If London's traditional tech strengths (if it makes sense to talk about "traditions" for such a new sector) then what are the new sectors that are attracting entrepreneurs and interest?. Informilo spoke to industry insiders. The Internet of Things and education technology (edtech) are the next hot sectors.
The Internet of Things
The UK government is to make available £45 million in funding for research in the emerging field of Internet of Things (IoT) technology, as well as a £1 million European grant fund to support start-ups working in the space, the Prime Minister David Cameron announced in March.
“I see the Internet of Things as a huge transformative development — a way of boosting productivity, of keeping us healthier, making transport more efficient, reducing energy needs, tackling climate change,” Cameron said at CeBIT, an annual technology trade fair in Hannover, Germany. “We are on the brink of a new industrial revolution and I want us — the UK and Germany — to lead it.”
The government’s focus on IoT came as welcome news to the UK’s Amadeus Capital Partners, which earlier this year announced it had raised £33.2 million in a fund it will invest in UK companies developing technologies in low-power computing and the Internet of Things, Big Data analytics, cloud computing and cyber security, medical technology, and digital healthcare.
“As a fund manager we evaluated some sectors that will be high growth and Internet of Things is one example,” says Amadeus’s Alex van Someren.
“Interestingly the UK government independently decided that IoT is going to be very important as an opportunity for UK innovation and is setting aside additional money for research to boost UK innovation at the pre-company stage. That means we stand a much greater chance as a country of having a good quality pipeline of innovation in the sector.”
The Internet of Things and the technology ecosystem surrounding it are expected to be an $8.9 trillion market in 2020, according to technology analyst firm IDC. IDC is predicting that the installed base of things connected will be 212 billion by the end of 2020, including 30.1 billion connected autonomous things.
Intelligent systems will be installed and collecting data by this point. Devices like Fitbit and Jawbone are pumping more and more data about people’s behavior into the cloud. Information about movements and personal health have to be secured and tools need to be developed to extract meaning from the data.
“Healthcare, wellness, security and big data analytics are all fertile domains within IoT for start-ups,” says van Someren. “There is a great deal of potential and deal flow in this space.”
Another emerging area exciting London-based investors is ed-tech. In March, London-based mobile e-learning company Quipper announced a £3.4 million funding round, bringing the total raised to $10 million. Skype founder Niklas Zennström’s venture capital firm Atomico, an early investor in Quipper, took part in the latest round. Index Ventures earlier this year led a $1 million seed round in Gojimo, a startup targeting mobile as a delivery and engagement platform for learning.
In total, UK ed-tech start-ups, which currently number over 500, have raised more than £400 million and there are already success stories: Mendeley, a London start-up for academic collaboration, was bought last year for £65 million by academic publisher Reed Elsevier.
But London is late to opportunities in the ed-tech sector, says Ian Fordham, co-founder of The Education Foundation, the UK’s first independent, cross-sector, education think tank. “The Americans have at least a 10-year start on us,” he said. That, he said, was one of the drivers for setting up Europe’s first accelerator program specifically for the sector, Edtech Incubator.
The rewards could be substantial. In 2012, IBIS Capital’s Global e-Learning Investment Review valued the global education market at some $4.4 trillion; the UK government is predicting that will rise to $6.3 trillion in 2017. To show how big that is by contrast, a 2012 report by IMS Health says global spending on prescription medicines is just under $1 trillion.
Within the education market, IBIS Capital predicts the e-learning will be the fastest growing segment, worth some $91 billion, and forecast to grow by 23% compound annual growth to 2017.
So it is no surprise that start-ups are following the money trail and that Campus London is now hosting its own ed-tech accelerator, Emerge Venture Lab. Along with the usual selection of tech mentors, Emerge Venture Lab has partnered with the 574-year-old Eton College, alma mater of UK Prime Minister David Cameron, among many others.
Eton will not provide financial support or take equity (though it does not rule that out), but its teachers will help guide the start-ups in the program and may also try the new products with their students, an indication that even those who are old school can be quick learners when it comes to the new, new thing.