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Penetrating insights and the right connections

Raising capital and finding actionable data in IoT

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There are several technology buzzwords and phrases that travel around the innovation and digital sphere – giving us all a glimpse of how we will all work and play and live in the future. Words like blockchain, big data, artificial intelligence (AI) and the Internet of Things (IoT). None has more potential to influence all aspects of our lives, and is more misunderstood, than IoT.

The Internet of Things is a loose term that comes to describe any product – whether it be software, hardware or a combination of both – that allows ‘things’ (such as fridges or tractors) to be connected and networked and provide actionable data. It is that data that the funds industry needs to be interested in.

Alexandra Deschamps-Sonsino, innovative interaction designer and product designer at designsarm gave the FundForum audience a primer of various applications and industry sectors that are being impacted by IoT. However, the bulk of her talk centred in on the struggles to find funding and traction for startups focused on this space. The struggles of the entrepreneur are well documented. Deschamps-Sonsino highlighted the unique challenges that are present for startups that tend to combine both hardware and software.

According to her the minimum seed investment needed to start an IoT company is $150k. This investment would allow a startup to employ around four to five people for tech development and marketing, create a small supply chain, create a production ready product for testing as well as a product ready to be shown to retailers for future orders. This was an excellent detail on the capital needed, which would be useful most  venture capitalists or angel investor networks looking at investing in IoT startups.

In addition to investing in new IoT companies, the fund industry should pay attention to how they can use the the actionable data that arises from connected devices.

Deschamps-Sonsino listed several industries where IoT has made inroads. Most notably, home monitoring. A device worn by an elderly relative could alert emergency services, automatically, if it detected a fall, for example. Devices to monitor heating or to check for leaky boilers are already on the market. She listed health and safety, waste management, and agriculture as several other areas ripe for an influx of IoT services. However, what she didn’t mention was the data.

The insurance industry has a well-documented interest in IoT devices. Some recent examples I can think of include, black boxes in cars, bracelets worn to monitor health and devices that check for underground water leaks in your home. All of these products, while sold to a consumer, are valuable to the insurance industry because of the data they provide. That data allows insurance firms to offer tailored, and sometimes, cheaper policies to their clients.

The fund world will always be connected to wealth management and financial advice. Most financial advice revolves around life events. The birth of a baby, a marriage, a child embarking on a university degree. As a consumer, your devices may soon start fielding that data to your financial adviser. And your financial adviser will be doing a far more efficient job because it.

Liz Lumley is a global independent FinTech commentator. For more commentary visit her blog Girl, Disrupted.

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