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HAX Hardware Review - 1H 2018 Trends and Outlook

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The past year has been very active for hardware. IPOs, acquisitions (and some spectacular failures) have made the news. With advancements in deep tech and automation, connected technology in healthcare, homes and offices, hardware is changing the way people experience and improve life and the world around them.

This report is a summary of news from the hardware tech world; new movements we saw through working with startups, and some of our thoughts on the year ahead. A full copy of the report is available for download at: hax.co/hax-hardware-review-1H2018

Published in: Devices & Hardware
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HAX Hardware Review - 1H 2018 Trends and Outlook

  1. 1. 1H 2018 Edition hardware review
  2. 2. Thank you to our sponsors and partners
  3. 3. Foreword The past year has been very active for hardware. IPOs, acquisitions (and some spectacular failures) have made the news. With advancements in deep tech and automation, connected technology in healthcare, homes and offices, hardware is changing the way people experience - and improve life in - the world around them. This report is a summary of news from the hardware tech world; new movements we saw through working with startups, and some of our thoughts about the year ahead. As early-stage investors, we see new technologies ahead of others. We are often asked why we’ve invested in certain areas. Our first answer is always “amazing teams”, but going beyond that, we included our views on particular sectors. A lot can happen in a year. Almost too much. Our last report in June 2017 counted 243 pages. We decided to increase our publishing frequency to keep things more relevant and go deeper into areas of interest. OTHER HAX REPORTS HARDWARE TRENDS 2017 HARDWARE TRENDS 2016 HARDWARE TRENDS 2015 THE STATE OF ROBOTICS 2015 3 THANK YOU TO OUR AUTHORS & KEY CONTRIBUTORS ANANT PATHAK DUNCAN TURNER CYRIL EBERSWEILER BENJAMIN JOFFE RHIANNA RICHARDS ZONA LIU CREATIVE DESIGN BY - VITALY VYAZOVSKY LISASHCHEGLOVA
  4. 4. About HAX Program-Based Venture Capital for Hardware HAX runs a hands-on program to support the companies we invest in. Our offices are strategically located in Shenzhen and San Francisco, the most important ecosystems for hardware entrepreneurs. To date, HAX has invested in almost 200 companies. Those include consumer tech, healthcare, enterprise IoT, industrial robotics and advanced manufacturing technology. HAX is part of SOSV, a global early stage fund with US300M AUM. SOSV invests through the following flagship programs, which HAX is proud to have as sister organizations. SOSV | Indie Bio | RebelBio | Chinaccelerator | MOX | Food-X Contact us: makeit@hax.co WWW.HAX.CO 4
  5. 5. ACKNOWLEDGEMENTS The authors thank the hundreds of startup founders we work with, our analyst and creative teams for continuing to take this report to new levels, and the many people who are part of the hardware revolution. HAX STARTUPS QUOTED 5 DISCLOSURE The data quoted in this report belongs to those who conducted the research. Many of the examples used are SOSV/HAX investments. Notable exceptions are unicorns, millenicorns (yes, it’s a thing), and companies that bit the dust.
  6. 6. Hardware Industry Overview TableofContents 6 8. M&As 9. Investments 10. IPOs 11. Unicorns 16. Consumer 28. Health 50. Enterprise 70. Industrial 7 12 Investment Track Overview 78 China Investment Landscape 79. Chinese Unicorns 80. Autonomous Vehicles 81. Industrial Robotics 82. Global VC Funding 83. China Rising as an Innovator
  7. 7. Hardware Industry Overview /01 7
  8. 8. Buyer Company Value Date Amazon Kiva $775M Mar 2012 Stryker Mako Surgical $1.65B Sept 2013 Apple PrimeSense $350M Nov 2013 Google Nest $3.2B Feb 2014 Apple Beats $3B May 2014 22014Google Dropcam $555M Jun 2014 Facebook Oculus $2B Jul 2014 Qualcomm KMel Robotics $25M Feb 2015 Fossil Misfit $260M Nov 2015 Gopro Skybotix n/a Dec 2015 Mattel Fuhu $21.5M Jan 2016 Mars Whistle $117M Mar 2016 Fitbit Coin n/a May 2016 Nokia Withings $191M Jun 2016 Zimmer BioMet MedTech $132M Jul 2016 Softbank Arm $32B Sep 2016 Fitbit Pebble $28M Dec 2016 Midea Kuka $3.9B Jan 2017 Fitbit Vector $15M Jan 2017 Electrolux Anova $250M Feb 2017 Hubbell iDevices $60M Apr 2017 Sumitomo Persimmon Technologies $32M Apr 2017 Softbank Boston Dynamics n/a Jun 2017 Softbank Shaft n/a Jun 2017 Intel Mobileye $15B Aug 2017 Apple Beddit n/a Aug 2017 John Deere Blue River $305M Sept 2017 General Motors Cruise $1B Oct 2017 Geely Terrafugia, Inc. n/a Nov 2017 Amazon Blink $90M Dec 2017 Assa Abloy August Home n/a Dec 2017 Logitech Revols n/a Jan 2018 Amazon Ring $1B Mar 2018 Meituan Mobike $2.7B Apr 2018 JUMP Uber $200M Apr 2018 Hardware M&A Remains Strong Disclaimer: While the data provided includes notable deals that happened in the world of hardware M&A, it doesn’t cover every hardware M&A deal in this time frame. 8 M&A Activity 2012 2013 2014 2015 2016 2017 2018 36 62 69 50 57 4842 Source: Crunchbase *Full-year projection 61*
  9. 9. Hardware Financings Have Increased Note: these deals are $1M and above. If pre-seed deals were included, the total number would be much higher. 0 1500 3000 4500 6000 1H2012 2H2012 1H2013 2H2013 1H2014 2H2014 1H2015 2H2015 1H2016 2H2016 1H2017 2H2017 1H2018 Number of funding rounds Funding raised (USD) 243 143 162 142 155 142 150 110 8590 4550 1717 50 45 90 85 110 150 142 155 142 162 143 243 Source: BOLT State of Hardware Financing + amended data via Crunchbase 9
  10. 10. May 2014 Dec 2014 Apr 2015 Aug 2015 Dec 2015 Apr 2016 Aug 2016 Dec 2016 Apr 2017 Jul 2017 Nov 2017 Mar 2018 $60B*Hardware IPOs on the Rise $3B $4.1B $2.9B $45M $107M $150M $145M $1.3B $2B $4.4B $654M $1.5B $130M Source: Crunchbase* Announced / upcoming initial public offerings 10
  11. 11. Privatehardwarecompaniesshootingtounicornstatus inrecordtime 8 hardware millenicorns founded since 2000 20142010 20152013 2006 20102017 20072001 2012 20092008 Reached $1 billion market valuation in the past year Founded since 2000 and currently over $1 billion market valuation Rocket systems and technologies for payload deployment Accessibility solutions for the blind and visually impaired Surgical robots for medical applications Metal 3D printing for industrial manufacturing Autonomous vehicles and driverless cars Connected consumer and home devices Digital medicine platform Connected fitness and wellness Intelligent, dynamic glass maker Sustainable, cloud- based waste and recycling solutions Wearable that enables digital interaction in a cinematic way Cellular network via low-throughput communication for connected devices 11
  12. 12. HAX Investment Track Overview /02 12
  13. 13. Consumer mostly focus on re-imagined and personalized experiences for home, work and leisure. Health covers both regulated medical devices and non-regulated consumer health technology. Enterprise and Industrial can sometimes target the same customer, but with distinct offerings. Enterprise focuses on sensing technologies designed to reduce inefficiencies in businesses, enable new business models, and increase value in output. Industrial startups perform physical tasks, completed by service robots or manufacturing technologies. Categorizing startups in such away helps us monitor resources, funding requirements and success by area. There is some overlap and companies sometimes pivot from one to the other. We’veinvested inover200startups We split them into 4 tracks 13
  14. 14. From B2C to B2B When HAX started investing in 2012, Fitbit had already been in the market for three years. Crowdfunding campaigns were beginning to gain traction with consumers. Connectivity was breathing new life into existing consumer hardware. While we still invest in a similar number of B2C companies each year, our healthcare and B2B investments (infrastructure and automation in particular) have dramatically increased. 14
  15. 15. Starting in 2016, we significantly increased our investments in healthcare, enterprise and industrial. 0 10 20 30 40 '12 '13 '14 '15 '16 '17 '18 While most people know us for our work in consumer tech… first half 15
  16. 16. Consumer Hardware Trends 16
  17. 17. Consumer hits are difficult to predict 'Go big or go home' is not a sustainable investment thesis. Proving user traction whilst staying lean is. We invest in lean consumer tech companies that create re-imagined and customized experiences for home, work and leisure. We look for companies that bring specialized value with their technology, have a geographical advantage and/or an ability to sell in enterprise channels. We believe that if a consumer technology can provide a vastly better experience, offer a high perceived value, and figure the right product-market fit, its creators stand to build a brand of significance. The good news: advancements in connectivity now afford companies the ability to tap into consumer internet and social network dynamics to scale quickly. Innovation in sensing technology and materials is also enabling unprecedented bespoke experiences. What’s more, consumers are opening up to the idea of premium services and subscriptions with loved and trusted brands. 17
  18. 18. 18 2012 2013 2014 2015 2016 2017 2018 Investments ($M) $1.23B $2.84B $2.04B $1.65B $1.09B $0.82B $0.68B $2.16B* 108* *Full-year projection Consumer electronics funding are down in 2018 after a high in 2017 - by the number of companies funded, average funding and total amount. Investor confidence in consumer hardware took a hit as some high-profile companies ended up being zombies (i.e. nowhere close to a venture-scale exit). Consumer hardware funding at four year low Source: BOLT State of Hardware Financing + amended data via Crunchbase Deals 40 75 131 142 140 135 62
  19. 19. Winding Down JAWBONE, founded 1997 Raised $983.8M Once the king of the bluetooth speaker market, the company is relaunching itself with health- related IP as Jawbone Health (we'll keep an eye on this space). Post-Juicero BadNews After the spectacular shut down of Juicero - which burnt through close to US$120M - and a series of crowdfunding scandals, it seemed that consumer hardware was replete with failures. Here are some of the most talked about in the past year. Bites the Bullet Teforia, founded 2014 Raised $17.1M Offered at a $1k price point, the tea maker didn’t get enough traction. The management team, however, seems to be making another go of it with a more reasonable $249. We Had High Hopes Doppler Labs, founded 2013 Raised $51.1M With a team of PhDs and some great tech, we were rooting for this one. Unfortunately, colossal burn rates and delayed market entry (a frequent cause of failure) can be troublesome for keeping investors engaged. Out of Business Navdy, founded 2012 Raised $43M In a surprising turn of events, given the amount of funding, Navdy hit a series of troublesome issues and delays that resulted in the company necessitating the liquidation of its assets. 19
  20. 20. Ring, founded 2012 Raised $209.2M $1B exit 2018 Outdoor home security company Acquired by Amazon August Home, founded 2012 Raised $73M $UND exit 2017 Smart home access and locks Acquired by ASSA ABLOY Anova Culinary, founded 2013 Raised $1.8M $250M exit 2017 Smart kitchen appliances / sous vide Acquired by Electrolux iDevices, founded 2009 Raised $20.1M $60M exit 2017 Connected home products Acquired by Hubbell Blink, founded 2009 Raised $5.8M $90M exit 2017 Wi-Fi home security cameras Acquired by Amazon On the flip side, there were some remarkable and profitable exits recently. Post-Juicero GoodNews 20
  21. 21. The timeline of August Home’s acquisition path to ASSA ABLOY is a good example. In April 2017, the company signed a deal with Home Away, where their tech would enable remote management of vacation rental homes. In September 2017, they then partnered with Walmart to make deliveries more efficient. This consumer-enterprise overlap in product-market fit enabled an acquisition to ASSA ABLOY one month later. Increasingly, we're seeing that consumer products need alternative revenue streams. These are either driven through increased specialization, like consumer companies moving into health and providing valuable health data, or by expanding to B2B. 21 FOUNDED SEED SERIES A DEBT FINANCING SERIES B SERIES C PARTNERSHIPS ACQUISITION $2M $38M Hardware got hard Mar 2013Nov 2012 Sep 2014 Mar 2015 Apr 2017Jul 2017 Sep 2017 Oct 2017 $8M Nov 2013 Enterprise strategy drives revenue $25M
  22. 22. Speech as an interface when typing is not an option Mara Founded 2014 Voice-assisted running app Sensible Object Founded 2015 Alexa-enabled trivia games Novel Effect Founded 2015 Voice interactive story time Toymail Founded 2013 Connected kids toys and entertainment Voice has become a race for large tech companies - but it’s also a fertile place for startups. Clearly small companies are not poised to compete with the likes of Alexa, Siri, Cortana or Google Assistant, but they are surfacing unique ideas and applications for what’s possible with voice technology when typing is not possible. 22
  23. 23. Speech asameans forcognitive development Winner of “Best in Baby Tech” @ CES 2018 Oyalabs, Founded 2017 Oto is the first monitor for your baby’s healthy brain development. Monitoring your baby's learning environment, it gives you personalized tips to help your baby become smarter and happier. www.oyalabs.com  We look at a lot of natural language processing-based companies and were delighted when we met Oyalabs, a startup with a new take and specialization in health. Rather than using speech to substitute typing, they use voice as a way to gauge the level of cognitive development of a child; delivering metrics that track the number of words and interactions, as well as the breadth of vocabulary. start-up 23
  24. 24. SpeakingofEducation… The U.S. STEM market is overcrowded. In China and other emerging markets, however, we see huge upside potential. The former stems from the continuous interest and investment by the Chinese government, who is taking a public-private approach to revamping its policies in terms of science and engineering spend. Also at play - an increasing investment in STEM startups. Case in point: $1.07B was invested into Chinese EdTech in 2015 alone. Source: Bloomberg 24 China India USA Russia Iran Indonesia Japan 195,000 206,000 335,000 561,000 568,000 2,600,000 4,700,000 The countries with the most STEM graduates Recent graduates in science, technology, engineering, mathematics (2016) Source: World Economic Forum via Forbes/Statista
  25. 25. SmartBuilding BlocksforFuture Creators A great example of a Chinese STEM startup in this space is Tinkamo, a smart toy that introduces young children to programming and tactile problem-solving in line with their neuro-motor development. The building blocks leverage voice technology to incorporate speech into play, making Tinkamo another great example of how AI is being applied to learning. It also illustrates how consumer companies can connect to organizations: in this case, educational establishments. tinkamo.com start-up 25
  26. 26. Keurig and Nespresso have been a 'recurring revenue' hit with their pods, but consumer preferences are changing: people now desire fresh coffee. The growth of Blue Bottle and Starbucks Reserve speaks to this trend. Coffeeis Changing 26
  27. 27. orendacoffee.com UltimateBespokeCoffeeatHome Brewing coffee for your unique taste profile. Orenda also offers a marketplace for fresh roasted coffee beans by partnering with roasters. Combined with its technology to understand people’s taste preferences, the company closes the loop: it supplies people with the ultimate coffee-as-a-service with suggestions of beans based on individual taste profiles. start-up 27
  28. 28. Tech-Enabled Healthcare: Consumer Health & Medical Devices Track partnership with 28
  29. 29. *Source: Deloitte 29 Decentralized diagnostics devices & increasing data from constant sensing Health is our fastest growing investment category and the number one potential future market in our mind. Why? Lifestyle-related diseases are now increasing at an alarming rate. Globally, the number of people impacted is expected to rise from the current 415 million to 642 million by 2040*. And while the technology to identify life-saving biomarkers exists, it’s not accessible. Sensing data will change this - helping us to better predict diseases enable prevention.
  30. 30. Jawbone Health Hub Getting Clinical Medical-grade health tech Fitbit Invests in Glucose Monitoring Tech Sano received $6M from Fitbit Jan 2018 Glucose monitoring patch Fitbit Partners w/ Dexcom Moving into medical-grade glucose monitoring, integrated into Fitbit May 2018 AliveCor Kardia Band Integrated w/ Apple Watch FDA clearance for EKG accessory Nov 2017 Much movement in consumer healthcare Large companies are seeking to differentiate and increase the perceived value of commoditized tracking devices 30
  31. 31. Number of Google Ventures digital health and healthcare deals. Annual tech participation in healthcare* 2012-2017 YTD (5/18/17) Silicon Valley Giants Move in Big on Health $6,249 Source: CB Insights. 2018 funding numbers and projection via data sourced from Crunchbase. * Activity made by the 10 largest tech companies in healthcare. Not indicative of all health tech investments. 2018 funding numbers and projection via data sourced from Crunchbase 31 Projected full-year run rate Source: CB Insights 36 2012 2013 2014 2015 2016 2017 2018 Deals Disclosed Funding ($M) $2,234$4,083$2,794$914$506$299$215 26 48 41 30 2120 1313 20 21 30 41 48 26 24 2013 2014 2015 2016 2017 2018 YTD 9 8 15 16 27 12 Projection
  32. 32. $48M funding to date Raised $24M Series B May 2018 Proactive health monitor for sleeping infants; allows parents to view their child's vital signs in real time Raised $1.6B to date Raised $1.2B Series B Nov 2017 Developing a blood test for early cancer detection Spun out of Google Life Sciences Raised $800M Jan 2017 Variety of projects, including retinal scanning for cardiovascular diseases and surgical robots Set up in partnership with Glaxo Smith Kline in 2016 Implantable electronics for new treatment protocols, including type 2 diabetes Silicon Valley Giants Move in Big on Health Google and Amazon have invested in, or independently acquired, a number of companies in this space. 32
  33. 33. Distribution Deal Nov 2017 Ran talks to distribute the Apple Watch to Aetna’s 23M customers + Glucose Sensor Jun 2017 Partnership with Dexcom to integrate the company’s glucose sensor data directly into the Apple Watch + Hearing Implants Jul 2017 Partnered with Cochlear to integrate the company’s hearing implants with the iPhone Silicon Valley Giants Move in Big on Health As has Apple, with expansion into distribution deals and partnerships. 33
  34. 34. Brain & Spine Procedures Acquired by Zimmer BioMet €164M in 2016. Planned launch over the course of 2018-2019. Advanced Surgical Robotics Collaboration between Verb and Verily, giving the two companies an edge over the best-known surgical robot in the market today: Intuitive's da Vinci. Hip & Knee Replacement Received FDA clearance in Oct 2017 for Cementless Mako Total Knee, strengthening the co.’s leadership position in robotic tech Endoscopy Transformed Raised $280M Series D in Aug 2017 Flexible, Steerable Scope & Vision Technology  Raised $20M Series H in Jan 2017 Quite a Year for Surgical Robotics Surgeons will soon have more helping mechanical hands 34
  35. 35. Source: MedCity News The Quest for Diagnostics Investment has kept pace with advancements in diagnostics. Funding increased 10x from 2009 to today, and concentrated in fewer companies - a sign the Theranos scandal has been a wake-up call for better technical due diligence. 35 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 # Startups Invested Investments in Diagnostics Startups through the end of H1 2017
  36. 36. Raised $50M Series A in 2017 Tests 1,000+ pathogens from a single blood draw, helping clinicians rapidly diagnose infectious diseases. Raised $36M Series D in Nov 2016 Comprehensive battery of real-time diagnostic blood tests, doable in a physician’s office in 15 minutes. Raised $1.2B in 2017 Blood cancer test with greater than 99% specificity. Aiming to detect cancer early, when it can be cured. Blood is today's "gold standard" in diagnostics and investors are continuing to fund new startups focused on new health applications Boom Time for Blood Money 36
  37. 37. ZiO Health, Founded 2016 Seed Stage Personalized health care at the molecular level, including quality of breast milk. AptaCam, Founded 2014 Seed Stage Rapid detection of infectious diseases, including HPV. HAX Startups in This Space BBB, Founded 2014 Raised $5.1M Tests 50+ diagnostic conditions in 2-60 sec with one drop of blood. Criam, Founded 2016 Seed Stage Portable testing device that can identify blood type in three minutes. 37
  38. 38. Source: World Health Organization 38 Chronicillnesses anddiseasesarea productoflifestyle andenvironmental conditions Chronic illnesses are at an all time high. From heart disease and stroke to diabetes and hypertension, they account for 60% of all deaths worldwide. A product of longterm lifestyle choices and conditions, their onset is something we can do something about - a proactive approach to mitigating and controlling them via healthy lifestyle practices.
  39. 39. World diabetes cases are expected to jump 55% by 2035 2013 2035 South and Central America59.8% Africa109.6% North America/Caribbean37.3% Middle East/North Africa96.2% Europe22.4% Southeast Asia70.6% Western Pacific46.0% Source: International Diabetes Foundation Source: Yach, D. et al JAMA 2004;291:2616-2622 0 12.5 25 37.5 50 1990 2002 2020 Diabetes Respiratory Diseases (Athsma, COPD) Other 'Noncommunicable' Diseases Cancer Cardiovascular Diseases Annual Global Mortality Chronic Illness Current and projected cases of diabetes by region 39
  40. 40. NoShortageofAppsin ThisSpace My FitnessPal, Founded 2005 Acquired by Under Armour for $475M in 2015 | Health and wellness app that tracks food and exercise. Most are focused on diabetes, weight loss, and exercise. Missing are sensors and their ability to track ongoing progress from within the body. mySugr, Founded 2012 Acquired by Roche for €70M in 2017 Digital health company that strives to “make diabetes suck less” Glooko, Founded 2010 Total funding $71M. Raised $35M in Series C June 2017 | Monitors medications, carb intake, and integrates data from most continuous glucose monitors, blood glucose meters, insulin pumps, and fitness trackers 40
  41. 41. Urine is the New Blood TestCard, founded 2017 Raised $200K Postcard urinalysis test Vivoo, founded 2017 Raised $120K Personalized nutrition and lifestyle advice based on urinalysis While blood chemistry provides insight into health, the act of drawing blood remains invasive. Urine, however, contains valuable data points which can be acquired easily, cost-effectively, and at scale. Simplifying daily draws for data collection, it has the potential to save trillions of dollars in healthcare costs. 41
  42. 42. Bisu tracks your dietary health, fat metabolism and hydration in just 2 minutes, and provides daily feedback to help you reach your goals. bisu.bio Personalized Health Analysis start-up 42
  43. 43. World Population Growing at a Decreasing Rate 1760 1790 1820 1850 1880 1910 1940 1970 2000 2030 2060 2090 World Population Annual Growth Rate World Population 11.2B 10B 9B 8B 7B 6B 5B 4B 3B 2B 1B Fertility Control on the Rise 2% 1.8% 1.6% 1.4% 1.2% 1% 0.8% 0.6% 0.4% 0.2% 0% Source: UN Population Division (2015) - Medium Variant. OurWorldinData.org. The world population is growing, albeit at a decreasing rate. Higher standards of living, education levels and liberalization are empowering women to take control of their fertility and this is reflected in the declining fertility rate (down by half since 1950). 43
  44. 44. World Population Total Fertility Rate: Children Per Woman 1.25 2.5 3.75 5 1950 1960 1970 1980 1990 2000 2010 Fertility Control on the Rise Source: UN Population Division (2017 Revision) Women want to know their body and choose when they get pregnant. Fertility tests, however, can be expensive and difficult to track. And while fertility apps are inexpensive, they’re often wildly inaccurate. 44
  45. 45. Modern Fertility Founded 2017 Raised $7M Makes fertility information more accessible to women; offers comprehensive ovarian test vSculpt by Joylux Founded 2013 Raised $8.8M ($5M Series A in 2017) Vaginal rejuvenation device - treats tissue and pelvic floor muscles via light energy Celmatix Founded 2009 Raised $59.6M Multi-genetic test for fertility and reproductive health Startups in the Fertility Space Prima-Temp Founded 2010 Raised $6M Vaginal ring measures core body temp, detecting ovulation 45
  46. 46. The First Fertility Tracking Kegel Designed for women to exercise their pelvic floor and understand their fertility. kegg.tech KEGG narrows the scope on accuracy. Rather than providing qualitative feedback based on indicators that measure what happened the month before, it monitors what’s happening in the here and now. Tracking fluctuations in body temperature and the changes of impedance in cervical mucus, it predicts with greater accuracy which days - and times of day - you can and cannot conceive. The Future of Birth Control start-up 46
  47. 47. Technologydrivesgrowthbyincreasingproductivityin twodifferentways changingtheprocess throughautomation makingprocesses
 moreefficientwithdata In 1987, Robert Solow won the Nobel Prize in Economics. His theory, The Solow Model, reduces economic growth to a simple equation. This principle applies to technology and the digitization of traditional businesses quite well. Without getting too complicated, it boils down to this: there are two main factors in making any process more efficient - capital and labor. While you can increase the quantity of those inputs to raise output, that can only go so far. At some point, technology will need to advance in order to see efficiency gains. 47
  48. 48. HAX B2B Investment Thesis The Difference Between Industrial and Enterprise B2B covers two key areas: Enterprise and Industrial. Enterprise includes the development of sensing technologies that either enable new business models or raise efficiency / output. Industrial investments aim at the automation of a physical process, i.e. a service robot or manufacturing technology. 48
  49. 49. Seven big areas of focus Increasing Productivity Food and water supply Manufacturing Energy Mining Construction and Facilities Logistics Communication 49
  50. 50. Digitizing existing industries via sensing, connectivity and innovative hardware 50
  51. 51. Big data and machine learning for B2B will drive 70% of IoT value* over the next 10 years. This will be enabled by physical sensors. Source: McKinsey Driving Efficiencyfor Enterprises 51
  52. 52. There are two main ways to address the problem: Grow more. Waste less. Making Agriculture More Efficient In the next 20 years, our world faces a food crisis. We expect 9.2 billion people to be on the planet by then. In order to feed everyone, we will need to triple our current agricultural output. Scaling to meet this demand, however, requires greater productivity, which to date has been driven by the expansion of land or the use of more fertilizer and pesticides - neither of which are sustainable long-term. Efficiency must be driven by precision agriculture - helping farmers with a cost-efficient means to analyze, predict and manage crops to maximize productivity. 52
  53. 53. 0 1 2 3 4 1961-70 1971-80 1981-90 1991-2000 2001-13 Annual % growth in global agricultural output, 1961-2013 Input and Prediction Through Precision Expansion of agricultural land Expansion of irrigation to cropland More inputs per area Improvement in total factor productivity Over the last decade, production increases have mostly relied on fertilizers and pesticides. We may have reached a limit, making now more important then ever to gain high-precision insights into the soil and environmental conditions. Source: USDA, Economic Research Service, International Agricultural Productivity data product. 53
  54. 54. SoilTesting
 Comesto
 theFore "Soil is the largest living organism on earth, yet humans know far more about our solar system than we do the top six inches of soil on this planet.” - Remi Schmaltz, CEO of Decisive Farming 2014 $8M Founded Raised 2013 $10M Founded Raised 2014 Founded 2017 $14M Founded Raised 2013 $5M Founded Raised Advanced prevention and management of agricultural diseases. Ag-analytics company, develops cloud based software solutions integrated with wireless sensors, which boosts crops yield Continuous data monitoring and system control. Bootstrapped to 26 countries. Ag data software service that optimizes pest management in orchards and vineyards. Provides growers with a decision support service to increase their yields and to optimize irrigation 54
  55. 55. Optimize 
 fertilizer application, increase your yield
 nordetect.com Nordetect builds portable, lab-grade testing units that provides farmers with a quick (and cost-effective) way to sample, test and analyze chemical levels in the soil. With quick feedback, farmers can measure the chemical balance in their soil (NPK) and adjust the types and amounts of inputs they’re using, to improve and optimize their yield. 55
  56. 56. PreventingWasteinthe SupplyChain 1.3bn tons wasted could feed 37% of the world 0 75 150 225 300 Europe North America
 and Oceania Industrialized
 Asia Sub-Saharan
 Africa North Africa,
 West and 
 Central
 Asia South and
 Southeast
 Asia Latin America Source:FoodandAgriculturalOrganization, Percapitafoodlossesandwaste(kg/year) Lostinsupplychain Lostatthetable One third of the food produced globally is wasted. 56
  57. 57. Take corn, for example. In the US, over 96 million acres of land is devoted to the crop (larger than the size of Germany) and it’s stored in commercial grain bins. When moisture and mold get in, farmers run the risk of not only losing the crop, but hundreds of thousands of dollars in lost revenue as a result. AmberAg addresses exactly that: small sensors that help farmers monitor the conditions within their stored grain environment. When moisture is detected, it’s automatically fanned out - protecting the crop (and revenue gains). Reducing waste from crop to table 57
  58. 58. Construction productivity is stagnant, costing the world $1.6tr per year Global productivity real gross value added
 Per hour worked Source: The Economist Construction has the lowest productivity gains of any industry. Lagging behind much of the entire global economy average, companies are having trouble keeping up with infrastructure demand. There’s only so much capital and labor can do to increase productivity. And with few relying on technological advancement to boost this, the industry is ripe for innovation. Constructing Efficiency Gains 58 200 150 100 Manufacturing 1995 20142004 Total Economy Construction
  59. 59. Doxel founded 2015 Raised $4.5M Machine vision for monitoring construction productivity Propeller founded 2014 Raised $14M A visual and easy-to-use drone data analytics platform for worksites Katerra, founded 2015 Raised $1.1B Optimizing the way buildings are developed, designed, and constructed Companies tackling construction productivity in unique ways 59
  60. 60. Improving
 worker
 productivity andsafety Wakecap uses sensors integrated into job sites and personal safety equipment to create a mesh network that enablesthegeo-positioningof materials,equipmentandworkers - providing visibility into worksite operations, worker safety, and overall levels of productivity. wakecap.com 60
  61. 61. Larger machinery and big payoffs for investment in productivity for some. But process improvement and data- driven decision making lags far behind for most. Mining for Change Mineral Mining (excl. diamonds) is a $3.5 trillion global industry. About 75% is fossil fuels. Mining, as an industry, has spent one tenth the amount of oil and gas on innovation in the last three decades. The industry has seen a 3.5% average decline in productivity every year since 2004 and has struggled to attain low-unit costs and high-output per employee. With expensive CAPEX for machinery, maximizing efficiency per employee is a key component toward increasing productivity. Source: McKinsey MineLens
 productivityindex 61
  62. 62. Founded 2015. Raised $3.8M Series A in April 2017 Plug-and-play satellite IoT for remote fleet operation / logistics Founded 2014. Raised $10M Series C in Jan 2018 Pilotless drones for mining, oil and gas surveying v Founded 2005. Acquired by Norbit Oil Corp in Nov 2017 Visual detection of oil spills and collision-bound vessels Airobotics Aptomar Fleet Space Tech Innovativeminingtechnology 62
  63. 63. RockMass makes mines safer and more productive with geological data. Their solution, Atlas, is a handheld geotechnical mapping device that enables miners to collect, process, and view joint set orientations. Omitting noisy data, it can be used both above and below ground. rockmasstech.com Geotechnical MappingSolutions 63 start-up
  64. 64. v Thewarcontinuesforbikeshare Source: The Economist 0 75 150 225 300 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 ShareHolders Worldwide bike-sharing schemes per year In the world of transportation, there’s an all out war for ownership of the last mile. The growth of bike sharing, especially, has highlighted the necessity of speed, convenience, and affordability in the final frontier of urban travel. The recent surge in popularity of Bird and Jump bikes further amplifies the importance of speed in the mix. Eventually, between public transport, bike- sharing and car-sharing, the use of multi- modal transport will grow and become more seamless. 64
  65. 65. LimeBike,
 founded2017 Raised $132M Bluegogo,
 founded2016 Acquired by Didi Mobike,founded2014 Acquired by Meituan Dianping $2.7B JUMP,founded2014 Raised $11.6M - Acquired by Uber Youon,founded2010 Raised $348M ofo,founded2014 Raised $2.2B OLABikes,Spun out of Ola Cabs in India Dec2017
 Thewarcontinuesforbikeshare 65
  66. 66. pushme.bike Two wheel e-vehicles need a distributed system of batteries, and the software to manage them, in oder to maintain product-market fit and attain operational efficiency. That’s where pushme comes in: a distributed battery network that enables dock-less, two-wheel eVehicle sharing. Your bike. Reinvented. pushme clips onto any bike in seconds, making it electric. Users can swap batteries on the go with pushpod battery stations, and never run out of power again. 66 start-up
  67. 67. Energy Grid Management Saving & Syncing The future of energy lies in our ability to consume better and use less of it. It also necessitates efficiency at scale. Realizing these gains, however — whether you’re a home owner, building manager, or utility optimizer — requires the ability to access and understand consumption data. Even better - a solution that can not only sense what’s happening, but autonomously make adjustments and connect to the grid at large. Electricity for residential A/C $29bn Savings of 1-2%
 in large energy areas is gaining favor Source: energy.gov 67
  68. 68. Watty, founded 2013 Raised $4.8M Real-time home energy consumption Sense, founded 2013 Raised $20M Track home energy use in real time Tado, founded 2011 Raised $59.3M Smart A/C & radiator thermostats Cielo, founded 2014 $UND Series A Makes any A/C smart Ecovent, founded 2012 Raised $9.8M Smart vent & sensor Room-by-room climate control Breezi founded 2016 / Raised $1.5M Monitors HVAC filters / systems Quite a few startups tackling the home energy space 68 start-up
  69. 69. Flair is a system of connected vents, sensors and software that brings room level control to heating and cooling systems. The system integrates with connected thermostats for control of the furnace, compressor and blower motors in central systems and works directly with mini-split ductless systems. With Flair, consumers save energy by deemphasizing rooms that are unoccupied while making spaces more comfortable by dynamically balancing airflow into rooms based on the specific occupant(s) and sensor data from that room. flair.co Flair also helps bring the more than 1 billion non-internet connected air conditioning systems around the globe on to the internet for energy savings, comfort enhancements and integrations into the smart grid.ThePerfect Temperature inEveryRoom Flair, Founded 2014 Total Funding $1M start-up 69
  70. 70. Industrial Robotics 
 Performing dull, dirty and dangerous tasks; miniaturization of industrial manufacturing processes 70
  71. 71. Wazer, founded 2016 Raised $1.3M on Kickstarter Waterjet digital cutting Glowforge, founded 2014 Raised $70.2M 3D laser printer Desktop Metal 
 founded 2015 Raised $276.8M 3D metal printing Shaper, founded 2012 Raised $16.3M Handheld CNC Some Industrial News Formlabs, founded 2011 Raised $103.7M 3D printer for creators + - 71 start-up
  72. 72. FabricIndustryCosts Manufacturers Profit 100 0 %ofRevenue Purchases65.9% Wages 14.7% Other11.2% Depreciation2.3% Apparel brands make a lot of money but the manufacturers do not. Currently, global apparel manufacturing profitability is about 5% and in large part, that’s due to the declining price of cotton. The problem is that the apparel supply chain is highly fragmented. Manufacturers have to spend vast sums on purchases for fibers, yarn, machinery, manufacturing processes and labor which leaves very little room for profits. Most of the value gets added on at the distribution and retail stage. Textile Industry Costs (2016-2017) 72
  73. 73. Founded 2013 Raised $600K on kickstarter 3D Printers for Knitwear Kniterate Manufacturing patent for on-demand creation of apparel Cutting back on waste with bespoke manufacturing 73
  74. 74. unspun.tech A new tech on the market is unspun: Using 3D body scanning, it can weave bespoke apparel. Unspun runs retail and distribution through its online channels. start-up 74 3D Custom-Fit Clothing
  75. 75. Robot-as-a-Service ontheRise Source: World Robotics 2017 Thousands of units Robots-as-a-service are also filling the void of process inefficiency by automating existing tasks. While their use is on the rise in some industries, like logistics and defense, there’s still work to be done on broadening their applicability into many key verticals. Defense Field PR Exoskeletons Medical Construction Logistics 2015 2016 2017* 2018-2020* 200 150 100 50 0 75
  76. 76. founded 2017 Seed Stage Window cleaning founded 2014 Seed Stage Agile rovers for hazardous conditions founded 2014 Series A stage Floor Scrubbing founded 2017 Seed Stage Autonomous inspection robots using visual, chemical or other sensors Youibot Avidbots Rovenso plecobot HAX Companies
 inService robotics
 space plecobot.com rovenso.com youibot.com avidbots.com 76
  77. 77. Viabot Outdoor Maintenance viabot.com Viabot is a great example of a robot-as-a-service tackling more than one task. Their multi-functional robot takes care of outdoor chores for commercial properties via a single unit that sweeps, mows lawns and scrubs by autonomously swapping tools — automating physical, and time wasting chores, and making robots more adaptable for businesses. start-up 77
  78. 78. ChinaChina has had plenty of domestic innovation in recent years, from the automotive industry to robotics. There is also no shortage of money - and for good reason. 78
  79. 79. TheChinese UnicornClub Founded Since2009 Value $60B founded 2010 Smart devices 2 years Value $20B founded 2011 Batteries 5 years Value $5B founded 2014 Electric Vehicles 1 year Value $5B founded 2012 Consumer Robots 4 years Value $2.6B founded 2015 Bike Sharing 2 years Value $3B founded 2012 Displays 3 years Value $3B founded 2014 Electric Vehicles 2 years Value $2.6B founded 2014 Bike Sharing 3 years Value $2B founded 2009 Batteries & EV 7 years Value $1.5B founded 2012 Smart Transporters 4 years Value $1B founded 2014 Smart Devices/AC 2 years Value $1B founded 2013 Motion Sensors 3 years Value $1.3B founded 2013 Automotive 2 years Value $1B founded 2013 Automotive 5 years Time to Unicorn Status 79 Value $5B founded 2011 Electric Vehicles 5 years Value $4.3B founded 2009 Automotive 7 years
  80. 80. Nio, founded 2014 Raised $200M Pre-IPO in Mar 2018 iDriverPlus, founded 2015 Und Series B in Apr 2018 RMB100M Series A in Jun 2017 WM Motor, founded 2015 Raised $1.9B as of Dec 2017 Pony.ai, founded 2016 $112m Series A in Jan 2018 Autonomous Mobility &Electric Vehicles 80
  81. 81. Dorabot, founded in 2014 $30M Series A+ in Feb 2018 Deploying AI and robotics in the logistics sector Jaka Robot, founded in 2014 $10M Series A+ in Mar 2018 Collaborative robot developer Suzhou RoRobot, founded in 2017 Raised tens of millions RMB Seed round in Dec 2017 Commercial service robots Industrial Robotics Quite a bit of investment is also being placed in robotics 81
  82. 82. 0 30 60 90 120 2015 2016 2017 2018 China USA Europe Global VC Funding For the first time, Chinese venture capital overtook the US. This is not just in hardware; it’s across the realm of technology. Up until recently, Silicon Valley has been the center of technology investment, but China is fast catching up due to the amount of money pouring in to the venture capital sector, which is driving these numbers. 82 Total VC funding, $bn Source: Dow Jones VentureSource quarterly report
  83. 83. USA China Japan Germany Republic of Korea France UK Netherlands Switzerland Sweden 0 15,000 30,000 45,000 60,000 Accelerating Intellectual Property 2,965 patents4,024 patents Source: World Intellectual Property Organization 2017 China Rising as an Innovator +0.1% +13.4% +6.6% +3.7% +1.3% -2.4% +1.2% -5.2% +2.8% +7.0% Number of PCT Applications Published A better proxy for assessing the innovation landscape is looking the number of patents published. China increased its number of filings by 13% last year, which means it’s closing in on the US. Huawei and ZTE were the top two publishers of 2017, which is massive resolve for Chinese enterprise. 83
  84. 84. Howdidwedo? Pleasegiveus feedback For more information visit hax.co #HAXhardwarereview Download the full report at: hax.co/hax-hardware-review-1h2018/

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