

• Funding activity in the IoT sector has grown significantly over the past few quarters, both in terms of number of funding rounds and total investment volume

• European and Israeli IoT companies raised €411 million across 84 deals in 2015

• In the first quarter of 2016, 41 different IoT companies received a combined €159 million in venture funding

• These figures represent a significant year-on-year uplift, especially in terms of total number of investments, which grew exponentially, from eight in Q1 2015 to more than 40 in the first three months of 2016

Funding by quarter (2015 - Q1 2016)

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Funding deals Q1 2016

Investment volume Q1 2016

YoY change +356% -7%

QoQ change +37% +33%

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ANALYSIS

• Monthly data also shows an acceleration in IoT investment activity towards the second half of 2015 and early 2016

• Investment volume peaked in February 2015, mostly due to France-based SIGFOX’s €104.5 million round

• In terms of number of deals, November 2015 was the most active month, with 19 investments in IoT companies. Another French company, Netatmo, was mostly responsible for the spike in investment volume in November, as it raised €30 million

• In early 2016, there have been at least 11 IoT investments per month, representing a significant increase compared to the same period a year ago. The spike seen in April 2016 was caused by large rounds from French automotive companies Drivy and Koolicar

Funding by month (2015 - 2016 YTD)

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ANALYSIS

• As a relatively nascent sector, the vast majority of investments in Internet of Things companies have traditionally taken place at the early stage

• Interestingly, the number of seed-stage deals has remained constant over the past few quarters. At the same time, Series A and B deals have increased, which points to the maturation of the sector and increasing capital needs for IoT companies with good traction

• The only three Series C (or beyond) IoT funding deals seen in Europe since 2015 were Moovit’s €45.4 millionSigfox’s€104.5 million and Drivy’s €31 million in April 2016

Funding by stage (2015 – Q1 2016)

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* Analysis based on rounds of which the stage was specifically disclosed.

ANALYSISFunding by size of investment (2015 – 2016 YTD)

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• As previously mentioned, since 2015 the majority of IoT investments have been relatively small in size (lower than €5 million)

• While funding rounds of €1 million or smaller have plateaued at approximately 10 per quarter, in Q1 2016 there was a noteworthy increase in €1 million to €5 million deals, which rose to 15 such deals for the quarter

• The same trend applies to investments of €5 million to €20 million; another sign of the maturation of the space and the acceleration of the IoT industry

• Late-stage deals continued to be relatively uncommon, with just six larger than €20 million in the past five quarters

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ANALYSISFunding activity by country (2015)

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• Israel accounted for the highest number of IoT investments in 2015, at 14, thanks to a significant level of activity in the IoT verticals of developer tools and smart cities

• Four additional countries saw at least 10 IoT deals last year: UK, France, Sweden and The Netherlands

• Germany, which has traditionally ranked in Europe’s top three countries in terms of investments, saw just six IoT deals in 2015

• IoT companies from at least 16 different European countries raised capital in 2015

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ANALYSISFunding activity by country (2016 YTD)

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• Germany-based IoT startups have gotten off to a fast start in 2016, with nine investments in the first four months of the year in areas where the country has traditionally have a strong presence: automotive, industrial IoT and network solutions

• France ranked second, with 8 IoT investments in Q1 2016

• Israel, which led the region in 2015, saw seven investments in early 2016

• Sweden and the UK rounded the top five, with five and four deals, respectively

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ANALYSISFunding by vertical (2015)

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• Network solution IoT companies, led by SIGFOX’s €104.5 million round, attracted the highest percentage of capital in the sector, at €150 million across eight deals

• Smart city was the second vertical in terms total investment volume, largely thanks to Moovit’s €45.4 million Series C in January 2015

• Companies that build IoT tools (frameworks, APIs) to be used by developers were also high on the list, with 10 investments

• Although not visible on the graph to the right, it’s worth noting that in 2015 there were four investments in the IoT retail sector (which combined for just €500,000 million)

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ANALYSISFunding by vertical (2016 YTD)

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• So far in 2016, automotive companies have attracted €55 million across five deals, the largest amount for any IoT category this year, thanks to big rounds from Drivy and Koolicar

• In just four months, there have been as many investments in the smart home sector as in 2015; another sign of the acceleration visible in the IoT space over the past few quarters. Smart home startups raised a combined €38 million in January through April 2016, vs. €42 million in 2015

• Health was the second category in terms of number of deals, with six investments worth a combined €23 million

• Six different verticals saw investment activity surpass the €20 million barrier in January through April 2016

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IoT INVESTMENT HEATMAP

2015 2016

Q1 Q2 Q3 Q4 Q1 Q2 (QTD)

Automotive €14 €26 €55

Agritech €1 €8

Smart city €45 €7 €16

Smart home €2 €3 €33 €16 €26

Sports €5 €15

Developer tools€1 €11 €3 €27

Health €18 €5 €12 €8 €22 €1

Network solutions€105 €23 €23 €22 €4

Industrial €1 €7 €25 €15 €8

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Funding by vertical (2015 – 2016 YTD, million euros)

ANALYSISTop 10 funding rounds (2015)

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• Toulouse-based SIGFOX’s €104.5 million round was the highest in the IoT sector in 2015, and at least twice as big as the second one, Moovit’s €45 million

• Five additional investments surpassed the €20 million barrier: Moovit, Netatmo, Argus Cyber Security, Actility and Vayyar

• Israel’s dominance in the IoT space in 2015 is clearly visible in the graph to the right: the country accounted for six of the region’s top 10 rounds

• Interestingly, no UK company made it to the top 10

• Four of the top 10 companies were providers of network solutions for the Internet of Things

Million

€10.0

€10.1

€13.2

€18.2

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€22.5

€23.6

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€45.4

€104.5

Relayr (DE)

Anima Connected (IL)

Cellwize (IL)

EarlySense (IL)

Vayyar (IL)

Actility (FR)

Argus Cyber Security (IL)

Netatmo (FR)

Moovit (IL)

SIGFOX (FR)

ANALYSISTop 10 funding rounds (2016 YTD)

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• French automotive company Drivy raised the largest round in Europe and Israel in the first four months of 2016, at €31 million

• Germany’s Tado and Portuguese startup Veniam were the other two companies in the region to surpass the €20 million mark. Veniam’s round included the participation of well-known US investors Union Square Ventures and True Ventures, as well as the venture arms of Orange, Verizon and Cisco

• Koolicar and Telensa, rounded the top five

• France was the country with the highest share of investments in the top 10, at three

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Estimote (PL)

Neura (IL)

Rombit (BE)

Rythm (FR)

LifeBEAM (IL)

Telensa (UK)

Koolicar (FR)

Veniam (PT)

Tado (DE)

Drivy (FR)

ANALYSIS

• In the past 16 months, Bpifrance has made five investments in different IoT companies, the highest number amongst all tech investors

• Ween• SIGFOX• Snips• Netatmo• Drivy

• Eight different investors recorded two deals in the period. Only Bpifrance had more than two

• It’s worth noting that the list of top 10 backers includes four corporate investors (NGP, Swisscom, Mitsui and Cisco Investments), pointing to the high interest of large multinationals in IoT solutions and for cooperation between startups and corporates

Top investors by number of deals (2015 – 2016 YTD)

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Chalmers Ventures

Cisco Investments

Ginko Ventures

HTGF

Inventure

LVenture Group

Mitsui & Co

Swisscom

Bpifrance

NOTABLE FUNDING ROUNDS

NOTABLE IoT FUNDING ROUNDSDrivy

Peer to peer (P2P) car rental platforms have existed for many years in Europe, and Drivy was one of the original companies in the field.

Founded by Paulin Dementhon in 2010, the French company has become one of the leaders in the space, with 36,000 cars and 800,000 users, and operating across France, Germany and Spain.

Whilst other P2P car rental marketplaces rely on users exchanging car keys in person, Drivy has developed Drivy Open, a system that allows customers to open rented cars by simply using their smartphones. This is made possible by specific sensors and hardware that Drivy provides to its customers to install in their cars.

Drivy raised the largest IoT round in the first four months of 2016, at €31 million. The deal included the participation of well-known investors Index Ventures, NGP and Alven Capital.

* According to LinkedIn data. 25

Name of company Drivy

Location France

Vertical Automotive

Founded in 2010

Employees* 69

Total funding €48.9 million

InvestorsIndex Ventures, NGP, Bpifrance, Cathay Innovation, Via-ID, Alven Capital

Last funding round €31 million (April 2016)

NOTABLE IoT FUNDING ROUNDSTyto Care

IoT solutions applied to the healthcare sector attracted €42 million in funding in 2015. Tyto Care was responsible for €10 million, as the Israel-based company ramped up production and commercialization of its health monitoring devices in both the European and US markets.

The $11 million round was led by an undisclosed American strategic investor, and also included the participation of LionBirdand Teuza Capital Fund. Interestingly, US-based retailer Walgreens also backed the health startup, providing additional capabilities in the distribution of Tyto Care’s devices in the US.

Tyto, the company’s main product, is a connected device that through multiple sensors allows patients to perform comprehensive physical exams anywhere. The data is then submitted to physicians and doctors for its analysis.

Tyto is the developer of both the device and the online platforms that act as the connecting tissue between hospitals, clinicians and patients.


Name of company Tyto Care

Location Israel

Vertical Health

Founded in 2011

Employees* 23


InvestorsCambia Health Solutions, Fosun Pharma, LionBird, OrbiMed Israel Partners, Teuza Venture Capital Fund, Walgreens

Last funding round €10 million (September 2015)

NOTABLE IoT FUNDING ROUNDSArgus Cyber Security

Argus Cyber Security represents one more example of Israel’s long standing tradition and strength in the technology security sector.

The Tel Aviv-based company has developed a series of cyber security solutions for the automotive industry, coinciding with significant and strong efforts from Tesla, Google and other traditional car manufacturers to turn most vehicles on the road into connected cars.

As several hacks have recently shown, connected cars can be remotely hacked and taken control of. As Argus demonstrated in late 2015, their security solutions can prevent this, mitigating the rising risk to human lives and property.

Argus Cyber Security has raised more than €27 million to date, including a €23.6 million round from multiple investors in September 2015.

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Name of company Argus Cyber Security

Location Israel

Vertical Automotive, security

Founded in 2013

Employees* 32


InvestorsAllianz Ventures, Magma Venture Partners,Magna International, OurCrowd, Motus Ventures, Vertex Ventures

Last funding round €23.6 million (September 2015)

* According to LinkedIn data.

NOTABLE IoT FUNDING ROUNDSRelayr

Berlin-based relayr is mostly known among developers and IoT service providers for WunderBar, a small hardware development and product prototyping kit.

Relayr launched WunderBar in 2013 and ramped up its production with a $111,000 crowdfunding campaign on the Dragon Innovation platform.

Relayr core offering is ‘Cloud’, a turnkey platform for sending, receiving and saving data from connected devices and sensors.

After participating in Startupbootcamp’s accelerator and raising a $2.3 million seed round in September 2014, relayr raised a €10 million Series A round in November 2015 led by renowned Silicon Valley investor Kleiner Perkins Caufield Byers.

Other investors in the Series A round included Munich Venture Partners and Tom Noonan, an executive at Cisco.

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Name of company Relayr

Location Germany

Vertical Network solutions

Founded in 2013

Employees* 58


InvestorsKleiner Perkins Caufield & Byers, Munich Venture

Partners, Startupbootcamp, Tom Noonan

Last funding round €10 million (November 2015)


NOTABLE IoT FUNDING ROUNDSEvrythng

Evrythng has developed what it likes to call the ‘Internet of Things Smart Products Platform’, a platform that allows developers, brands and users to connect any consumer product to the web and manage real-data to drive applications.

The company spans three main areas: connected products, smart supply chains and customer engagement through data-driven smarter products.

“I had the idea that every physical object in the world — from the cars we drive, the clothes we wear, the beers we drink, and homes we live in — would have an addressable, real-time presence on the Web,” explained CEO and co-founder Niall Murphy in an interview with VentureBeat.

To date, Evrythgn has raised more than €13 million from investors such as Atomico, Dawn Capital, Cisco Systems or Samsung Ventures, which led its €6.8 million Series B in June 2015.

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Name of company EVRYTHNG

Location UK

Vertical Developer tools

Founded in 2011

Employees* 55


InvestorsAtomico, Dawn Capital, Samsung Ventures, Cisco

Systems

Last funding round €6.8 million (June 2015)


NOTABLE IoT FUNDING ROUNDSNetatmo

Paris-based Netatmo has been building smart home products since 2011. The company was founded by Fred Potter, who was also one of the original co-founders of Withings, another French IoT company that was recently acquired by Nokia for €170 million.

Netatmo has three main products and is currently in the final stages of the development process of its fourth, an outdoor security camera. The company’s products retail from €69 to €199.

Netatmo has raised €34.5 million in funding in two separate rounds.

Its first round, of €4.5 million, was closed in June 2013 and in November 2015 it raised €30 million in additional capital from Legrand, a French industrial group that is a global leader in products and systems for electrical installations and information networks, Iris Capital, Bpifrance and former Apple exec Pascal Cagni.

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Name of company Netatmo

Location France

Vertical Smart home

Founded in 2011

Employees* 115


Investors Legrand, Iris Capital, Bpifrance, Pascal Cagni

Last funding round €30 million (November 2015)


NOTABLE IoT FUNDING ROUNDSVeniam

Veniam’s goal is to build what its co-founder and CEO Joao Barros calls ‘the Internet of moving things’.

The Portuguese company, which is headquartered in San Francisco but has the vast majority of its employees in the city of Porto, is looking to enable free WiFi in urban areas by leveraging vehicles, thus creating a type of mesh network that would provide users of public transportation and pedestrians with free connectivity.

Since its inception two years ago, Veniam has raised more than €24 million in funding from notable investors. The company started off by raising a €4 million seed round from US-based venture capital firms Union Square Ventures and True Ventures.

In February 2016 it raised another round, to the tune of €20 million, from previous investors and also corporate backers such as Orange Digital Ventures, Verizon Ventures and Cisco Investments.

Veniam’s two main markets are Porto and Singapore.31

Name of company Veniam

Location Portugal

Vertical Network solutions, automotive

Founded in 2014

Employees* 39


InvestorsUnion Square Ventures, True Ventures, Orange Digital Ventures, Verizon Ventures, Cisco Investments

Last funding round €20 million (February 2016)


NOTABLE IoT FUNDING ROUNDSRombit

Antwerp-based Rombit is a company that specializes in the development of IoT platforms for the industrial and smart city sectors.

The company has developed a three layer solution, combining software, hardware and data storage capabilities, that can plug into existing IT infrastructure to provide a better understanding of a company’s performance.

Rombit has already developed multiple solutions in the smart city and freight and cargo space, such as BadgeControl or A-Sign.

The company raised its first round of external funding in March 2016, €10 million from Clear2Pay founder Michel Akkermans.

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Name of company Rombit

Location Belgium

Vertical Industrial IoT

Founded in 2012

Employees* 26

Total funding €10 million

Investors Michel Akkermans

Last funding round €10 million (March 2016)


EXITANALYSIS

KEY EXIT TRENDS

Limited M&A activity involving IoT companies

Exit activity in the European and Israeli IoT landscape remains limited.

From 2015 until April 2016, there were just 11 exits in the sector, including 10 acquisitions and one small IPO from Swedish company Plejd.

These 11 liquidity events combined for €446 million. 72% of which 72% belonged to just two acquisitions:

• Withings: acquired by Nokia for €170 million

• Red Bend Software: acquired by Harman International Industries for €154 million

Although not strictly a pure Internet of Things company, it’s also worth highlighting the acquisition of Alcatel-Lucent by Nokia for €15.6 billion. Alcatel-Lucent is a significant developer of IoT infrastructure in Europe and other markets.

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France and the US, as main location of acquired companies and acquirers

Three of the 11 exits seen in the period in Europe and Israel came from French companies, as the country became the IoT leader in terms of M&A transactions.

As previously noted for the overall regional technology markets, US-based companies were also the main acquirers of local IoT companies, tied at three acquisitions with the UK.

In terms of the category of the companies involved in exits, four of the 11 exits in the period came from developers of smart home products and three from startups in the health space, the highlight being Nokia’s €170 million acquisition of Withings in April 2016.

As the IoT sector grows and startups grow, one could expect M&A activity to increase significantly, both in terms of established multinationals acquiring competing startups and in the public flotation of private companies.

ANALYSIS

• To a certain degree, IoT remains a young industry, especially when compared to other more mature technology sectors. As a consequence of this, there has been limited activity in the European and Israeli exit markets over the past few quarters

• We have recorded 11 IoT M&A transactions since Q1 2015, with a maximum of three per quarter in Q1 and Q2 2015

• The majority of exits did not disclose the size of the transaction. The peak in exit value seen in Q1 2015 was caused by Israeli-based Red Bend Software’s €154 million acquisition by Harman International Industries

• Sweden-based Plejd was responsible for the only IPO of the period. Albeit a small one, of just €3.7 million

Exits by quarter

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ANALYSIS

• A monthly breakdown of IoT exits shows three additional M&A transactions in the first four months of 2016, one in January and two in April

• One of the April deals was the acquisition of France-based Withings by Nokia for €170 million, the largest IoT exit on record in Europe and Israel

• Although not included to the right, it’s also worth highlighting the €15.6 billion acquisition of Alcatel-Lucent by Nokia, closed in Q1 2016. Despite not being a pure IoT company, the French network developer is a significant provider of IoT infrastructure technology in Europe

• Investors participated in six of the 13 IoT exits that took place in 2015 and in the first four months of 2016, or 46% of the total

Exits by month & VC involvement (2015 – 2016 YTD)

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VC-backed Non-VC backed

ANALYSISExits by location of acquired companies & acquirer (2015 – 2016 YTD)

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• Three French IoT startups were sold over the past 16 months, the highest number in Europe and Israel. The three France-based companies were Mobiquithings (€27.7 million exit), Withings (€170 million) and Sen.se (undisclosed)

• Besides France, only Switzerland and Israel had more than one IoT exit in the period

• US companies were the main acquirers of European and Israeli tech startups in 2015 and early 2016. The importance of the US as a market for local exits was also visible in the IoT sector, as US-based companies were responsible for three IoT exits

• The UK and US combined for almost 50% of IoT exits

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Location of acquired companies

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UK

US

Location of acquirers

ANALYSISExits by vertical (2015 – 2016 YTD)

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• Three IoT companies in the health sector were acquired in 2015 and early 2016 in Europe and Israel

• Health was the second vertical with most exits in the period, only trailing smart home solutions

• Plejd and AlertMe were the two exits in the smart home space. Both companies were VC-backed. UK-based AlertMewas acquired by British Gas for €90 million after having raised €32.8 million from multiple investors

• In terms of total exit value, health took the lead with €170 million, as a result of Nokia’s acquisition of Withings

• Automotive came in second, as a consequence of Red Bend Software’s €154 million acquisition

€170 €154 €95 €28 €-0

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Health Automotive Smart home Network solutions

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ANALYSISTop exits (2015 – 2016 YTD)

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• Listed to the right are the only five IoT exits where the price of the acquisition (and IPO) was disclosed

• As previously mentioned, Withings’s acquisition by Nokia in April 2016 was the largest of the period, at €170 million

• Red Bend Software’s was the only other acquisition in Europe and Israel to surpass the €100 million barrier. The deal took place in January 2015

€4

€28

€91

€154

€170

Plejd (SE)

Mobiquithings (FR)

AlertMe (UK)

Red Bend Software (IL)

Withings (FR)

Million

NOTABLE M&A TRANSACTIONS

NOTABLE M&A TRANSACTIONSWithings

France-based Withings is one of the oldest connected health product manufacturers in Europe. The company, founded by Eric Carreel and Cedric Hutchings in 2008, has developed multiple products over the years, including activity trackers, smart weighing scales, thermometers, blood pressure monitors, home and baby monitors.

Prior to its acquisition by Nokia in April 2016 for €170 million, Withings had raised €30.3 million in funding from French investors, including Ventech, Bpifrance, IDInvest Partners and 360 Capital Partners.

As a result of its acquisition, which is expected to receive final approval by regulators in Q3 2016, Withings will become part of the company’s Nokia Technologies business.

Withings has more than 200 employees across offices in Paris, Cambridge, the US and Hong Kong.

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Name of company Withings

Vertical Health

Founded in 2008

Employees* 204

VC-backed Yes (€30 million)

Acquired by Nokia

Price €170 million

InvestorsVentech, Bpifrance, IDInvest Partners, 360 Capital Partners


NOTABLE M&A TRANSACTIONSRed Bend Software

Born in 1999, Red Bend Software transitioned over the years to the commercialization of multiple IoT solutions within the automotive and mobile space, including the development of M2M modules used for the Internet of Things.

The company was originally founded in Israel but ended up moving its headquarters to the US, while maintaining a significant software development center in Israel.

Between 2000 and 2008, Red Bend Software raised more than €30 million from multiple investors, including Pitango Venture Capital, Greylock Partners, Carmel Ventures and Coral Capital Management.

Red Bend was acquired by Harman International Industries in April 2016 for €154 million. Interestingly, Harman had originally acquired the also automotive software company QNX Software Systems in 2004 for $138 million, which then sold again to BlackBerry for $200 million in 2010.

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Name of company Red Bend Software

Vertical Security, automotive

Founded in 1999

Employees* -

VC-backed Yes (€30.4 million)

Acquired by Harman International Industries

Price €154 million

Investors

BackWeb Technologies, Carmel Ventures, Coral Capital Management, Greylock Partners, Infinity Venture Partners, Pitango Venture Capital, Poalim Ventures, Viola Credit


NOTABLE M&A TRANSACTIONSAlertMe

AlertMe was one of the first European companies in the smart home space. Founded in 2006 in the city of Cambridge, the company’s main product was Hive, a smart thermostat that allowed consumers to control the temperature of their homes remotely.

At the time of its acquisition, the company claimed that Hive was being used by 150,000 customers.

In two funding rounds in 2009 and 2010, respectively, the UK company raised more than €30 million in funding from investors such as Index Ventures, SET Venture Partners, Good Energies or British Gas.

The latter, which serves around 12 million homes in the UK, bought AlertMe in February 2015 for $100 million (or €90.9 million). As a result of the acquisition, AlertMe’s products and services were integrated into British Gas’ main offerings.


Name of company AlertMe

Vertical Smart home, security

Founded in 2006

Employees* 36

VC-backed Yes (€32.8 million)

Acquired by British Gas

Price €90.9 million

InvestorsBritish Gas, Good Energies, Index Ventures, SET Venture Partners, VantagePoint Capital Partners

NOTABLEIoT

STARTUPS

IoT STARTUPS TO FOLLOWLifeBEAM

Location Israel

Founded 2011

Industry Sports

Management team Omri Yoffe, Zvika Orron, Cid Carver, OmryCzapnik, Manny Reif, Shimon Hayun

Employees* 22


Investors Tri Ventures , Square Peg Capital, Atomic 14 Ventures, Wellborn Ventures, Cerca Partners

In their own words:

“LifeBEAM aims to become a global leader in sensing human performance during dynamic activities via innovative bio-sensing technology implemented into wearables.

The company initially focused on applications for the aerospace and defense markets, keeping jet pilots and astronauts safe in extreme environments by sensing and monitoring vital signs such as heart rate, SPO2, blood flow and activity.”

Similar companies:

• Cobi• Milestone Sports• Woo Sports• JOHAN Sports• PIQ


IoT STARTUPS TO FOLLOWKiwi.ki

Location Germany

Founded 2012

Industry Smart home

Management team Claudia Nagel, Christian Bogatu, Peter Dietrich

Employees* 30


Investors Paua Ventures

In their own words:

“KIWI provides secure and hands-free access for large multi-tenant buildings. With KIWI, your entrance door unlocks comfortably without buttons or searching through your pockets.

Consumers enjoy the safe, simple and convenient comfort of just walking through their doors with our transponder “Ki” in their pocket or our mobile app. Service providers – like post or waste management companies – gain work efficiencies.”

Similar companies:

• Convergent Home Technologies• eyeSight Mobile Technologies• EVRYTHNG• Sonos• Zimplistic


IoT STARTUPS TO FOLLOWCropX

Location Israel

Founded 2013

Industry Agritech

Management team Isaac Bentwich, Yossi Haran, Dr. Michael Dowgert, Nir Refaeli, Dani Dishback

Employees* 22


Investors OurCrowd, Innovation Endeavors , GreenSoilInvestments, Finistere Ventures

In their own words:

“CropX is an ag-analytics company that has developed the world’s most advanced adaptive irrigation service, which automatically optimizes irrigation, thereby delivering dramatic crop yield increase and water and energy cost savings to farms.

CropX’s technology was developed by a team of world-leading scientists and has been validated on-farm over the past five years.”

Similar companies:

• Cares Imaging• Farmlogs• Farm Dog Technologies• Farmeron• Crop-R• Phytech• Agworld


IoT STARTUPS TO FOLLOWKonux

Location Germany

Founded 2014

Industry Industrial IoT

Management team Sarig Duek, Oren Kind, others

Team * 33


Investors TechFounders, FOUNDER.org, New Enterprise Associates, UnternehmerTUM-FondsManagement, MIG Fonds

In their own words:

“At KONUX, we are building smart sensor systems for machine insights. With our patented technology and a team of young and seasoned talents, we are transforming a $100bn market.

Today the industrial world is struggling. Using outdated sensing technologies they can not prevent nor understand machine and infrastructure breakdowns. They are losing millions of dollars every year. We have developed the KONUX platform to solve this problem.”

Similar companies:

• Atonarp• SenseFly• SGI• Omegawave• Tacterion


IoT STARTUPS TO FOLLOWPhytech

Location Israel

Founded 1998

Industry Agritech

Management team Yochay Altman, Omer Guy, Eitan Peleg, SarigDuek, Itay Mayer

Employees* 22


Investors Mitsui & Co, Syngenta Ventures

In their own words:

“Phytech's PlantBeat technology is a simplified, alert-driven mobile platform which combines predictive algorithms and data analysis tools that integrate continuous crop health and supportive environmental data, distilled into real-time recommendations.

Phytech is helping growers in their day-to-day farming decisions impacting both the quality and yield of their crops, while reducing water usage. Our advanced solutions use state-of-the-art sensors, wireless communication, and innovative software for collecting and analyzing data.”

Similar companies:

• Crop-R• aWhere• Cares Imaging• FarmLogs


IoT STARTUPS TO FOLLOWActility

Location France

Founded 2010

Industry Network Solutions

Management team Olivier Hersent, Boris DezierVice , Nicolas,Jordan Vice , Bernard Jannes, Pedro Da Silva,Mehdi Hajjam

Employees* 76


Investors Swisscom Ventures, Orange, Ginko Ventures, KPN Ventures

In their own words:

“Actility is an industry leader in LPWA (Low Power Wide Area) large scale infrastructure with ThingPark®, the new generation standard-based IoT / M2M communication platform.

Actility’s ThingPark Wireless® network provides LoRa / LoRaWAN long-range coverage for low-power sensors used in SmartCity, SmartBuilding and SmartFactory applications.”

Similar companies:

• Trakkies• Wirepas• Mistbase• Athom• Libelium• Lines.io• Paradox Engineering


IoT STARTUPS TO FOLLOWNeura

Location Israel

Founded 2013

Industry Developer tools

Management Gilad Meiri, Triinu Magi, Ori Shaashua, Gil Mahler

Employees* 28


Investors UpWest Labs, Pitango Venture Capital, Singtel Innov8, Microsoft Ventures, Lenovo, AXA Strategic Ventures, Liberty Israel Venture Fund

In their own words:

“Neura enables smarter technology, powered by trust. Bringing context to the Internet of Things, we recognize behavior patterns, create actionable triggers from IoT data and let users enhance their personal technology with those triggers.

We help people use data collected by their devices, for purposes that directly benefit them, while safeguarding their personal information.”

Similar companies:

• Seebo• Atomation• thethings.iO• TV App Agency• Kontakt.io• Relayr• Resin.io


IoT STARTUPS TO FOLLOWSentiance

Location Belgium

Founded 2012

Industry Smart City, Adtech, Health

Management team Toon Vanparys, Frank Verbist, Vincent Jocquet,Vincent Spruyt, David Damen, Roel Berger

Employees* 29


Investors Negotiae, Young Sohn, Volta Ventures, Pamica, Samsung Catalyst Fund, Qbic Fund

In their own words:

“Sentiance unlocks contextual mobile experiences by mining sensor data on smartphones, wearables and connected devices. Sentiance enables companies worldwide to tap into a new level of mobile personalization and engagement.

By filtering meaningful commercial data out of users’ direct environment, Sentiance provides Ambient Intelligence which is automated through a proprietary sensor fusion platform.”

Similar companies:

• Expertmaker• Nubera / Getapp• Adbrain• Semasio• Appwiz• Fyber• AdExtent


IoT STARTUPS TO FOLLOWCobi

Location Germany

Founded 2014

Industry Sports

Management team Andreas Gahlert, Carsten Lindstedt, HeikoSchweickhardt, Tom Acland

Employees* 44


Investors Negotiae, Young Sohn, Volta Ventures, Pamica, Samsung Catalyst Fund, Qbic Fund

In their own words:

“The biking solution for smartphone lovers: COBI is the first integrated system which intelligently connects your smartphone with your bike to create a completely new riding experience.

The future friendly, modular system connects to fitness and bike sensors and integrates six accessories into one unique design: smartphone holder with charging function, automatic front and brake light, bike-navigation, alarm system, bell and bike computer.”

Similar companies:

• Johan Sports• Petcube• Woo Sports• Milestone Sports• WallJAM• Tintag


IoT STARTUPS TO FOLLOWHeptagon

Location France / USA

Launch 2000

Industry Hardware

Management team Christian Tang-Jespersen, Desmond Lim, Erik Volkerink, Markus Rossi, Hartmut Rudmann, SowChun Leong

Employees* 122

Total funding -

Investors Nokia Growth Partners, Jolt Capital, GGV Capital

In their own words:

“Heptagon provides complete 3D/imaging, illumination and optical sensing solutions for smart devices and the internet of things.

With over two billion units shipped and 20 years of industry firsts in miniaturizing and integrating complex hardware and software systems, Heptagon has industry leading technology and services to enhance our customer’s competitiveness.”

Similar companies:

• VCST• Brainlab• Convey Computer• Datamars• Wilocity


EUROPEAN IOT LANDSCAPE:

FUTURE PREDICTIONS

WHAT DOES THE FUTURE HOLD?The Internet of Things is just getting started

Despite the fact that several entrepreneurs and businesses have been building IoT companies for a number of years, one could argue that the Internet of Things is still a nascent industry.

Funding and M&A data for the sector in Europe and Israel indicate that the industry’s best years are still ahead. In 2015, 84 local companies raised funding, totalling €411 million. In the first quarter of 2015, just nine companies completed a round of financing.

Fast forward one year, to Q1 2016, and that number grew exponentially to 41 companies and €159 million, pointing to the fact that the industry is accelerating and a higher number of companies are maturing and finding product/market fit, both in the B2B and B2C markets.

In fact, in the first four months of 2016, there have been 49 funding rounds worth a combined €242 million, or almost 60% of 2015’s total.

M&A activity remains limited, as the market continues to evolve and the development of large businesses that could be appealing to other tech giants carries on. Tech giants and large industrial players

that are, in fact, also increasingly involved in the overall IoT markets, with a significant focus in Europe.

As previously mentioned, the venture arm of large tech multinationals such as Orange, Cisco, Verizon or Swisscom have been involved in multiple European and Israeli IoT investments over the past few quarters. In addition to this, companies like Sony, Cisco, Nokia or IBM have also set up IoT-related projects in several European cities, potentially bringing together entrepreneurs with established players that could act as clients or, eventually, acquirers.

Accelerator programs such as Startupbootcamp, which currently has four different programs in Europe associated to the field, could also become key in the development of the industry.

An appropriate legal framework

According to a study by McKinsey, the potential value the IoT industry could provide worldwide could reach $11 trillion within by 2025.

However, for this to happen, various organisations refer to the need of clear regulations, standardisation, data protection and a strong privacy framework at a European level.

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METHODOLOGY & DISCLAIMERS

From November 2013 onwards, we’ve continuously monitored approximately 120+ sources of news and information across multiple European regions and languages. All the mergers, acquisitions (including all purchases of majority stakes as well as full take-overs)and initial public offerings by European technology companies that we tracked this way have been listed and analysed by the Tech.eu team for the purpose of this report, along with additional transactions that were not reported by any of the aforementioned sources but flagged by people from our collective networks.

In most cases, the deal size was not disclosed, but we’ve included the price for acquisitions and mergers for any transaction reported by a publication that we consider reliable and trustworthy. For IPOs, we have opted to look at the valuation given by the market at the moment shares were publicly traded for the first time. In addition, when a deal size was disclosed bu tin a currency different

from the euro, we’ve converted the amounts around the date the transaction was first announced or reported –we cannot guarantee that the converted amount exactly mirrors the price at the time of closing of an agreement (mainly because that date is rarely shared).

We have opted to include non-European Union member states such as Russia, Turkey, Israel, Norway, Switzerland and others in this analysis, as we consider them an integral part of the European technology industry as such. This is in line with Tech.eu’s overall editorial policy.

Considering the vastness, fragmentation and breadth of different languages that defines Europe, it is possible that certain M&A transactions or IPOs were not included in our analysis. We believe, however, that this is as comprehensive a report as possible for 2015. We have included M&A transactions and IPOs based on the date that they were initially reported by an authoritative source

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not necessarily the inking of the agreements or listings in question. Hence, exit agreements that were sealed at the end of 2015 maybe included in the data for 2016.

We’ve included transactions involving small and large technology corporations, and everything in between. ‘Technology’ in this case encompasses digital, Web, mobile, infrastructure and hardware, but we chose not to include transactions involving companies that are active in the fields of biotechnology, life sciences and ‘cleantech’ as we consider them categories worth tracking separately.

The data used for this report does not only include transactions for startups or digital-only tech companies, but also more ‘legacy’ corporations such as telcos, Internet service providers, as well as infrastructure, hardware and ‘high tech’ firms because we consider them European technology companies as much as e.g. a European-founded mobile app development startup.

Finally, we would like to add that our system of monitoring sources, and structurally saving data for reports, has greatly improved since we started in November 2013. It is possible that the data set has allowed for better analysis as the past year has progressed, and we continually work to improve our data collection and reporting.

Please subscribe to our newsletter to be kept up-to date on future reports, which will dive into specific verticals, geographies and other groups.

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We welcome any feedback you may have on our report and methodology. If you’d like to report inaccuracies, flag possible omissions or additions to the data set, or have any other comment to share or questions to ask,

please reach out to [email protected] and we will respond as soon as possible.

Thank you for reading our analysis.

Robin Wauters(Founding editor, Tech.eu)

Jaime Novoa(Analyst, Tech.eu)

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