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VC Investments in IoT Security to Reach $400 Million in 2016

Growth of the Internet of Things (IoT) raises questions about device vulnerability to hacking. IoT technology is a great investment for the future and could easily be embraced by any industry – medicine, automotive, education and administration, among others. The smart city doesn’t seem far away.

The complexity of the system makes it challenging to create reliable and secure infrastructure. In spite of security concerns, enterprises welcome the adoption of IoT and invest heavily in its advancement. Based on a 17% annual growth rate, yearly spending on IoT connectivity is expected to reach $1.3 trillion in 2019, research firm IDC estimates.

Venture capitalists understand its potential and opportunities. With security an ongoing issue, they’ve started investing the big bucks in “cyber-physical” security startups to create technology that secures the IoT ecosystem and protects it from cyber criminals, says Forbes.

Boston-based research company Lux Research conducted a study on IoT development and funding in the startup ecosystem. According to their findings, half of the startups focused on IoT security are US-based, while a third are located in Israel.

“More than half of the companies aim to provide horizontal security platforms capable of supporting multiple types of IoT devices and environments. Securing industrial control system networks is a huge initiative across the IoT security landscape while securing the connected car is also a hot spot. Methods for performing authentication and encryption in IoT environments are also a major focus,” Lux Research discovered.

In 2015, VC funding of IoT security startups grew 78% to $228 million and it is expected to reach $400 million in 2016.

“Connected consumer and business products have begun flooding the market, but security has been an afterthought. The world now has to figure out how to secure the multitude of things that have recently become connected,” said Mark Bünger, Lux Research Vice President.

About the author

Luana PASCU

From a young age, Luana knew she wanted to become a writer. After having addressed topics such as NFC, startups, and tech innovation, she has now shifted focus to internet security, with a keen interest in smart homes and IoT threats. Luana is a supporter of women in tech and has a passion for entrepreneurship, technology, and startup culture.