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Israel Will Dominate IoT Trend, Predicts Google Exec’s VC Firm

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Wednesday, December 16th, 2015

Innovation Endeavors’ in-depth report, ‘2015 Israeli Internet of Things Landscape,’ predicts Israeli startups will be a major driver of the IoT revolution.

As reported in Israel21C;

Many people still aren’t exactly sure what the Internet of Things  is all about.

But experts with their finger on the pulse of this massive connectivity trend predict that Israeli companies will take a leading role in building the IoT bridge between the digital and physical worlds to transform everyday lives and markets.

That’s the conclusion of a three-month study recently released by Innovation Endeavors,  the Silicon Valley and Tel Aviv early-stage venture-capital firm solely backed by Google Executive Chairman Eric Schmidt.

The study looked into 330 Israeli IoT companies across five verticals and 23 sub-verticals, from the seed stages all the way to revenue growth.

“By now, nearly everyone has been exposed to the Internet of Things (IoT) in one way or another, whether through a Fitbit bracelet, a Nest smart thermostat, or now even the Apple watch,” according to a report summary.

“At Innovation Endeavors in recent months, we have seen a growing amount of impressive IoT activity coming out of Israel. This intrigued us and led us to do a three-month deep dive into the space. The goal was to both demystify the existing understanding of IoT and identify the trends, sectors, and technologies that can serve as significant opportunities for Israeli entrepreneurs in this space.”

“The sectors that are currently most relevant to IoT – like cyber security, ag-tech, and healthcare – also happen to be the ones in which Israel is already the most advanced around the globe.”

Their “deep dive” involved poring over more than 50 market research and analyst reports, and meeting with top Israeli IoT companies and leading experts from around the world.

“We found that if Israeli entrepreneurs can capitalize on their existing IoT-related proficiencies, they can dominate in this space,” says Aaron Dubin, a member of Innovation Endeavors’ investment team.

“This is mainly because in Israel IoT already actually has strong, real context. In other words, the sectors that are currently most relevant to IoT – like cyber security, ag-tech, and healthcare – also happen to be the ones in which Israel is already the most advanced around the globe.”

Key findings

The results of the Innovation Endeavors study are presented in a visual “landscape.” These are the key findings on that landscape:

1. IoT activity is booming in Israel

Israel is home to approximately 6,100 active startups in total, of which IoT represents a surprisingly whopping 5 percent. These companies pertain to all verticals, stages, and levels of the stack, and address unique problems across many major markets.

2. Israeli IoT leverages Israel’s strengths in sectors like healthcare, life sciences and cyber-security

Two of many examples given are Argus Security,  which is building a firewall for the connected car of the near future; and Consumer Physics’ SCiO  pocket molecular sensor that gives users instant info on the chemical makeup of food, medicine, plants and more.

3. The Israeli IoT industry is still immature

Most companies on the landscape are still in the R&D or initial revenues stages, and about 80% are focused on applications rather than IoT platforms or components. This suggests that Israeli startups have not yet found their long-term product-market fit, but it also represents an opportunity for companies to capitalize on such “whitespaces” in the landscape.