Prediction: 2016 Will Be the Year of Enterprise IoT

Verizon Ventures Director Ed Ruth and portfolio company Filament take a look at how industrial and enterprise-focused IoT startups will surpass consumer startups in 2016.

According to our analysis, we estimate that consumer IoT startups raised 15 percent more VC funding than enterprise-focused startups in 2014. However, in 2015, roles seemed to have reversed with enterprise outpacing consumer by around 75%. In 2016, we believe the enterprise will continue that trend, but by a much larger order of magnitude — roughly 2 to 3 times more than consumer.

2016 will see enterprise IoT VC funding considerably dwarf that of consumer.

We’re seeing this with the success of one of our portfolio companies, Filament, an industrial network provider focused on IoT applications that provides long-range wireless sensor networks secured by blockchain technology. Using their decentralized IoT stack, any device can discover, connect, interact, and transact value without central authority requirement.

The Filament team also expects to see the industrial side of IoT continue to grow substantially in 2016 while home automation and wearables will continue to try to make additional headway against the noise of all the Kickstarter products emerging.

Filament expects to see the first large-scale IoT deployments (in the tens of millions), and this will show the first results of major cost-savings and efficiency increases. Up until this point it’s been made up of lots of small and fragmented products.

Filament fundamentally believes that decentralization is core to the IoT — where devices can and should be autonomous market participants — buying and selling their own data, and interacting with other devices and people directly. This interaction includes not only data transfer, but also value transfer — the direct payment to and between devices.

2016 will be the year of enterprise IoT, and growth will continue for the foreseeable future. It was estimated that overall IoT products and services revenue would be over $250 billion in 2020, with enterprise accounting for just under $200 billion of it.

You can find similar posts on our blog. To learn more about Verizon Ventures, please visit verizonventures.com