Cisco’s investment arm is committing $150 million to back early-stage companies in the internet of things sector, and has begun with investments in two startups and one accelerator. Cisco has participated in funding rounds of London’s Evrythng, Sunnyvale, Calif.-based Ayla Networks and the Bay Area’s Alchemist Accelerator.
The new funding adds to Cisco Investments’ previously announced $100 million commitment to startups focused on the internet of things. Cisco Investments currently has stakes in more than 80 companies and 35 funds as part of a $2 billion portfolio. It has more than 40 people responsible for making investments in companies of all sizes. Other investments include Whiptail, Belly, Phunware and Platfora.
So what about the startups Cisco is backing? I’ve covered Ayla before when it launched as a hardware and software platform for big companies to get their products online. Dave Friedman, co-founder and CEO (pictured, left) of Ayla Networks, explained that in the time since we last spoke, Ayla has won several large customers in China, where the internet of things is a pretty acceptable and obvious next step for business.
In China, many consumers have skipped the laptop and gone straight to mobile, which leaves them ready for the next step of controlling and connected devices, Friedman said. He’s seeing a hundred times more projects this year over last and expects that same jump in projects next year. A lot of businesses are just trying out a bunch of things to see what resonates with end consumers.
Ayla has raised $14.5 million in Series B financing from Cisco; the International Finance Corporation, a member of the World Bank Group; Linear Venture; SAIF Partners, one of China’s largest venture capital firms; and SJF Ventures. Existing investors Crosslink Capital and Voyager Capital also participated in the new funding round. The money will help Ayla continue to expand its business in China, and support its unnamed corporate clients.
The other IoT platform play here, Evrythng, is all about software. Unlike, Ayla, which is offering a cloud-based platform that ties to hardware modules manufactured by a few chip makers, Evrythng believes that the hardware and cloud elements should be separate.
It sees itself as a business more concerned about providing identity and authentication for devices and things. So a company might connect a vending machine to Evrythng by pointing the data to the Evrythng cloud, but it can also send the data derived from RFID tags on the individual soft drinks inside the vending machine to the same cloud. Once in the cloud, the vending machine company can share that data among partners and generally manage it and any other data it wants to link together with that chunk of information.
Evrythng has scored a total of $7.5 million in Series A funding from Cisco, Atomico, New York-based private equity investors BHLP LLC and London-based venture capital firm Dawn Capital.
Alchemist Accelerator is an enterprise focused accelerator in the Bay Area that has Salesforce.com, Citrix and Microsoft as backers or supporters.
Cisco’s investments here are clearly focused on the enterprise side of the internet of things, which makes sense given Cisco’s overall commitment to that segment of the market. While Ayla’s or Evrythng’s clouds may end up storing consumer data, their clients are some of the big-name consumer brands who need help understanding and navigating the challenges that connecting billions of devices and things can entail.
What’s notable about these investments is that they almost seem to intrude on Cisco’s eventual impact in this sector. The hard work of getting devices online and then managing them in an authenticated fashions seems like a direction Cisco should prepare to go. I suppose with these investments, it is.