Case (iidf) team 2 (eng)

1. Internet of Things in Russia

2. Mythology Return from operations Return from investments Our recommendations
Return from operations Return from investments
I. How IoT projects earn money?
II. Potential market
III. What problems they solves?
or
Who’s ready to give them money?
IV. Who solves them and have this
money?
I. Potential best deals in Russia
II. Best deals in the world
III. Active funds in IoT market

3. How IoT projects earn money
Monetization prospects:
Maturity
Steps
No working
business
models yet
$$: M&A
Hardware
sales
+free cloud
services
$$: hardware,
capex
Connected
thing is part
of service
contract (as
cell phones)
$$: service,
opex,
data
Unified service
across sold
Things
$$: hardware,
capex +
services, opex
Commodity
service
assumes
ubiquitously
available
things;
as prepaid SIM
$$: service,
opex,
data
Experiment:
Hardware:
Bring-your
own-thing:
Service-funded
thing:
Commodity IoT:
B2C iBeacons
fitness
wearables
wearables
based
health
insurance
health-ins.
provided
motion
tracker
yet no
examples,
most
potential
benefits
for whole
ecosystem
B2B
smart
meters
industry 4.0
sensored
farming
predictive
maintenance
of
manufacturing
connected
industry
products
Sources: Harvard Business Review, HarborResearch, ECIS2014
Mythology Return from operations Return from investments Our recommendations

4. Challenges:
•Diversity of objects
•Immaturity of innovation
•Unstructured ecosystems
From “firm business
model”
To “ecosystem business
models”
Customer
needs
Solution for existing
needs in (reactive
manner)
Address real-time and
emergent needs
(predictive manner)
Offer
Stand-alone product
Updatable product that has
synergy value
Role of data
Single-point data used
for future products
Changing experience for
current product
Path to profit Selling next product
Recurring revenue for current
product
Control points
Commodity advantages,
brand
Network effects between
products
Capability
development
Leverage core
competencies
Understanding how other
ecosystem partners make
money
Traditional product mindset Internet of Things mindset
Sources: Harvard Business Review, HarborResearch, ECIS2014
How IoT projects earn money
Mythology Return from operations Return from investments Our recommendations

5. Sources: Cisco IBSG , MIT Technology Review Business Report
More
connected
devices than
people
World
Population
6.3 Billion 6.8 Billion 7.2 Billion 7.6 Billion
Connected
Devices
500 Million 12.5 Billion 25 Billion 50 Billion
Connected
Devices
Per Person
2003
2010
2015 (P)
2020 (P)0.08
1.84
3.47
6.58
Internet of Things
Transport
Energy
Other
Earth
Home
Education
Business
1. Individual
networks
2. Connected
together
3. With security,
analytics, and
management
Potential IoT market
0
10
20
30
40
50
60
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Things
Tabs
PC
Smartphones
IoT world market
bn, USD
Mythology Return from operations Return from investments Our recommendations

6. Sources:
Security
Safety
Privacy
Steal of sensitive
personal information
Enabling unauthorized
access and misuse of
personal information
Problems with automatic
trading software, which
can get trapped in a loop
causing market drops
Symantec reported on a
Linux worm that targets
routers, cameras, and other
embedded devices
The flaws in Samsung
Smart TV
Major security holes in
traffic light systems that
allowed hackers to control
100 signals in Michigan
What can
be done?
Bolster the security of IoT
environments with:
• security tools like data
encryption
• strong user authentication
• resilient coding
• standardized and tested APIs
that react in a predictable
manner
Old
infrastructure
Old
infrastructure
Mythology Return from operations Return from investments Our recommendations

7. Sources: RusBase, Tecnocrunch, Skolkovo
Mythology Return from operations Return from investments Our recommendations
Sector:
Health and fitness
Sport tracker +
Fitbit app
Sector:
Cloud Service
Sector:
Transport
Sector:
Cloud, M2M
Cloud service that
allows you to
combine different
devices operating
in the format of
"Internet of
Things"

8. Sources: CBInsights, 2014, eWeek 2014
Future Prospects
Short term
Medium term
Long term
Block A
For a short-term investment the
most attractive areas are:
• Home Automation & Energy
Management
• Healthcare
• Monitoring & Tracking
• Quantified Self
Block B
• New IT infrastructure, especially
with “fog computing”
• new protocols and ways of data
transfer
• new ways of data cleaning and
reduction of its complexity
Block C
Artificial intelligence technology
the ability to collect and process
all data about one process, to
select significant indicators from
that dataset and to make the right
management decisions on the
basis of algorithms.
Creation of this technology may
change or destroy the existing
market of Block A products.
Creation of this technology will
use infrastructure, owned by Block
B companies, so revenue of Block
B will rise with development of
Block C
Creation of this technology is
impossible without creating Block
B technologies
Mythology Return from operations Return from investments Our recommendations

9. Sources: CBInsights, 2014, eWeek 2014
Problems - Russia
Industry/application area Case description Products/services/benefits
offered
Technology neede
Manufacturing IoT-adapted manufacturing
process
Customization of products
during the production process
Situation-aware smart
machines and robots
Health Health related products and
service
Medical expertise Sensors, IoT communication
infrastructure
Health guidance service Monitoring of key parameters,
analyzes by medical experts
Sensors
Home Home owner’s digital service Monitor and manage facilities Pnp devices, installation
package, open and user-
friendly applications
Saving energy Measuring temperature,
reducing energy consumption
Sensors
Traffic Traffic data marketplace Real-time traffic & weather
conditions
Databank, sensors
Shopping Electronic shopping assistant Key information about a
product
Electronic shopping assistant
device, RFID
Food Food security tracking system Tracing of food products from
original material providers to
consumers
Sensors, RFID
Real estate Real-time waste monitoring Reducing the cost of waste
collection
Sensors
Mythology Return from operations Return from investments Our recommendations

10. Sources: Sources: CBInsights, 2014, eWeek 2014
Mythology Return from operations Return from investments Our recommendations
Type of technology Problem solving idea Growth drivers
Smart house
Sensor unauthorized access to the premises
Remote video monitoring sensors
Intelligent light control
Motion detectors
Detectors of presence
Energy consumption sensors They will provide savings of $ 200 to $ 500 billion
a year by 2025, according to the McKinsey
Global Institute.
Water leakage sensors Doha city, Sao Paulo and Beijing have reduced
leakage by 40 - 50%
Healthcare
A connected pill bottle that ensures patients take
their medications.
Ministry of Labor estimated the number of elderly
people is increasing by 1 million a yearDevices that monitor the status of health of the
elderly people
Corporate Advertising and marketing According to Cisco research
Governmental
Intelligent traffic management system
The study of “Machina” expects 2020 revenue of
$ 100 billion through the use of IoT in road
payments and fines
Waste management systems
City of Cleveland was able to eliminate 10
loading routes and reduce operating costs by 13
percent..

11. Sources: Rusbase.vc, Siliconrus.com, angel.co/internet-of-things
Startup Raised Capital Info
$3 mln
Investor: LETACapital
Core business: intellectual autopiloting
systems for vehicles
$ 1,5 mln
Investor: LETACapital
Core business: Remoto
$ 1,1 mln
Investor: Qwave
Core business: LED solutions
$ 1 mln
Investor: Almaz Capital, Aventures
Capital
Core business: Remote pet camera
$ 250k - 2mln
Investor: TMT INVESTMENTS, Maxfield
Capital
Core business: secure connections for
IoT
$218 k
Investor: crowdfunded on Indiegogo
Core business: cellular tracker
$ 160k
Investor: Skolkovo
Core business: Smart. Safe. Robot.
N/A
Investor: RVC
Core business: system for remote
control of vehicles
Potential best deals in Russia
Mythology Return from operations Return from investments Our recommendations

12. Company Investors
Amount
Raised
Series Year
Exit Size
2014
Exit Type
Nest Labs Google Ventures $80M С 2013 $3 200M
Acquisition
(by Google)
Dropcam
Institutional Venture
Partners
$30M C 2013
$555M
Acquisition
(by Nest and
Google)Accel Partners $12M B
2012
Felicis Ventures $5.8M A 2011
GoPro
Foxconn International
Holdings
$200M PE 2012
$427,2M
IPO on
Nasdaq
Walden International
Investment Group
$88M A 2011
Riverwood Capital,
Steamboat Ventures
$205k VC 2010
Oculus VR
Andreessen Horowitz $75M B 2013
$2 000M
Acquisition
(by
Facebook)
BIG Ventures $16M A 2013
Crowdfunding $2.4M - 2012
Mythology Return from operations Return from investments Our recommendations
Sources: Rusbase.vc, Siliconrus.com, angel.co/internet-of-things

13. Sources:
$3 500M
$613M $406M $3,5M
1Q2014 2Q2014 3Q2014 4Q2014
Exit Flow
Narrative
IFTTT
Kinsa
SimpliSafe
Sources: CB Insights, The Pitchbook Platform
IoT CATEGORIES FUNDED
Wearable Tech
TOP 10 INVESTORS 2014…
NOTABLE EXITS
KEY TRENDS
Healthcare
In-store Retail
Wearable Tech
Drone
startups
Connected Car
Building Blocks & Platforms
Connected Home
 2014 Median Exit Size = $29,8M
 Largest Exit: Nest Labs Acquisition by Google
 Only 1 IPO – June 2014 GoPro Inc. on Nasdaq
 $108M Raised
 29 Deals in 2014
 104% YoY Growth
 10 Drone Companies
 $997M Raised
in TOP 10 Deals
 $542M – Largest Deal
…INVESTED IN FOLLOWING STARTUPS
LIFX
Misfit
Helium Systems
Boombotix
Acquisition Buyout IPO
15 2 1
Exits 2014 by Type
Mythology Return from operations Return from investments Our recommendations

14. Sources: Skolkovo, Intel, RusBase
Russian Funds – IoT activity
Competition of the IoT on the
basis of the first compatible with
the Arduino platform Intel
Galileo and Microsoft Azure
cloud service
Raised capital: $50 mn
Founded at 24th of
April 2015
Glance
control system
of smart house
+ Project’s NPV est.:
200 mn RUB
+ Investment
requirements: 60 mn
RUB
+ Raised funds: 1 mn
RUB
Geo Watch
watch with
GPS-tracker for
kids
InHome
Power System
M2M devices
Emdea
blood pressure
monitoring
system
Internet of Things-IT
Challenge
+ 1 place – 3 mn RUB
+ 2 place – 2 mn RUB
+ 3 place – 3 mn RUB
B2B
orientation
10 projects
DiSiKon – early fire
warning system
Electronic seals on
the one of railroad
SNG
Cisco IoT Innovation
Grand Challenge
Mythology Return from operations Return from investments Our recommendations
Google’s $3.2 billion
acquisition of smart
thermostat startup
Nest Labs

15. Sources: According to our analysis
Mythology Return from operations Return from investments Our recommendations
Block A
• active PR
• marketing campaigns
Block B
• strategic partnerships with
main players from
• block A
• IT companies
• telecom companies
• Focus on fog computing
• new ways of data
transfer
• initial data analysis.
Block C
 R&D fuelling
Home
Automation &
Energy
Management
Healthcare
Monitoring &
Tracking
Quantified Self