Why IoT Companies Will Boom in 2023

Referring to physical objects that are equipped with sensors and connected to the internet, the Internet of Things has always been an oddly clunky term for such a significant and pervasive technological development. But while it doesn’t exactly roll off the tongue, the Internet of Things, or IoT, has certainly been on industry leaders’ lips lately, with VC funding reaching new heights.

According to new research by electronics manufacturer Avnet Abacus, the average funding round value for IoT startups in 2022 was around $15.9 million. This represented a 30% increase on 2021, and was in the fact the highest average capital fundraise amount in the IoT sector in almost 20 years. What’s more, 2022 saw the second-highest ever number of acquisitions of IoT companies worldwide.

As Tim Bassford of Avnet Abacus put it: “There is strong evidence pointing towards a future where we will have more and more connected devices, communicating wirelessly, and providing timely and relevant insights from these new sources of data. This provides great potential for companies to operate more efficiently and provide new value to customers, and as a result, the IoT will continue to grow.”

With this in mind, let’s consider some of the big trends that are determining the shape of the sector today.

IoT technology is transforming healthcare at a breakneck pace. This shift was of course accelerated by the pandemic, when there was a sudden imperative for clinicians to monitor patients remotely.

Cut to 2023, and the concept of the virtual hospital ward is becoming ever more normalised, with wearable devices allowing medical professionals to carefully chart bodily functions and keep track of chronic disease progression, while at the same time relieving pressure on hospitals and clinics.

Investors are taking note of the innovative startups that are spurring such changes – an example being UK-based company Acurable, whose AcuPebble devices allow continuous monitoring of breathing and cardiac biosignals, and automated diagnosis of sleep apnoea.

Acurable raised around $11.6 million in a funding round last year, and is part of an IoT healthcare market that a recent report estimates will grow to over $289 billion by 2028.

As more and more devices join the IoT realm, the traditional separation between domestic and enterprise networks is likely to blur, at least where certain sectors are concerned. In a report on 2023 trends, IoT connectivity firm Eseye highlights a coming convergence, particularly when it comes to healthcare.

The aforementioned rise of the virtual hospital ward will be a key driver for the convergence. With essential analyses like remote heart monitoring being implemented, healthcare providers will – in the words of the report – “no longer rely on a consumer managed home network and broadband internet access to be up and running when a patient’s life may be at risk.”

We expect to see more startups and long-established companies offering connectivity solutions that integrate enterprise and domestic Wi-Fi, Thread and Bluetooth communications.

Last year’s release of the iPhone 14, whose US models don’t support physical SIM cards, drew mainstream attention to eSIM technology. As the name suggests, eSIMs consist of software installed on devices, allowing them to connect with network providers without the need to slide in physical SIMs.

The advent of eSIMs promises to be good news for manufacturers of IoT devices, as it will simplify their products and reduce supply chain costs. Another advantage of eSIMs is that updates can be easily done over-the-air (OTA), allowing swift and seamless reconfiguring of settings and updates to software.

Remember the metaverse? As a talking point, it may have been somewhat overshadowed by last year’s shock arrival of generative AI, but this virtual, immersive domain is sure to be every bit as disruptive as AI in the months and years to come. And we’re set to see it increasingly enhanced by IoT sensors, in the domestic, corporate and healthcare settings.

We’re already seeing IoT sensors allowing engineers to create digital twins of physical systems, from robot devices to retail floors to entire factories, in order to gain real-time data for testing capabilities, assessing pain points and improving safety. There is huge growth potential for startups that can take this kind of immersive analysis further, including those facilitating VR systems that allow people to “enter” and explore the digital twins within the metaverse.

IoT has gone from novelty fridges and toasters to being an integral part of modern life, with over 43 billion devices now thought to be connected to the internet. This evolution brings with it serious security concerns. In a sense, every device connected to the internet is a potential window through which hackers may gain entry to the IT infrastructure of a home or a business.

Cybersecurity companies will develop new, savvy solutions to address IoT security issues, in tandem with more formal legislation by governments across the world. For example, the White House National Security Council has announced that it’s seeking to roll out industry-standard labelling for IoT devices in the United States, both to inform the public on risks and to encourage manufacturers to tackle concerns head-on.

Meanwhile, the UK recently passed the Product Security and Telecommunications Infrastructure (PTSI) Act, which requires manufacturers to comply with security requirements.

Such measures will only further spur investment in IoT security solutions, so there’s every chance global spending will exceed the $6 billion by 2023 figure anticipated by Juniper Research back in 2018.