Harbor Research: IoT Investment Report - June 2017

Internet ofThings
Investment & Corporate
Development Report
Developing New Growth
Opportunities And Businesses At
The Intersection Of Smart Systems,
Services And The Internet Of Things
smart
systems
design
June 2017

internet of things investment and
corporate development report
Despite the endless opportunities with the internet-of-things, there remains an enormous hurdle:
Security. Technology headlines in May were dominated by, "Wannacry," another distributed attack
on computers and devices across the world. The attack targeted healthcare institutions and seized
personal health records, froze emergency room software, and forced nurses to adopt handwritten-
clipboards to document social security numbers, emergency contacts, illnesses, and diagnoses.
So, how do we fix this? The natural first step is defining the problem. The IoT is spurring the growth
of connected devices, each requiring connectivity, processing power, applications, and storage, and
all of these technologies have the potential of unwanted intrusion.
Currently, the most common fix is encrypting data as it passes from the device to the gateway and
up to the cloud, but this poses the same issue we’re currently facing: if a hacker identifies a hole in
this encryption, they will have access to every piece of data from every device using this software.
A more promising solution stems from the emergence of blockchain technology.
What’s blockchain? For the lay person, think of a locomotive train transporting cash for banks across
the wild west, on a daily basis. These trains are highly secure, but they’re also built by the same
manufacturer; So if a bandit spends enough time figuring out how to break into a single train, they
can replicate this process until either the train manufacturer updates the design or they’ve collected
all the gold.
In this analogy, the cash is the data and the trains are the encryption software for data
transportation. If the bank’s money is located entirely in this train, they’re relying on this single
manufacturer to protect all their capital. But there’s a better way:
With blockchain, instead of using the train, the bank hires 10 cowboys to transfer the cash. The
cowboys are directed to travel separately and given bodyguards to protect them on the journey. By
using this strategy, the bank distributes their risk. If the bandits spend the time to figure out how to
rob the cowboys, they’re still limited to stealing only a tenth of the cash they would’ve found on the
train.
In essence, this is the concept of the distributed ledger, the underlying technology of blockchain.
Data is distributed across multiple sources, and hackers only have access to a sliver of pie when
compared to traditional encryption. The weeds go much deeper on this topic, but the important
takeaway is that a solution for IoT security exists and is seeing adoption.
Coincidentally, over this month we saw investments in IoT security startups rule the headlines of
both private and public investments. Nearly $500mm was invested in the month of May, and three
major IoT security initiatives were launched by technology incumbents like Cisco, IBM, and GE.
Securing the Internet-of-Things
?

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TABLE OF CONTENTS
About the Author
Colin Ferrian is a senior research analyst at Harbor. He specializes in detailed due-
diligence throughout the world of technology and smart systems, supporting clients
on strategy, investment quantification, growth initiative assessments, and business
model development.
Prior to joining Harbor, Colin was an analyst at Chicago based hedge fund, Coe Capital
Management, where he focused on discovering, vetting, and executing growth and
turnaround investments in public US equities in many sectors, including leading
research on semiconductor technologies and capital equipment/components, as
well as medical devices and diagnostics, network services, industrial manufacturing,
transportation, natural resources, and consumer goods.
01: M&AINVESTMENTS Page06
02: PEOPLEMOVING Page 13
03: NEWPRODUCTS Page 14
04: PARTNERSHIPS Page 16
05: PRIVATEFUNDING Page18
06: TECHNOLOGYYOUSHOULDBEWATCHING Page17
07: NEWFUNDING Page24

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There was a total of $1.3B invested in IoT over the month of May, and there was a
surprising amount of action in both security and artificial intelligence. Highlights
included Microsoft, Cisco and Red Hat acquiring startups for their IoT security
portfolios and Apple, Cisco, and Google making notable investments in artificial
intelligence. Other notable events include VR-developer platform, Improbable
raising $500mm, IBM’s partnership for using blockchain in energy, and cable
rivals Charter and Comcast announcing a team effort to enter the wireless service
industry.
M&A and Investments
»» Security: Miscrosoft acquires Hexadite and Cloudyn, Red Hat acquires
Codenvy
»» Network Services: Cisco acquires Viptela, OneWeb Intelsat merger nixed,
Actility acquires Abeeway, Presidio looks for IoT acquisitions, Verizon divests
cloud to IBM and data centers to Equinix, VMware acquires Apteligent, Dish
acquires spectrum
»» Energy: Itron acquires Comverge
»» Connected Car: Renault acquires Intel's autonomous car R&D operations, DMI
acquires Lochbridge
»» Artificial Intelligence: Apple acquires Lattice Data, Cisco acquires Mindmeld
»» Smart Home: Whirlpool acquires Yummly, Apple acquires Beddit
People Moving
»» Point72 hires Daniel Gwak and Sri Chandrasekar as co-heads of AI investments
»» Google launches an engineer-led AI investment platform, led by Google VP,
Anna Paterson
»» Datadog hires SVP of Alliances, John Gray, from rival New Relic
New Products
»» Avnet launches Industrial IoT Starter Kit
»» Qualcomm tests low-altitude drones for network ehancements
»» Crowdflower announces next-generation computer vision solution
»» Cisco introduces IoT Threat Defense
»» Ericsson launches blockchain on GE's Predix
»» IBM launches blockchain on a distributed energy project
HARBOR RESEARCH
EXAMINED IoT COMPANIES
FOR KEY MOVES

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Partnerships
»» Connected Car: Google partners with Audi and Volvo, Waymo partners with
Lyft
»» Industrial: Trackvia and Current by GE partners on low-code platform
Private Funding
»» AR/VR:
Improbable raises from Softbank, Andreesen Horowitz, and Horizon
Ventures
»» Artificial Intelligence:
Bonsai raises from Microsoft, Samsung, Siemens, and ABB
Orbital Insight
Bitfusion
Reality AI
Fastdata.io
»» Healthcare: Vericred, Aira
»» Industrial: Tamr raises from GE Ventures
»» Network / Network Services:
People Power
Rigado
Cockroach Labs
Thinnect
»» Robotics: Abundant Robotics, 3DR
»» Security:
Karamba Security
Mocana
IoTium
Neos
New Funds:
»» Apple creates a $1B U.S. Manufacturing Fund
»» Honeywell launches their first venture fund with $100mm target
»» Section 32 closes $150mm fund
»» Ovvious Ventures raises $191mm fund
»» Deft.vc nears $125mm for new fund
»» Telit raises $44mm in equity for IoT-related acquisitions
»» Saudi Telecom closes on a $500mm venture fund
»» Upfront is raising $500mm for two new funds
»» Intel, Bank of America, Merrill Lynch and HSBC raise $107mm for blockchain
investment
»» IBM launches the IBM Blockchain Founder Accelerator

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M&AandInvestments
Security: Microsoft has acquired cybersecurity automation company, Hexadite,
for $100mm and network monitoring software company, Cloudyn, for $60mm
• What do they do: Hexadite is an Israeli startup that uses AI to identify and
protect against smaller network attacks, which can reach up to 10,000 a
month for larger organizations. They also identify larger problems and hand
them off to security specialists. Cloudyn monitors and optimizes a company’s
operations across multi-vendor cloud architectures.
• What's Microsoft's strategy? Microsoft’s interest in cyber security is a part
of a larger trend where legacy services are no longer fit for the needs in
increasingly malicious and sophisticated attacks.
• Who’s next? IDC estimates that enterprises will spend nearly $82B on security,
and we’ve tracked over $500mm in venture funding for these network-
securing companies in 2017. Here are a few of the top capital raises this month:
• Crowdstrike – A leading innovator in network endpoint protection and
the recently hired contractor for investigating Russia's inteference in the US
election.
• Karamba – Secures networks in the transportation space, with a specific focus
on autonomous vehicles.
• Mocana – An IoT security platform that employs a military-grade
cryptographic software installed on a chip. It secures the data between the
devices, gateway, and the cloud.
• Aporeto – Microservices security provider that prevents attacks in container
architectures. A primer on containers and their potential replacement of SaaS
can be found here.
• Redlock – Provides security solutions for public cloud infrastructure via their
Cloud 360 platform.
M&AandINVESTMENTS
01
Microsoft's month in security,
and the next set of players to
watch

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Security: Red Hat (NYSE: RHT) acquired Codenvy, a provider of tools that enable
software developers to create container-based and cloud-native applications
• What do they do? Codenvy is a container-focused cloud IDE that’s built on top
of the open source project, Eclipse Che, a Java workspace for developers.
• What’s a cloud IDE? It allows developers to get up and running without the
need to set up a local development environment. Beyond removing the
hassle of setting up tools before coding can begin, IDEs also allow building,
testing, and previewing projects in the cloud. Here’s a ranking of the best
ones.
• What’s Red Hat’s strategy? Red Hat originally made its name as the enterprise
Linux company, but in recent years, they’ve been clear that they see the
cloud and containerization as a significant part of its future. Last year, Red Hat
partnered with Codenvy and Microsoft to provide developers a common way
to integrate programming languages across IDEs, and a few weeks ago, they
announced a product of the partnerships, Openshift.io, a set of cloud-based
developer tools based on Eclipse Che.
Network Services: Cisco acquires SD-WAN provider Viptela for $610mm
• What do they do? Viptela offers software-defined networking (SDN) for
corporate computer networks, helping companies centrally manage
applications, security and analytics.
• What is Cisco's strategy? Cisco’s been aggressively purchasing cloud
companies over the past year, paying 18x revenues and $3.7B for
AppDynamics and a similar multiple on a $1.4B price for Jasper Technologies.
This also marks the 15th acquisition since Chuck Robbins’ appointment as CEO
in 2015.
• Who do they compete with? Viptela competes with Versa Networks,
Cloudgenix, Citrix's (NASDAQ:CTXS) NetScaler, Silver Peak's Unity
EdgeConnect, and Cisco's (NASDAQ:CSCO) Meraki solution.
• Who’s next? Last month, we highlighted a quick primer on SD-WAN after
Riverbed’s purchase of Viptela competitor, Xirrus.
Network Services: SoftBank's OneWeb merger nixed with Intelstat for $14B
• What’s the story? In February, OneWeb, the US satellite communications
provider backed by SoftBank (20% ownership), announced it would purchase
Intelsat for $14B to combine the companies’ satellite fleets, in an effort to offer
Red Hat's moving from Linux
to containers with Codenvy

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low-cost internet service across the world. As part of this deal, Softbank agreed
to invest $1.7B in the company for a 40% stake. However, after extending the
tender offer period and sweetening the deal three times, OneWeb ended
their negotiations to merge with satellite peer, Intelsat, after creditors would
not accept the debt swap offers.
• What’s next? Softbank has said it’s having discussions with competitors
of Intelsat on other potential deals following the failed merger. This could
include satellite players such as UK-based Inmarsat (OTCMKTS: IMASY),
Viasat (NASDAQ: VSAT), Canadian-based and privately owned Telesat, and
Luxemborg-based SES S.A. (OTCMKTS:SGBAF).
• What’s Softbank’s strategy? Softbank is aiming to leverage connectivity speed
from the intersection of satellites and internet service offering. With OneWeb
deploying a range of satellites roughtly 30x closer to the earth’s surface than
existing communications satellites, this will result in internet download speeds
of 200Mbps and upload speeds of 50Mbps, versus the current US average of
34Mbps and 19Mbps, respectively. With the company’s 80% ownership in
Sprint Wireless, Softbank is moving to use satellite service from providers like
OneWeb to increase broadband coverage and speed.
Network Services: Actility, the IoT solutions provider acquired French based
geolocation systems developer Abeeway
• What do they do? Abeeway offers a patented low power GPS (A-GPS for IoT) as
well as data fusion technology to optimize power consumption. In comparison
to the current trackers that use GPS signals, Abeeway offers a dramatic increase
in battery life.
• What’s Actility’s strategy? Last month, Actility raised $75mm in new capital
to growth their portfolio of industrial IoT solutions across different verticals.
The acquisition of Abeeway will contribute locational service capabilities to
Actility’s ThingPark platform, a carrier-grade platform for service providers
that accelerates IoT go-to-market with core network and sensor management
through combining different location technologies.
Network Services: Presidio (NASDAQ: PSDO) CEO aims to find more acquisitions in
the near future
• What’s the story? After reporting its earnings for the first time as a public
company, Presidio CEO Bob Cagnazzi said he expects to make more channel
acquisitions, a strategy they’ve agressively pursued over the past two years
Riverbed's SD-WAN offering
expands with their acquisition
of Xirrus

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with the purchases of hybrid-cloud solution provider Sequoia and network
service provider Netech from Cisco for$300mm.
• What kind of acquisitions? Cagnazzi noted a geographic bias in the Mountain
area, Midwest, and the west coast and a technological preference in IoT and
managed services. He did not mention any size specificity, but Presidio’s
heavily leveraged $724mm in net debt load does not bode well for this
aggressive forecast, despite their $96mm in quarterly cash from operations
generation.
Network Hardware: Verizon sells the last of their data centers to Equinix for $3.6B
in cash
• Why? For the past few years, carriers have been offloading data centers
and colocation businesses because of corporate customers seeking cheaper
and more sophisticated offerings to manage their data. Since owning and
operating fleets of data centers is not a core capability of these carriers,
they’ve mostly moved to sell these assets to data-center companies with a
competitive advantage in the business.
• Just the data centers? Nope. Verizon’s also selling their cloud and managed
hosting services to IBM (NYSE: IBM), for the same reasons. The announcement
of this sale marks the end of Verizon’s ambitions in the cloud, an area they
began prusing when they acquired Terremark's data centers and private
cloud business for $1.4B in 2011.
Network Services: Vmware acquires Apteligent
• What do they do? Apteligent was originally named Cittercism and operated
as a platform for companies to monitor mobile app performance, but over
time, the company moved into the enterprise, as a way for developers to both
network insights and user behavior, as a way to improve the user experience
of their applications.
• What’s VMware’s strategy? The acquisition adds to VMware’s investments in
end user computing, building off of their $1.5B acquisition of AirWatch, a
mobile device management provider, in 2014.
• Competitors: Due to Apteligent’s pivot into the broader market, its
competitors are relatively fragmented, but they include startups such as
Fabric and Crashlytics.
Cognex makes its fifth acquisition
in industrial vision over six months

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Dish's pursuit of connecting
devices, not people
Network Services: Dish acquires $6.2B of spectrum for building out a
communications network for IoT devices
• Why? Despite losing 143,000 paying TV customers in the first three months of
2017, management at Dish Network was rather positive about winning $6.2B
of spectrum for national coverage during a recent FCC auction.
• Why is this important? Dish has been pivoting away from traditional satellite
TV in recent years. In the past decade, they’ve bought geographically
fragmented potions of wireless spectrum from the FCC. However, the
investment won last month is low-frequency, 600 MHz spectrum previously
used by broadcast TV stations because of the stronger indoor penetration
capabilities and full US coverage.
• What’s Dish’s strategy? The spectrum is a crucial step to Dish’s pursuit of
building a communications network for connected devices, not people.
Earlier in the year, the company also outlined plans to build an NB-IoT network
to connect a wide range of IoT devices.
Energy: Itron acquires Comverge for $100mm, expanding their SmartGrid
Offerings
• What do they do? Itron sells innovative IoT sensor technologies and edge
computing analytics for smart metering and grids, whereas Comverge
provides the software platform behind a variety of utility demand response
and energy management programs. The two companies have been working
together since 2009.
• What’s Itron’s strategy? Comverge’s solutions are already deployed in nearly
3 million energy management devices, stemmed by the need for near-real-
time data required by utility companies. When combined with Itron’s edge
technology, this data will be relayed to customers faster and from more points
along the grid, increasing performance and reliability.
• Valuation: Comverge generated $60mm in revenues last year, so this
valuation reflects roughly 1.7x sales. When compared to peers like Enernoc
(NASDAQ: ENOC) trading at 0.42x price to sales on $400mm annual sales, it’s a
substantial premium for the acquired company.
Autonomous Vehicles: Renault acquires the R&D operations of Intel (NASDAQ:
INTC)
• Why? The French automaker, Renault, is ramping up their focus on connected
and autonomous vehicles, and the purchased R&D business unit specializes in

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Lattice charges Apple $10mm
per engineer in acquisition
embedded software research and development, aiding in Renault’s expertise
in personalized services and real-time updates in vehicles.
• What’s Renault’s strategy? The company’s been building up their offerings of
new connected services, but it may also help keep costs under control. CEO
Carlos Ghosn stated they expect costs of electronics and software content in
vehicles to rise from 35% of the cost of an average vehicle to 50%, by 2020.
• What’s Intel’s strategy? Earlier this month, Intel opened an R&D center for
autonomous driving in Silicon Valley, so it made sense for them to sell the
French location.
Artificial Intelligence: Apple (NASDAQ: AAPL) acquires Lattice Data for $200mm
• What do they do? Lattice is a data intelligence company that uses machine
learning technology to convert unstructured “dark” data into structured and
meaningful information.
• Why is this important? The connected world of IoT is producing data at an
accelerated pace. In 2013, there were 4.4 zettabytes of data, and this is set
to rise to 44 zettabytes by 2020. For reference, the current daily production
of data is around 0.0025 zetabytes which is equivalent to around 90 years
of HD video. Between 70-80% of this data is “dark” and therefore largely
unusable when it comes to processing and analytics. Lattice solves this
problem.
• Valuation: Terms of the deal were not dicsclosed, but rumors floated that the
pricing was around $200mm. That’s around $10mm for each of Lattice’s 20
engineers. Compared to Google’s $500mm purchase of DeepMind in 2014,
the price per engineer is actually quite close.
Artificial Intelligence: Cisco acquires MindMeld, the AI conversation tool for
$125mm
• What do they do? MindMeld specializes in developing conversational skills for
chatbots providing customer support in unstructured conversations.
• Why is this valuable? Most existing chatbots rely on scripted responses and
have trouble navigating conversations with humans. MindMeld uses machine
learning, such as natural language processing, question answering, and
dialog management. More specifically, their platform ingests customer data
to create a natural language model that’s specific to a client’s industry and
products, and they use a dialog manager that enables the software to speak
with a user through chat and voice applications in a human-like fashion.

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Cisco's beefing up AI services
with MindMeld's chatbot
• What’s Cisco’s strategy? MindMeld capabilities will be a key addition to
Cisco’s existing AI service products like SpeakerTrack and VoiceTrack. More
importantly, this represents another major step into software as MindMeld
will be the foundation of the company’s new Cognitive Collaboration team,
sounding oddly familiar to IBM Watson’s Cognitive Computing Group.
Services: DMI acquires Lochbridge for an undisclosed amount
• What do they do? DMI is an end-to-end mobility services company; they
supply services of UX and app development, branding and marketing, big
data analytics, and app management. Lochbridge is also a service team
focused on connected system strategies such as integrating connectivity,
extracting and monetizing data, and building analytics, specifically in the
automotive and manufacturing industries.
• What’s DMI’s strategy: The acquisition will expand DMI’s services beyond
mobility. They’ve noted the value of the acquisition for moving into the
connected car and IoT space, where Lochbridge has a number of existing
customers, including the top five global auto OEMs and two major third party
logistics companies.
Smart Home: Whirlpool acquires Yummly, the providerof a digital recipe platform
with over $200mm registered users
• What do they do? Yummly is a
visual and semantic recipe search
engine and aggregator with
20mm users that also lets users
create shopping lists and food for
delivery.
• What’s Whirlpool’s strategy? This
acquisition is one of recent steps
that the company has taken
to place itself into the current
and next-generation of cooking, via their “Kitchen of the Future,” which
includes sensors that can detect what food and cooking instruments are on
the counter to tell the user what to do with it, how to automate the cooking
process, and then clean up the dirty dishes left in the sink.
• Valuation: Financial metrics were not disclosed beyond the purchase price
of $200mm for 20mm registered users now, versus 1.7mm in 2014, against a

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Apple's foray into the smart-
home
$100mm valuation in Yummly’s last funding round in 2015. For comparison,
Pinterest has 150mm monthly active users and was last valued at $11B.
Smart Home: Apple (NASDAQ: AAPL) acquires Beddit, the sleep-tracking
software and hardware app
• What is it? Beddit is a thin strip of sensors
that goes across a user’s bed, analyzing
sleep-related data like sleep time
and efficiency, heart rate, respiration,
temperature, movement, snoring, room
temperature, and room humidity. It retails
for about $150.
• What’s Apple’s strategy? With Apple’s
announcement of smart home gadgets
and Amazon Alexa competing Homepod
this month, it’s fair to assume the
phone manufacturer has turned to the connected home as a compelling
opportunity. Their tardiness to the consumer living rooms despite their
mobile device leverage is still concerning, so we’ll wait to build an opinion
until after the Homepod is actually released in December of 2017.
PeopleMoving
Point72 opens a new office in Palo Alto and hires co-heads of AI investments
• Takeaway: Point72 Ventures, the early-stage VC led by billionaire Steven
Cohen, has opened a new office in Palo Alto and appointed Daniel Gwak and
Sri Chandrasekhar as co-heads of AI investments. They were both previously
with In-Q-Tel, a VC firm funded primarily by the Central Intelligence Agency.
Point72 invests in emerging tech companies within the financial industry,
in an effort to replace what Steven Cohen commonly notes as the “lack of
trading talent” in the market.
Google launches an engineer-led AI investment platformled by Anna Paterson,
a Google VP of engineering who specializes in AI.
• Takeaway: This is the first industry-specific investment arm for Google, and
first engineering led team, rather than professional venture capitalists. This
fund will be separate from Google Ventures and will report to Google, rather
than Alphabet. The firm is reportedly seeking smaller investments between
$1mm and $10mm.
PeopleMoving
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AI investment funds rule
headlines in May
Datadog hires SVP of Alliances, John Gray, from rival New Relic
• Takeaway: Datadog's a cloud monitoring provider that competes with the
likes of New Relic, Librato and recently-acquired Appdynamics, and they've
recently hired their New Relic's SVP of Business Development to build
relationships with channel partners. The company has said they want to target
more MSP and SaaS providers who can use Datadog's tools for a transparent
view of cloud infrastructure.
NewProducts
Enablement: Avnet launches Industrial IoT Starter Kit
• Why it matters: In light of the new IoT strategy and rumors of internal IoT
pilots in select distribution facilities, Avnet, a global technology distributor
launched a new “Visible Things Industrial IoT Starter Kit” consisting of
integrated hardware and embedded software. It can be used to design, test,
and deploy IoT projects and systems.
• What’s Avent’s strategy? The company already sells a wide variety of IoT
products from capacitors, embedded devices, gateway solutions, low-power
wide area networking technologies, and microcontrollers to wireless and GPS
modules, so this transition into IoT focused products is a natural move, in an
effort to adapt to this secular trend.
Network Hardware: Qualcomm shares results of cellular system performance in
networks service low-altitude drones
• Why is it important? This strategy is comparable to the pursuits of Softbank
and OneWeb, mentioned earlier in this article. Companies like Qualcomm and
Softbank are trialing ways to deliver faster cellular service performance via low
flying equipment
that act like
antennas for our
devices.
• Is it realistic? The
technology of low
flying satellites
offers more data
capacity with
seemingly similar speeds, so despite the success of the drone trials, this is more
likely to help prove low flying satellite technology. That said, Google continues
NewProducts
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Drones vs balloons to enhance
network service
to test their Project Loon with air balloons and for the same uses, but it’s still
far from a reality.
• After months of sending drones into the airspace above its campus in San
Diego, Qualcomm is sharing the results of what’s believed to be the first
comprehensive, systematic study of cellular system performance in networks
serving low-altitude drones.
Platforms: CrowdFlower Announces Next Generation Computer Vision Solution
• What is it? The CrowdFlower platform can take real time images and
categorize, label, and cleanse them in miliseconds. For example, a camera
on the hood of a car can take pictures in millisecond intervals, identify and
categorize objects like pedestrians and other cars, and submit this data, in
structured form, to a central processing engine.
• Who else is doing this? There aren’t many competitors with this technology,
and even the close competitors seem to be far from CrowdFlower’s crowd
sourced tech. But for comparisons sake, MechanicalTurk and DataPure are
pseudo competitors, offering a varying amount of use case personalization,
advanced support and quality control features.
Security: Cisco introduces IoT Threat Defense
• What is it: Threat Defense is a cybersecurity architecture based on a suite of
technologies and services designed specifically for different types of devices
across a diverse set of verticals.
• Why is it important? The mere announcement of a new architecture from
Cisco can be underwhelming, but at the very least, it reflects a forward-
looking presence in the IoT-security space. As the growth in these connected
devices accelerates, security will continue to grow as a crucial step in
developing these technologies, and right now, there are very few solutions on
the market.
Security: Ericsson (NASDAQ: ERIC) launches Blockchain Data Integrity for GE's
(NYSE: GE) Predix platform
• What is it: Blockchain Data Integrity provides a distributed ledger for fully
auditable, compliant and secure data on the platform’s microservices.
• Why is it important? Microservices, or containers are the future of platform
architectures, and the only drawback to this emerging architecture is security.
By adding blockchain technology on top of containers, Ericsson has built a

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CrowdFlower's turning
images to data via crowd
sourced developer
massive hurdle to hackers trying to gain entrance to a user’s Predix data. We
expect similar technologies to see strong adoption over the coming months.
Security / Energy: IBM launches distributed energy blockchain project in the
Netherlands with Tennet
• Details: Dutch utlity Tennet, renewable energy project developer Vandebron,
intelligent battery storage leader the Sonnen Group and IBM announced the
launch of two utility-scale pilot distributed renewable energy-grid integration
projects.
• Why is it important? Blockchain and battery storage technologies are widely
seen as the most necessary steps in building a renewable energy system
where houses and companies can generate, use, and share energy from
renewable sources, without the need for utilities. By integrating blockchain,
the stored energy units from renewables can be safely bought and sold to
others on the grid, through the use of an auditable distributed ledger.
• No utilities? This is a longer explanation, but a few months ago, The Economist
published a great description of this concept how blockchain will contribute
to these changes.
Partnerships
Transportation: Google partners with Audi and Volvo to build an infotainment
system
• Details: Google has partnered with Volvo to build a next-generation
infotainment system to corner the rapidly growing connected car market
against Apple CarPlay. The Volvo cars released in two years will feature
Google's Android system, but unlike Android Auto, the new system won't
require a smartphone to operate. This will give Google access to drivers who
might use services like Google Maps in their cars, but don't own Android
devices, ensuring its services and apps are in continual use.
• Why is this important? The partnership is meant to improve the user
experience by better integrating apps and services into cars rather than
shoving phone screens into car displays. These customers have generally been
reluctant to use in-vehicle systems that can be clunky and difficult to use, and
more than 50% of car owners never use their infotainment systems after 90
days of purchase, according to a 2016 study led by J.D. Power. This is an issue
for car companies investing heavily in data generating entertainment systems,
Partnerships
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IBM accelerating the death-spiral of
utilities
Google is looking to solve that problem by improving the infotainment
experience.
Autonomous Vehicles: Lyft and Waymo partner on self-driving cars
• Details: Amid its ongoing lawsuit against Uber, Google's Waymo has
partnered with Lyft to work on autonomous vehicle technology.
• Why is it important? Lyft's existing network and infrastructure will expose
Waymo's technology to more markets, while Waymo's tech will help Lyft keep
pace with its rivals in the self-driving space.
Network Services: Comcast (NASDAQ: CMCSA) and Charter (NASDAQ: CHTR) to
partner on wireless offerings
• Details: The two largest U.S. cable operators have agreed to work together
for at least one year to develop a wireless business. The deal includes
creating common operating platforms and technical standards, among other
proposed synergies.
• Why is it important: As consumers continue to “cut the cord” of cable
providers, these companies are looking to pivot towards new sources of
revenue. Rather than work separately for a 5G future, against the likes of
AT&T, they are combining forces with hopes of a faster entrance into the
market. Additionally, both players have varying deals with existing carriers,
like the ability to resell Verizon’s network in their respective territories, and
they’ve also spoken about exploring deals with wireless providers other than
Verizon, even buying a wireless company in the next year.
Software / Industrial: Trackvia and Current by GE partner to offer a low-code
application platform to quickly and easily gain insight from data without a coding
background.
• What is it? TrackVia allows users to drag and drop functions that previously
required coding or IT/consulting expertise for systems like supply chain or
inventory management systems, ERP, and business process management.
Current, on the other hand, is GE’s $1B energy management arm, launched
as a startup in 2015 and is composed of GE’s innovative energy technologies,
from connected lighting to behind the meter solar and storage, and it’s glued
together by Predix.

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Comcast and Charter turn
from competitors to partners
for wireless
• What’s GE’s strategy? The partnership gives non-coding business professionals
the ability to customize everything in their energy management processes,
from analyzing, building new functions, automating tasks, and visualization
data.
• Why is this important? The automation and facilitation of coding and IT
management processes is gaining traction quickly with enterprises due to the
high cost of developers. In the future, we expect most of enterprise tasks that
require coding to move to a “drag and drop” platform, allowing any employee
to complete tasks previously siloed in the IT department.
PrivateFunding
Augmented Reality / Virtual Reality
Improbable, a platform for developers to build virtual reality worlds, raised
$502mm at a $1B valuation.
• Takeaway: Improbable is a stealth competitor to industry giants like Google
VR, and they provide a springboard for developers creating immersive
experiences. This massive round of $502mm was led by Softbank and included
previous investors Andreessen Horowitz and Horizon Ventures. Importantly,
and despite the current focus of gaming, this strategic investment from
Softbank will give the company access to top enterprise industry connections
like transportation, where they’ve recently made a $5B investment in Didi
Chuxing (the Uber of China) as an entrance into the autonomous car market.
Artificial Intelligence
Bonsai raises $7.6mm to help companies build their own AI
• Takeaway: Bonsai offers tools to simplify developer functions on TensorFlow,
a Google-founded open source software use to build and train deep learning
models. The company is focusing on fields like robotics, but they’re expanding
into industrial settings with Siemens listed as one of the early users. The
round was driven almost entirely by strategics, including Microsoft Ventures,
Samsung, Siemens, and ABB Technology Ventures.
PrivateFunding
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Orbital Insight raises $50mm Series C
• Takeaway: Smart Agriculture is extending well beyond connected sensors in
the field, and one of the most promising applications is geospatial analytics.
Orbital offers machine learning and
image processing to collect and pair
geospatial data with economic and
social trends, and they’re seeing a
notable amount of adoption from
commodity trading firms.
• Competitors: The first mover and
only other competitor with similar
tech is Descartes Labs, who also
combines satellite imagery with
machine learning to pull, clean, and
produce insights from geospatial
data.
• Difference? From our in-house geospatial expert: Descartes is solving a
major problem in geospatial analytics by cleaning imagery data and offering
insights in real-time, whereas it seems that Orbital is more focused on visual
“counts,” an area that could potentially be disrupted by the growth in on-the-
ground connected sensors.
Bitfusion raises $5mm Series A
• Takeaway: The company’s Flex platform gives developers a central place to
manage the lifecycle of AI applications, from training, testing, and eventually,
deployment. The tech is based on containers that make scaling and moving
experiments and models between local machines and the cloud easier.
(Industrial) Reality AI, an artificial intelligence software for R&D engineers
developing IoT products closed a $1.7mm Seed Round
• Takeaway: This AI-based company offers software used solve the difficult
detection and classification problems in real-time signal processing, and it’s
offered on a platform where engineers do not need to be experts in machine
learning to use it. The key use cases include predictive maintenance and
condition monitoring in industrial equipment, but customers can also put the
sensors on their mixers, pumps, or robots to track equipment health.
Improbable's VR platform raises a
massive funding round at a unicorn
valuation

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Fastdata.io, a real-time stream processing company, raised $1.5mm in a round led
by Nvidia
• Takeaway: This startup was built on the potential of pairing a stream
processing software engine with graphics processing units (GPUs) to
accelerate just about any kind of real-time data processing. The founders
attribute their “aha” moment to Nvidia’s release of CUDA which is a GPU used
for general purpose processing. The company’s aiming for use cases in AR/VR,
self-driving cars, and the IoT.
• Competitors: The engine competes with open-source Apache Spark, but the
Fastdata.io founders boast their processing capabilities at 2.5-3x faster than
the rival.
Healthcare
Vericred, a provider of healthcare data services geared toward health technology
companies and insurance companies, raises a $5.5mm Series A
• Takeaway: The company offers
a centralized data platform to
allow individuals and businesses
to enroll, understand and use
health insurance and employee
benefits. This includes tools
for pricing transparency,
appointment-booking,
enrollment, and engagement.
Aira, a connected eyewear manufacturer that provides remote assistant services
for the blind and visually impaired raises a $12mm Series B
• Takeaway: After beta testing internet-connected eyewear that provides
remote assistant services for the blind and visually impaired people, Aira
has raised a Series B to pursue commercialization. The tech consists of a
tiny camera mounted on wearable devices (Google Glass and Vuzix) and
Aira’s network of trained agents who assist blind and low-vision people in
navigating the world, but they’ve noted an aim towards “autonomous mode,”
using AI and eliminates this need from a remote agent.
• The company made a big media splash while guiding a nearly blind runner to
the finish of the Boston Marathon.
Orbital Insight's use of satellites
for smart agriculture, but there's
competition in this space

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Industrial
Tamr Inc, the provider of data unification services received a undisclosed strategic
equity investment from GE Ventures
• Takeaway: GE’s been a Tamr customer since 2014, using its database
technology to pull together information stored in more than 270 software
systems that GE uses to organize various business processes, and they’re
rumored to be in the process of integrating the technology into industrial IoT
platform, Predix. The startup has around 40 customers, including industry
leaders like Toyota, Merck, Novartis, Thomson Reuters and Hewlett Packard,
and a typical two year liscense for their software runs around $300,000. In
March, they also signed a sales partnership with HPE, who’s venture arm
previously invested in their Series B round, alongside other strategics like
Thomson Reuters, MassMutual, and Google Ventures.
Network Services
(AI) People Power raises $3.2mm in series B funding
• Takeaway: People Power offers two core products: a AI-enabled gateway and
an IoT Suite platform. The gateway uses AI to learn and enforce expected
patterns of network traffic and the platform allows devices to communicate
with each-other and prioritize tasks like energy savings via connected lighting.
These products are offered as white label solutions for OEMs to integrate into
their IoT strategies, and the funding was led by strategic energy players like
German based Innogy and Australian based Origin Energy.
(Platform) Rigado, a wireless hardware supplier for IoT modules and gateways for
connected devices raised $3.3mm in seed funding
• Takeaway: The startup is a combination of two Oregonian-based companies
that merged last year, and they offer hardware aimed to reduce the time
required to go-to-market, while helping engineering teams in their journey to
develop connected products.
(Network Software) Cockroach Labs raises $27mm Series B
• Takeaway: Cockroach is the provider of an open-source, scalable database
designed to reduce downtime. Like its namesake, the service literally
replicates itself like an insect and distributes information to increase database
reliability, and despite the crowded market, they’ve been able to land Baidu
Aira's leading the blind
with connected eyewear

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as a customer, processing two billion inserts a day while simulating nightmare
scenarios to check for resiliency.
• Competitors: Google’s CloudSpanner is a similar, distributed relational
database service, but Coackroach differentiates itself by being open source.
Additionally, an upcoming Cockroach feature called geo-partitioning will help
widen that differentiation by enabling control of replication by geography
at the column level. The column level is simply a section of the database
structure.
• Here’s a great primer on this technology.
(Network Software) Thinnect, a local network service provider focused in
commercial lighting and intelligent street lighting raises $1.7mm
• Takeaway: The Thinnect team has expertise in wireless mesh networks for the
military, and they’ve based their lighting solution on this remotely managed
lighting network technology which eliminates network planning and reduces
installation costs due to a flat architecture that allows connected sensors to
self-configure. The company has already licensed their technology to Cityntel,
an intelligent lighting company.
Robotics
Abundant Robotics raises $10mm to commercialize its apple-picking robot
• Takeaway: Apple growers generate around $50B in annual revenue, and
Abundant Robotics is using computer vision to recognize ripe apples and a
vacuum system to pick them. They expect to use the funding to move into
other agricultural markets.
• Competitors: FF Robotics is working on a similar robotic fruit harvester with a
patented algorithm that “learns” in each orchard how to locate, grip and store
fruit, and they are expected to release a protoype in Washington orchards
this fall.
(Drones) 3DR raises a $53mm Series D round
• Takeaway: After pivoting from a drone components company, 3D Robotics
is developing SaaS model that allows drone users to control their flights and
onboard cameras, then send this datastraight to the cloud. For the primary
industry targets, construction and real estate, that data can be stored in
Cockroach Labs is taking
on Google with distributed
database technology
TechnologyYouShould
BeWatching
06

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Autodesk’s BIM to give contractors, structural engineers and architects a way
to quickly and visually identify potential problems and avoid building delays.
Security
(Autonomous Vehicles) Karamba Security raises $12mm in funding
• Takeaway: Where most autonomous vehicle security technology focuses on
intrusion detection systems like those in PCs, Karamba software is built into
a car, and can prevent hacks on an embedded system. The software locks
down the factory settings, preventing the execution of any programs that
would deviate from those standards, and their technology has developed
quite a buzz in the auto industry as they’ve begun working with 16 new
manufacturers in the past 15 months.
(Industrial) Mocana raises $11mm in Series F funding
• Takeaway: Led by GE Ventures, Mocana’s funding will support their industrial
focused IoT security Platform which uses cryptographic software installed on
a chip or flash memory embedded within a device. More simply, they secure
data for their trip between device to gateway and gateway to cloud.
• Competitors: See below.
( Industrial) IoTium raises $8.4mm Series A
• Takeaway: Also led by GE Ventures, this Network-as-a-Service (NaaS)
provider aims to connect legacy on-site systems in industrial environments
with cloud applications, especially the challenge of securing and scaling
connected device strategies. Their three main use cases include remote
connectivity, network infrastructure for smart lighting, and smart city app
containerization. Juniper Networks participated in the round as a strategic as
well.
(Smart Home / Insurance) Neos, a developer of home-based sensor that update
users about potential threats via a smartphone app, raises a $5mm Series A
• Key Takeaway: Led by strategic investor and insurance incumbent, Munich
Reinsurance, Neos has built a kit of smart home sensors like smoke detectors,
motion sensors, and cameras that send real time alerts about the attached
Thinnect's using wireless mesh
expertise for an AI-driven
platform integration software

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devices and security system. Their key differentiator is the ability immediately
trigger a dispatch after a problem is detected.
• Competitors: AXA, an insurance company in Europe is entering the market
with a similar set of products while also offering “digital insurance,” for
consumers to merge risk protection with IoT devices.
New Funding
Apple creates $1B U.S Manufacturing Fund
• Takeaway: Apple’s creating a $1B fund to invest in U.S. companies that perform
advanced manufacturing, and shortly after releasing plans for the new fund,
they announced a $200mm investment in glass supplier Corning (NYSE: GLW)
for R&D of state-of-the-art glass processing.
Honeywell (NYSE: HON) launches their first venture fund
• Takeaway: Honeywell’s new fund has a target of $100 million and will be
managed by Honeywell Ventures, the conglomerate's investment arm.
The fund will focus on companies that could scale faster through access to
Honeywell's customers, channels, intellectual property and manufacturing
capabilities.
Section 32 closes $150mm fund
• Takeaway: The VC firm founded by former Google Ventures chief executive Bill
Maris, has reportedly raised $150 million for its debut fund, surpassing an initial
target of $100 million. The fund will focus on investing in tech across various
sectors, including IoT.
Ovvious Ventures raises $191,919,191 for second fund
• Takeaway: The early-stage VC firm led by Twitter co-founder Evan Williams,has
closed its second flagship fund on $191,919,191. Ovvious is a backer of online
publishing platform Medium and VR startup Magic Leap.
NewFunding
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Defy.vc nearing $125mm capital target for new fund
• Takeaway: This new firm is the product of two seasoned Silicon Valley VC-
alumni, Trae Vassallo, a former Kleiner Perkins investor, and Neil Sequeira,
a former partner with General Catalyst. They’ll reportedly have a focus on
early-stage connected-software startups, and both partners have a history in
investing in IoT companies like Nest, Enlighted, and Opower.
Telit Communications raises $44mm to fund new IoT-related acquisitions
• Takeaway: An unusual route for raising an acquisition fund, Telit sold 11.6mm
of their shares at a 4% discount with the aim to use these proceeds to acquire
IoT startups. In the last six years, the company’s acquired 10 IoT companies,
including Motorola’s M2M business, GlobalConnect, Navman Wireless OEM
Solutions, and Novatel Wireless. Fortunately, this retained earnings dilution
can be justified with a 330% increase in the company’s stock price since
beginning this strategy in 2011.
Saudi Telecom has closed on a $500mm venture fund for making investments in
AI, VR, banking services, logistics and digital health services
• Takeaway: The government owned telecommunications provider is engaging
in an economic diversification plan launched last year, and they’re working
to fund small and medium sized enterprises across promising technology
categories. The fund will be independently managed and self financed, and
this follows Saudi Telecom’s 10% or $100mm investment in the Uber of the
Middle East, Careem.
Upfront is raising $500mm for two new funds
• Takeaway: Upfront announced it’s raising a sixth fund targeted at $380mm
and a second opportunity fund targeted at $120mm. In the past, they’ve
invested in areas such as IoT, SaaS, digital media, and food and agriculture.
Intel, Bank of America, Merrill Lynch, HSBC and a dozen other financial instutions
have invested $107mm into R3 consortium
• Key Takeaway: Distributed ledger technologies are all based on a similar
system architecture, but the processes and applications of certain
technologies can prevent systems from communicating with eachother.
This is why a group of major banks have aligned on R3, to build a standard

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blockchain technology for transactions. The technology will increase the
speed and drastically reduce the costs of transactions, but it must be the same
throughout all parties.
IBM launches the IBM Blockchain Founder Accelerator, to help enterprises and
developers accelerate blochain adoption.
• Takeaway: IBM is joining a rare initiative of blockchain accelerators, and
offering tech, legal, and business expertise to founders building companies on
top of this technology. In addition, they’ll be giving participants early access
to new prebuilt software assets to help them reduce the time and technical
expertise needed for developers to write complex blockchain code.

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about
harbor research
Contact Us
Boulder USA
Alex Glaser
Harbor Research, Inc.
1942 Broadway Suite 201
Boulder, CO 80302
USA
p +1 303.786.9000
f +1 720.282.5801
m +1 314.374.8656
Email: aglaser@harborresearch.com
Contact Us
Zurich Europe
Glen Allmendinger
Harbor Research, Inc.
Badenerstrasse 549
8048 Zurich
Switzerland
p +41.435016.783
f +1 720.282.5801
m +1 617.290.3797
Email: gallmendinger@harborresearch.com
If you or your colleagues would like to learn more:
An internationally recognized research, technology, and business development
consulting firm, Harbor Research has predicted, tracked, and driven the development of
the Internet of Things since our inception in 1984. While our history is long, our strategy is
simple: capture and create value by combining accurate data discovery and analysis with
creative systems-thinking. It is this mindset that has given us the privilege of working with
some of the greatest companies in the world. Today, we continue to work with C-level
executives and top management of some of the world’s most consistently successful
companies and innovative startups. In the same way that the market has flexed and
grown over the years, our services and experience have grown to make us the premier
service organization you see today. We work with clients in a variety of ways including
consulting, advisory, research and content development, thought leadership and
workshop facilitation.
ABOUTHARBOR
UNIQUEPROCESSES
As much as we would like to
say there is a simple “linear”
process to drive new smart
systems innovation, the
nature and complexity of
the Internet of Things, there
is no one best way to design
an innovation process to
design new systems.
We provide our clients
with rigorous analysis and
insight to support critical
new business design and
development decisions.
Our research, content and
modeling provides an
ideal context for discovery,
ideation and planning.
THOUGHTLEADERSHIP
Building new ventures
for the Internet of Things
requires new and very
different modes of design
and development – orga-
nizations will need to push
the boundaries of collabo-
ration to include many new
and unfamiliar participants.
VIBRANTCOMMUNITY

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about
harbor research
Player Profiles, Ecosystem
Maps, Analysis and Database
Harbor Research has completed
500 player profiles on top
companies in the IoT market
including mapping their
customer, competitor, investor
and partner ecosystems.
Smart Systems Market Model
and Forecast
Harbor’s proprietary smart
systems device demographics
database and model helps
strategic business developers
evaluate opportunities, make
decisions around pricing models
and craft marketing and sales
strategies.
Research Briefs, Data Books
and Playbooks
Harbor’s research on markets
and technologies within the
overall Smart Systems and the
Internet of Things arena that
provide a forward-looking,
distinct perspective on new
market and technology growth
opportunities. Explore our
editorial calendar for our latest
research
Market, Technology and Event
Briefings
Briefings provide your team a
download on current market
dynamics and trends, emergent
technologies, or a company’s
movements.
Custom and Configured Research Interactions Help Support Strategy
Focused Market Intelligence
Tracking
We employ proprietary algorithms
to scour news sites, blogs, trade
publications and social media
feeds for curate information about
markets, technologies players and
events all organized against our
Smart Systems and IoT taxonomy.
On-Going Queries and Analyst
Support
Acting “on-call”, our analysts
will pull and aggregate specific
data, profiles or explanations in
configured responses to answer
your specific questions and meet
your unique needs.
Configured Research and Analysis
Recognizing that many clients
have needs that reach beyond
published reports, Harbor conducts
“configured” research and analysis
on topics that are emerging across
the landscape providing updates
based on specific areas clients are
focused on.
Custom Market Modeling and
Forecasting
We have designed our market map
and forecast model for configured
and custom modeling. Leveraging
our extensive device segment
coverage, clients can create custom
forecasts to look at quantifiable
elements beyond shipments and
associated revenues.
Strategic Business Reviews
Clients will have the opportunity to attend a collaborative session with analysts from
Harbor Research on a bi-annual basis. These discussions address strategic questions
about market, technology and player opportunities your team is focused on.

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