Internet of Things Offers Promising Entrepreneurial and Investment Opportunities, Says Panel of Experts

The Internet of Things, or IoT, created the loudest, most lasting buzz at the 2015 Michigan Growth Capital Symposium among entrepreneurs who are trying to harness its potential as well as venture capital investors who are assessing its revenue and investment prospects.

In 2014, $300 million was invested in 97 venture rounds for IoT start-ups. Predictions are that 50 billion connected devices will be in use by 2020, as smart products rapidly evolve into smart companies and eventually, smart cities.

“IoT is still in the early stages of development and happening sporadically, so there will be lots of unintended consequences,” observed Jonathan Murray, managing director of Draper Triangle Ventures. “In some areas, it will add value. In other areas, it will be frivolous. There is tremendous potential for IoT and big data to create deep insights and manage things better in our lives and societies. However, there is also the frightening reality that privacy is dead.”

During a panel discussion, a group of B2B and B2C entrepreneurs, venture investors and legal and cybersecurity experts identified several major issues in the IoT space.

Consumer versus industrial IoT – Right now, the consumer side is driving early IoT infrastructure development, as wearable fitness devices, smart-home systems and connected-car technologies come into the marketplace. “While the consumer market is interesting, the industrial and enterprise IoT market has more potential to create value,” observed Brad Erickson, a research analyst in mobility and IoT for Pacific Crest Securities. “At this point, hardware is far outpacing software in enterprise IoT. However, hardware’s value deflates over time, as we saw in the wireless space seven or eight years ago. Software services must be developed to drive value over the long term.”

Internet security – IoT is enhancing connectivity and adding value across many sectors, but strong security protocols must be put in place to realize those gains, according to Denis Foo Kune, the CEO of Virta Laboratories. “We’re seeing the same thing in IoT that happened to PCs 10 years ago,” he explained. “Hackers are looking for valuable information and weak end points. Health-care records, credentials and passwords can open the way into personal accounts. We have a chance with IoT to get this right and create strong security architecture from the get-go.”

Legal ramifications – The Federal Trade Commission is ramping up its scrutiny of IoT companies and urging them to adopt best practices to address consumer privacy and security risks. “As often happens with new technology, our legal system is reactive and tries to plug existing laws and regulations into places where they don’t fit,” commented Kevin DiDio, who specializes in corporate law and transactions at Varnum. “IoT companies need to bake security and privacy into the design of connected devices, keep connectivity in mind during manufacturing and give training to employees.”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: