Fresh from the sale of their first venture focused on the heating, ventilation and air conditioning (HVAC) market, Shishir Gupta, Nithin David and Varun Gupta embarked on what they thought was their next breakthrough idea.
In mid-2013, the trio decided to devise solar air conditioners based on their previous experience in the market but, after some pilots, they discovered the idea was commercially unviable.
From the ashes of their second enterprise, they did manage one small gain — a connected controller that reduced energy use by 30% during the night. Using this, they pushed their entrepreneurial energy in a new direction — towards the rapidly emerging opportunity in the internet of things (IoT) , or devices and objects that send and receive data over the internet. Rather than build large systems for this, their new venture Oakter is thinking much smaller. It is building out a series of IoT-based devices to “smarten” homes across India.
In around two years of operation, Oakter’s controllers have smartened some 10,000 gadgets, claims Shishir Gupta, without disclosing the number of homes his controllers have been installed in currently. The startup’s full launch hasn’t even happened, he says, since it is still reaching out informally to consumers. Around Diwali this year, Oakter is expected to make a big-bang offline launch and expects to reach 10,000 homes in a year and revenues of Rs 100 crore by 2018-19.
“Within 10 years, IoT will transform the way we manage our lives,” says Shishir. There are plenty of data points to back his enthusiasm. In 2008 itself, there were more objects connected to the internet than people, and technology researcher Gartner forecasts that by 2020 there will be nearly 21 billion connected devices. If the ATM was perhaps the first popular connected device in the early 1970s, hundreds of companies have since shown an interest in getting wired up.
IoT’s the Thing
In the US, the largest technology market, there has been a mixed response to various kinds of IoT. According to CB Insights, a tracker of this kind of deal data, deal volume is on track to surpass 2015’s total by 30%. Fundingwise, 2016 should be a robust year for IoT in the West, and the second year in a row of $1.2 billion-plus in funding. Several startups in the field raised significant amount of funding, including IoT software and services company Greenwave Systems ($45 million Series C), commercial drone developer Airware ($30 million Series C), and connected HVAC and lighting company Enlighted ($25 million Series D financing).However, deal flow looked less upbeat on a quarterly basis, with both value and volume declining in the second quarter of 2016. After an increase in the first quarter with 54 transactions, deal-making fell 26% quarter-over-quarter. And funding fell from $328 million to $325 million — a 9% quarter-on-quarter decline. At a global level, there is massive potential.
According to a statement from Gartner’s research chief Peter Sondergaard, the incremental revenue generated by IoT suppliers is estimated to reach $309 billion per year by 2020. This growth opens up new business opportunities, as half will be attributed to new startups and 80% will be in services, not products. Manufacturing, healthcare and insurance are expected to lead the IoT race.
Some of this entrepreneurial interest is being generated in India, too. For example, in May this year, Entrepreneurship and Venture Capital (EVC), an early stage investor, launched a $50 million unit to focus on IT.
Qualcomm Ventures, the VC arm of the global chipmaker, recently unveiled its $150 million India fund and made its first investment of $10 million in healthcare IoT venture Attune Technologies. In early July, a centre of excellence for IoT was launched jointly by software industry lobby Nasscom, the department of electronics and information technology and the Education and Research Network. This centre can house up to 40 startups and the model is expected to be replicated nationwide.