Investment Thesis | Rockfirst

INTELLIGENCE AGE

We are currently experiencing a global shift from the Information Age to the Intelligence Age, characterised by autonomous communication between intelligent devices.

The shift is driven by the consumer’s desire for efficiency, particularly in connection with everyday tasks that can be easily automated and aided by the proliferation of intelligent machines and smartphones. The costs associated with connected devices are no longer prohibitive; companies of all shapes and sizes are able to benefit from this new global ‘Mega Trend’. As John Major of Broadcom observes, ‘It’s affordable, and it works. The stars are aligning’.

The Internet of Things (IoT) and the Internet of Everything (IoE) are real themes, which are being played out by the sharpest minds in Silicon Valley and beyond. Big data and real time analytics are rapidly becoming core areas of corporate differentiation.

Investment Opportunity

Large corporates such as Google, Intel and Qualcomm have already invested heavily into this sector, while leading private equity firms and entrepreneurial investors are starting to follow suit.

Early success stories include Google’s $3.2bn acquisition of Nest, Samsung picking up SmartThings, Facebook buying Oculus and Intel acquiring Basis Science.

Erickson predict there will be more than 50 billion connected devices by 2020 and GE estimate that by 2025 the IoT could be responsible for $82 trillion of global output. As McKinsey&Company comment, ‘do not underestimate the degree to which the IoT is going to make a difference’.

The Intelligence Age will create the next economic boom in America and worldwide. Companies that capitalize on these opportunities will be the first publicly traded companies to be valued at a trillion dollars.

Rockfirst is proud to be an early investor in this space.

CB November 2014