IoT companies raised a record amount of funding in 2022, pulling in £13.22m on average, up 30% from the previous year, new research by Avnet Abacus reveals.

“Despite venture capital generally cooling off due to current economic conditions, the research reveals investor confidence is higher than ever for the long term prospects of companies developing products in the IoT,” Dr Sara Ghaemi, Avnet Abacus’s Technical Director, said.

The engineering firm analysed crunchbase data for companies listed under the IoT to provide insight on the level of investment activity.

Average funding rounds for IoT startups were the highest in over a decade, and the highest ever in Europe, the data reveals.

European IoT companies drew in £13.88m as their highest funding round ever, with American startups also seeing their highest deal in 19 years at £13.47m.

Industrial IoT also experienced a record year in 2022, where the average funding round reached £13.38m, more than double the average investment of £6.07m in 2021, and the highest since 2006.

In both 2018 and 2021, 5 companies in the Industrial IoT were acquired, while 2022 took that to new heights with seven startups in the sector purchased last year.

Acquisitions of companies in IoT worldwide were at their second highest ever in 2022 with 116 companies snapped up, marginally down from the peak of 117 companies in 2021.

Europe fared even better than previous years with 41 acquisitions making 2022 the continent’s highest year ever for IoT exits.

While the total amount raised by IoT startups globally dropped from £4.66 billion in 2021 to £3.57bn in 2022, the money invested in early stage startups was on the rise.

The investment into early stage IoT startups (those seeking funds in venture rounds A and B) reached the highest amount on record last year at £2.04bn, up 12% from £1.82bn  the previous year.

Meanwhile, the total investment for late stage IoT ventures was £0.9bn, down 54% from £1.96bn in 2021, and 36% lower than 2020’s figure of £1.4bn. Angel and seed investors in the IoT were also proceeding more cautiously last year, providing funds of £217m in 2022 compared to £336m in 2021.

“For years it seemed the IoT only existed in the words of market analysts, consultants and commentators, but we’ve now moved well beyond the hype with significant numbers of companies delivering real business value and venture capitalists putting their money behind them,” Dr. Ghaemi commented.

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Despite a huge decrease in the total amount of VC funds going into IoT companies last year, all of the reduction came from late stage ventures, with the average investment rising for early stage startups.

Dr. Ghaemi continued: “While the current economy is creating challenges for many startups, investors remain confident in the IoT and are placing larger sums than ever before in early-stage startups who are developing the connected products of the future.”

Tim Bassford, IoT specialist at Avnet Abacus commented: “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.”

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