Industrial IoT — Mega deals shape 2022 YTD, but deal count declines
Munich — FCF Fox Corporate Finance GmbH (FCF) publishes the latest “Industrial IoT Venture Capital Report”. This first-ever report, which examines European venture capital funding trends in deep-tech vertical industrial IoT, reveals a bifurcated trend.
Industrial IoT, the sub-vertical of IoT that focuses on industrial applications of IoT, is dominated by large industrial groups but also by a large number of start-ups that offer innovative solutions in areas such as hardware and sensoric, software & analytics and connectivity. In its latest report, FCF has highlighted VC investments but also exit activities (trade sale and IPO) of startups from the vertical, focus on European startups in the observation period 2017 — Q3 2022.
A look at the development of investment volumes and the number of deals reveals a split picture: Although financing volumes have increased significantly from EUR 650 million in 2017 to EUR 914 million in 2022. The number of deals, however, has been steadily declining since 2019, from 407 to 163 deals in 2022. The decline in the number of deals thus began even before the general cooling of the venture capital market since around the beginning of 2022. Nevertheless, the rising volumes indicate that the sector is still attractive for investors and is thus successfully holding its own against slumps in other verticals.
Maturity of the sector increases — Out of the garage, into the factory
More volume with fewer deals naturally means higher average and median volumes per deal. In 2022 in particular, the investment volume was largely driven by three mega deals — KINEXON with EUR 119 million, Descartes with EUR 107 million, and Nexxiot with a volume of EUR 102 million. In turn, the generally declining shares of seed & early-stage deals over time indicate a steadily growing maturity of the vertical.