Israel becoming an Internet of Things leader

Israel Internet of Things

The Internet of Things (IoT) is quickly taking over society. From smart watches to smart home systems, the IoT is infiltrating our lives on a larger and larger scale, and for good reason. The IoT makes us use energy more efficiently, stay aware of the world around us while also using the internet, and keep track of basically anything, and that's barely scratching the surface of how much the IoT is affecting the world around us.

By 2020, the IoT will encompass between 20 to 30 billion connected devices, according to a report by McKinsey & Company. Investors are flooding money in IoT startups and, according to CB Insights, funding for IoT startups grew from $768M in 2010 to over $1.9 billion in 2014. As with many technological trends, Israel is at the forefront of this new wave of innovation.

So what is the Internet of Things? The Internet of Things is basically a system in which internet-enabled objects can connect to other internet-enabled objects and share information. This can enable these objects to perform tasks without human intervention. The internet-enabled objects involved have sensing and processing capabilities and allow you to remotely collect information, automate and control processes and much, much more.

Innovation Endeavors, an early-stage venture capital firm backed by Google Executive Chairman Eric Schmidt (based in Silicon Valley and Tel Aviv) believes that the current definition of IoT is too broad and one-dimensional and lacks a clear application and purpose. IoT also may be almost entirely service-driven, meaning it will only take on meaning when applied to specific market verticals. Innovation Endeavors believes that a new definition and set of classifications for IoT must emerge for it to become relevant for today's world.

Innovation Endeavors' new definition (also called the Israeli Internet of Things Landscape) involved introducing new verticals to the landscape such as “Resources” (energy, water, etc.), redefining existing verticals like “Enterprise” with Industrial IoT, renaming verticals like “Connected Home” to “Connected Building” (due to the overlap between the IoT in homes and businesses), and identifying sub-verticals such as “security,” that stretch across multiple verticals, but aren't quite mature enough to become platforms themselves. Their new landscape is topped off with IoT-enabling technologies, like wireless charging or smart 3D interfaces.

So what's Israel's place in the IoT revolution? Well in Israel alone there are 330 IoT startups, across five verticals and 23 sub-verticals. One in every 20 startups in Israel is IoT focused. Israel may just be a natural when it comes to IoT, due to its strength in industries, such as cyber security, agriculture, and healthcare. When combined with the knowledge gained from military service, like machine learning, data mining, and predictive analysis, Israelis have an upper hand in the IoT field. An example of an Israeli company on the IoT landscape is Argus Security, which is building a firewall to prevent hackers from compromising or even taking control of your vehicle. BreezoMeter, another Israeli startup on the landscape, tracks pollutants from data from sensors located internationally. They then analyze the data and provide you with live, location-specific air quality updates.

The Israeli IoT scene does have its downfalls though. The problem with most of the companies on the landscape is that they are stuck in the middle stages of their lifecycle, like R&D or initial revenue stages. Also, nearly 80% of companies are focused around the applications category, rather than other levels, like IoT platforms or components. The unbalanced distribution in terms of stages and levels points towards a severe lack of infrastructure and maturity in this market wherein startups have not yet found their long-term product-market fit or verticalized their supply. This represents an opportunity for companies to take advantage of such “whitespaces” in the landscape. The platform level is waiting to be capitalized, as numbers indicate it is still early in the lifecycle curve.

IoT is most likely going to be a huge part of our future. From driverless cars to more automated homes, IoT will bring together the physical and digital worlds and change the face of how industry works. Israel is posed at a prime position to become a leader in this field and investors such as Innovation Endeavors will push Israel forward into the new IoT age. The future of the integration of internet into more of the physical world will most likely be largely influenced by startups in Israel. What they develop will surely change our lives in astonishing ways.

About the author: Tzvi Joffre is a freelance blogger who covers all sorts of technology and current events. To see some of his other work and to contact him, visit