"If you want to be the next Mark Zuckerberg," explained Wienke Giezeman, co-founder at LoRaWAN network provider The Things Network, "don't go into IoT."
At an entertaining panel session at IoT Tech Expo Europe this morning, representatives from various stakeholders discussed the ins and outs of Internet of Things investment – and what your startup needs to do to survive.
According to Manuela Krull-Mancinelli, managing director of smart city and IoT at StartUpBootCamp, 85% of startups at the boot camp are still alive after four years. Don't make the mistake of falling in love with your own technology at the expense of everything else, said Krull-Mancinelli – make sure you have a good team and get the business case right.
Giezeman said he had been an IoT entrepreneur for three years and that it was 'super hard'. If you want to build a business in IoT, he argues, you need a myriad of competencies – cloud, hardware, security certification, the lot. "It's very difficult for a startup," he added.
The good news, however, is that help is at hand – but the VC hand which giveth can also taketh away. Krull-Mancinelli said it was an 'artificial way to survive'. Giezeman was especially blunt. "If you're in IoT, really go for partnerships and then later for VC," he said. "They can't grasp the complexity of an IoT model. They'd prefer a SaaS app with $50k in recurring revenue – it's an easy bet."
Jinal Dalal, products and systems IoT at Google, noted the importance in differentiating between consumer and enterprise IoT. "Crowdfunding makes sense from a consumer perspective but it won't take you all the way," he said. Dalal added that VCs were particularly helpful on the partnership road – you can almost see it as a free resource.
There are other ways of getting money. One avenue is through ICOs – everyone may be doing them, but Krull-Mancinelli said that tokenisation was "a very good concept to fund IoT initiatives." Indeed, the two technologies can combine – data which is gathered on IoT-enabled devices can be stored on the blockchain – and this beget a discussion on different business models needed to survive.
Dalal explained how split funding can work as part of an IoT and data play – funding themselves from a hardware standpoint but with SaaS as an additional revenue stream – but added that 'if your long term strategy is in data, then hardware must be free.' While crowdfunding is often seen as giving an initial boost, it can also work when a company is already sucessful, Dalal said, in terms of raising money for hardware.
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