Every so often, there are years where a nascent technology category gets noticed by smart money while the broader market plays catch-up. In the early aughts, it was the cloud. Then mobile came along in 2007, followed by SaaS in the 2010s and Generative AI just last year.
Every time, the first investors ride a disproportionate wave while the consensus catches up.
Enter AIoT, where artificial intelligence meets the Internet of Things, and it’s primed to be the next overlooked mega-opportunity. It's time to hop on board. Where the Spotlight Shines To a significant extent, the spotlight on technology investing right now has, rightfully so, been on Generative AI – Large Language Models, AI software, consumer AI products, etc. The impact of this technology has been undeniably impressive and, thus, the valuations, hype, competition and the number of genuinely differentiating plays are all through the roof.
In contrast, the AIoT sector – bridging physical infrastructure and intelligence – is silently but steadily building the infrastructure for the next decade and generating massive value with a fraction of the spotlight.
The Sheer Scale of the Opportunity The world has an enormous amount of activity happening in physical infrastructure: manufacturing, logistics, supply chains, energy, infrastructure, and the list goes on. This is activity worth trillions of dollars globally that, in large part, is extremely low-digitised and incredibly inefficient. Most of these activities are ripe for real-time intelligence only an intelligent IoT infrastructure can deliver.
The impact of AIoT on industrial processes such as tracking assets, optimising inventory, predicting maintenance, ensuring safety, etc. Represents some of the biggest opportunities the world has ever seen, largely untapped with intelligence technology. The Undervaluation Thesis of AIoT So why isn’t AIoT getting the attention it deserves? Firstly, its complexity is somewhat daunting: AI requires hardware expertise in many cases, which is not common among venture capitalists.
Secondly, these are typically not flashy consumer products, with longer sales cycles and the business is less exciting than your average SaaS company.
Thirdly, companies that build in the space often work quietly, out of the headlines, rather than chase headlines. But those elements are precisely what makes AIoT attractive: competition is lower, there are high barriers to entry, you develop deep customer relationships, and these companies build sustainable competitive advantages (moats).
The Timing is Perfect. Several forces have come together to create the perfect time to invest in AIoT. Firstly, IoT hardware is finally cheap enough to enable massive-scale deployment of IoT devices.
Secondly, artificial intelligence capabilities have advanced to a level where a massive amount of IoT data can finally be processed meaningfully and made useful.
Thirdly, industrial companies are now actively searching for solutions that offer real intelligence from IoT deployments to achieve greater efficiency, reduced costs, and increased uptime. The Winners Will Define the Future. Every great technology wave is dominated by early mover companies that don't just benefit from the ride; they define the trajectory of the market. The AIoT companies that are being funded and built today are constructing the foundations of industrial operations for the next decade, which is going to be one of the biggest economic shifts we have seen.
The question is not whether AIoT will become the #1 investment category in the coming years – it will. The question is will you be part of that ride from the start?
Aperture Venture Studio is building the next generation of AIoT ventures that are grounded in real industrial applications, established infrastructure and proven customer need, at the cusp of this inflexion point.
Learn more at apertureventurestudio.com
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