Bringing Cellular Connectivity to the IoT “Long tail”

Author: Patrick Eggen, (@peggen) Managing Director of North America for Qualcomm Ventures

We first met Zach Supalla and the Particle team back in the summer of 2014. At the time, they were a small Midwestern start-up known for having achieved a successful Kickstarter campaign. Despite its modest roots, Particle’s vision was focused on a very tough problem: how to make it seamless for developers to build a successful IoT product from scratch. Today, most common industrial devices are still not connected to the Internet. Particle’s ambition is to connect the industrial “long tail” of devices — think of devices which are priced between $1,000 — $100,000 . These are expensive devices which cannot afford to be disconnected. Keep in mind, this is a vexing issue even for many mid-market industrial companies. It’s simply not easy to build such connectivity capability in-house.

At Qualcomm Ventures, the investment arm of Qualcomm Incorporated, we aspire to partner with portfolio companies whom not only attack non-trivial problems but create new product offerings which can be broadly adopted in an industry. As we evaluated the industrial IoT landscape, one of the key questions we grappled with was the sheer complexity of the ecosystem. Many start-ups or larger players were simply tackling one or two layers of the IoT connectivity stack. Particle was the rare company which offered a highly integrated full-stack IoT platform for industrial companies to develop and deploy connected devices. This was a breakthrough as it represented a turn-key connected solution built for scale. In addition, Particle was unique due to its focus on industrial, not consumer devices.

But Particle didn’t arrive at this comprehensive solution overnight. The team’s CEO and co-founder, Zach embraced a very intentional “slow rolling” strategy deployed over the past few years and adopted a very methodical and thoughtful approach to building the business. To validate the market, Particle completed a successful Kickstarter campaign which introduced the Particle development kit to the world. Out of the box, they offered the developer community a kit which allowed them to test out its capabilities at home. In addition, they sold over a 100K in these development kits among their core following, which further seeded the market. In the end, this allowed them to transform these customers into evangelists who worked at numerous large scale industrial companies, which was key. This “bottoms-up” approach was not only intentional, but successful. It provided Particle with a large credible customer base by the time it finally launched its enterprise-grade product.

We spoke with many of Particle’s current and potential enterprise customers. Their feedback was consistent across the board: internal development is too complicated, competing solutions are too challenging to deploy, the Particle stack is the preferred choice due to its simplicity and ease of use. These large scale industrial companies were all experiencing similar pain points. In addition, we heard several consistent themes. First, how important it was for industrial companies to have seamless connectivity solutions at their disposal. We saw many data points which supported the “consumerization of enterprise” trend. Second, many of these industrial companies were going through “digital transformations”. Connectivity is now table stakes for their businesses going forward. This is important, in that this game-changing feature will create new business models, unlock operational efficiencies and allow a direct relationship with the end customer. Finally, one of the key events in the Particle product evolution was the development of a cellular-based connectivity module. Once Particle made its commitment to offer cellular capability, its relevance to enterprise accounts dramatically increased. These themes illustrate the thoughtful and direct customer discovery journey that Particle followed to get to this point.

So how does this all relate to Qualcomm? As a world leader in next-generation mobile technologies, we have a keen interest moving the mobile future forward and seeing all industrial devices adopt cellular connectivity. Particle is a wonderful compliment to this, as they target the fragmented ecosystem of industrial devices. Not to mention, we love their ambitious vision of connecting all these devices to the Internet.

We’ve seen Particle come a long way since their move to the Bay Area in 2014. We have continuously monitored their progress and are now excited to invest in their Series B round. We strongly believe in the power of balanced investor syndicates. In particular, we are thrilled to work with OATV (contrarian investors); Root Ventures (one of the premier hardware investors); Rincon (SoCal partner) and Spark Capital, Series B lead (our last deal together was Cruise Automation J). Now it’s time for the real work to begin in helping Particle bring cellular connectivity to the broader IoT ecosystem. We’re looking forward to supporting their journey and helping them make their vision a reality.

Patrick is the Managing Director of Qualcomm Ventures North America and leads all U.S. investments. He previously launched Qualcomm Ventures’ Bay Area practice and started the Global Early Stage Fund, focused on Seed and Series A opportunities. Learn more about Patrick and follow him Patrick Eggen

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