Investing in the Internet of Things: Unlocking Growth and Value

For more than a decade, the Internet of Things (IoT) has evolved from a buzzword into a transformative force. While early discussions often leaned toward hype, the data—and the growing body of use cases—confirm that IoT’s impact is real and measurable.

Charlie Ross, Investment Director at Livingbridge, notes that Gartner’s 2017 estimate of 8.4 billion connected devices is expected to surpass 20 billion by 2019. The sheer scale of connectivity underscores the strategic importance of IoT for investors and enterprises alike.

At its core, IoT is a network of devices—ranging from fitness trackers to industrial machines—that exchange data via the internet. The true value lies in the continuous stream of information these devices generate: performance metrics, location data, and usage patterns that can be leveraged to drive efficiency and innovation.

Consumer applications illustrate the power of IoT data: car insurers calibrate premiums based on real‑time telematics, while smart refrigerators can auto‑replenish groceries. However, the most compelling opportunities for investors emerge in business‑to‑business (B2B) contexts, where IoT can overhaul operational workflows across industries.

Identifying Opportunities

A recent industry report found that over 40% of manufacturers have adopted smart factory solutions—such as sensors that flag maintenance needs—and another third are in the implementation phase. Similarly, retail firms increasingly use IoT to track products throughout complex supply chains.

Global venture capital has poured more than US$30 billion (€25.96 billion) into IoT startups, according to Bain & Company. This influx spans both established players and early‑stage ventures, making it challenging to pinpoint future leaders. Investors must focus on themes that will drive sustained demand, such as IoT cybersecurity—an area that gained prominence after recent high‑profile botnet attacks exposed the vulnerabilities of connected devices.

Creating Competitive Advantage

Companies that integrate IoT early often gain a decisive edge. Sectors such as agriculture, healthcare, and energy are already deploying IoT tools to enhance profitability and future‑proof operations. The ability to secure a competitive advantage through IoT adoption will become a key criterion for investors evaluating potential stakes.

Pure‑play IoT solutions that target specific industries are especially attractive, as they address unique pain points and enable rapid value creation.

Questions and Considerations

Businesses that lag in IoT adoption risk falling behind a technology poised to contribute more than US$11 trillion (€9.52 trillion) annually to the global economy. Management teams should assess where IoT can add immediate cost savings or revenue growth, benchmark against competitors, and identify quick wins that demonstrate tangible impact.

Organizations that answer these questions swiftly are positioned to accelerate growth, consolidate market leadership, and offer compelling investment propositions. The technologies that enable these outcomes are, in turn, prime targets for investors seeking high‑potential returns.

The author of this blog is Charlie Ross, Investment Director at Livingbridge