By Seth Fitzgerald / CIO Today. Updated May 06, 2014.
The venture capital division of Cisco, Cisco Investments, is allocating $150 million to the Internet of Things (IoT) industry. Cisco Investments will use that money to fund startups and other companies involved in the growing industry by either giving money to them directly or working through startup accelerators.
Not all of the money is being put toward IoT, though that is one of the major themes included in Cisco's "thematic" funding. In total, Cisco Investments has now invested $250 million in emerging companies in fields like the Internet of Things.
In January, the firm allocated $100 million to fund IoT startups. Last month, Cisco, IBM, GE and AT&T launched an Internet of Things consortium, an open membership group aiming to break down technology silo barriers and drive better big data access with improved integration between the digital and physical worlds.
Cisco's decision to increase its venture capital funding for IoT seems wise, especially considering the company's recent projection that the industry would be worth $14.4 trillion by 2022. Many of the devices currently being released onto the consumer electronics market are capable of working in the Internet of Things, meaning that the industry will become very profitable in the future.
Already, major technology companies are releasing home appliances and other electronics that "speak" to each other and the Internet. Mainstream companies that have yet to release their own IoT devices are at least putting money into the industry in some way. This includes multi-million dollar acquisitions, such as Google's purchase of Nest, a maker of connected thermostats.
Rob Lloyd, president of sales and development at Cisco, explained the company's view of the Internet of Things in March during the Cisco Editors Conference. Lloyd said that 99 percent of electronics still aren't connected to the Internet and to change that, funding must be focused on consumer-facing companies.
During the same conference, Cisco's chief development officer Pankaj Patel touted the company's advances in the industry. Patel said that Cisco had already spent billions on research in 2012, and a large portion of that money had been dedicated to the IoT.
For a company like Cisco that relies on the sale of connectivity devices, keeping up with innovations in the IoT industry is crucial. Since it is easier to invest in the industry and remain hands-off, Cisco has supplied funding to three IoT accelerators and startups. Alchemist Accelerator, Ayla Networks, and Evrythng have all received minority investments from Cisco.
"Our investments in Alchemist Accelerator, Ayla Networks and Evrythng align with our focus on early-stage innovation and companies focused on the Internet of Things," said Hilton Romanski, Cisco's senior VP of Corporate Development.
Cisco's main priority in reaching out to smaller IoT companies is to provide them with additional resources and contacts in the industry. "A new emphasis for Cisco Investments is to accelerate the development of the portfolio companies by connecting them to expertise and resources such as Cisco IT, Cisco's business leaders and Cisco's network of partners and customers through major industry events, such as the annual Cisco Live," according to Cisco.