Last month we profile the 10 most valued Internet of Things (IoT) startups in the world. The conclusion of that research was that 8 of those 10 IoT startups are based in California, thus possibly solidifying Silicon Valley’s position as a driver of IoT innovation. It would seem that California is also highly represented among the IoT startups with the best exits in 2014. In fact, the top 5 companies are all based in that state.
There is one fact that stands out from this infographic about IoT startup exits. It is that out of all the recorded IoT exits around the world in 2014, only 1 was done via an initial public offering (IPO), while nearly all of them, 15 out of a total of 18, were done via an acquisition by another business.
If we further analyze the 10 top IoT startup exits, we’ll notice that, while American companies represented 5 of the 9 purchasing businesses, businesses in 4 other countries also joined in. The most notable of these purchases is Samsung’s purchase of IoT darling SmartThings for $200 million in August. The main reason this acquisition stands out is the fact that this business got started on KickStarter only two years earlier.
But it would be remiss of us not to mention Google’s acquisition of Nest Labs, probably the single most important IoT startups purchase to date. Early in 2014, Google announced that they purchased Nest Labs for $3.2 billion. This is a huge value for a business that had only been around for a few years and which hadn’t had to raise anywhere near that kind of funding. So its investor were very well rewarded for the faith they placed in this IoT startup.
This purchase is also important for two reasons. First is the fact that only a few months after this purchase Nest announced that they were making their own acquisition as they bought Dropcam for $555 million (thus enabling Google to add a second IoT startup to its portfolio of products). Both the acquisition of Nest and the purchase of Dropcam were of such high value that they ranked first and second among these IoT startups.
The second reason these two purchases give Google what it needs to start building its own version of the Smart Home for its customers. The internet giant announced last year that they would place Nest’s technology at the heart of their IoT plans.
The race to lead IoT innovation is heating up and so far Google and Samsung have each bet big on the success of that space.