Meet the Israeli Startups Connecting the Internet to Everything

Venture capital firm Innovation Endeavors has mapped 320 Israeli startups operating in the hot field of the Internet of Things – and predicts Israel will become the leading technology power in the industry.

Ilya Melnikov

Israeli startups are trying to connect cats, plants, alcohol and just about everything you can imagine to the Internet. One of the hottest technological trends in recent years is the Internet of Things, or IoT. The term refers to the technology and its applications based on connecting “things,” or products all around us – in the home, at work, in industry and anywhere else – in a way that allows us to control them from afar, as well as collect information from them on a regular basis. This information can then be analyzed in order to improve their functioning, and for our own needs.

A recent report from the venture capital firm Innovation Endeavors, which is backed solely by the executive chairman of Alphabet (formerly named Google) Eric Schmidt, with managing and founding partner Dror Berman, has mapped the activities of Israeli firms in this new sector. The report says there are no less than 330 companies in Israel in the broad category of IoT: “As Israel is home to approximately 6,100 active startups in total, IoT represents a surprisingly whopping 5% of the Israeli startup ecosystem,” it reads.

Among those firms in the “2015 Israeli Internet of Things Landscape” report are application development companies, hardware and infrastructure firms – applications, platforms and components, the report calls them. The report divides the industry into five groups, and these are subdivided into 23 categories: from young ones to mature firms along the value chain. The mapping includes firms that develop user interfaces that can be integrated into IoT products.

The Internet of Things represents the ultimate bridge between the digital and physical worlds, says Berman. “There is no doubt that it will change life in almost every industry. Given the quality of startups in the field, such as those coming out of Israel, we believe that Israel will become the world leader,” he says.

The venture capital firm says that at the end of the day, its research has shown “IoT is not just another marketing term; instead, when applied to solving real, long-term needs, its promise is truly profound, by connecting us to the entire physical world around us.”

Innovation Endeavors says the areas in which Israel has traditionally excelled, such as cyber, agricultural technology and innovation in the health field, are the most relevant areas for IoT today. The report was based on over 50 market research and analyst reports, as well as meetings Innovation Endeavors conducted with leading Israeli companies and international experts.

The report divided the Israeli companies into subgroups – sub-verticals as they call them – based on their specialties and contributions to industry: for example, companies that work in their “natural” fields such as agriculture, energy and water; and technologies that allow the use of IoT, which aid companies in developing products using wireless charging or sophisticated 3D interfaces.

The categories include firms in consumer products too, in areas such as health, exercise, wearable computing and even products for animals. Cat2See, for example, has developed a system for feeding cats and monitoring their activities inside the home, using smartphones. Another major area is gardening: GreenIQ collects data from sensors and the Internet and can efficiently manage watering plants. Another major area is monitoring energy use, and making it more efficient.

Among the companies mentioned is Argus Security, which is building a “firewall” for the connected car, defending the vehicle from being compromised by outside attackers, especially hackers who can take control of your car remotely.

Another example is for those less worried about hackers and more worried about calories: Consumer Physics’ molecular pocket sensor allows one to measure the physical world around you, including food, medicine, plants and more. For instance, you can scan a piece of cheese and find out complete nutritional information like calories, proteins and fat. 

Almost 80% of the startups in the field are focused on applications, and not on the infrastructure. This unbalanced distribution of the startups into the various stages and levels “suggests 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. However, this also represents an opportunity for companies to capitalize on such ‘white spaces’ in the landscape, particularly around the platform level where the numbers indicate that it is still early in the lifecycle curve,” states the report.

“IoT represents the ultimate bridge between the digital and physical worlds that will undoubtedly transform lives and markets as we know them. If the Industrial Revolution was all about hardware, and the Internet Revolution was all about software, the next revolution will be the IoT revolution, which will be all about hardware and software coming together for the first time in a truly meaningful way. It is important that we prepare for the consequences because as much as IoT will come to address our existing needs and desires, it will also create entirely new ones beyond imagination.”

Innovation Endeavors says “we are always excited to see strong entrepreneurs leveraging new technologies in emerging markets, and in Israel, IoT represents just that. Due to leading tech, good timing and a number of other enabling factors, Israel finally has the ways and means to make a lot of noise in IoT on the world stage, and each of the specific tech advantages Israel holds will play a strategic role in IoT going forward. This makes Israel of critical importance to the global evolution of IoT, and very uniquely positioned to become a future leader in the field.”