After the first couple of successes – it will be obvious: we have entered “The age of sensors”.
Seed investors are in the unique position to spot trends early. Over the last twelve months I’ve noticed a new crop of startups coming in the door at Lerer Ventures and am confident we’re in the early days of the next major shift in computing – the Era of Connected Devices. It might still be five or ten years from now – but when it hits the impact will be huge.
These connected devices will be everywhere and enriching our lives in more ways then we can comprehend, today. No, I’m not taking about a toaster that’s connected to the net. I’m not even talking about like the Xbox in your living room or the iPhone on your desk. I’m talking about sensors and devices that will monitor and sense our environments, collect data and provide timely and critical feedback. If you think mobile is big right now, wait until the “edge of mobile” is fully developed. A tremendous amount of value will be created at the “edge” (e.g. sensors, appcessories, etc.) because unfathomable amounts of data will originate here and will then be routed to other devices, applications, services, etc. In order to support truly pervasive computing, the tech stack – hardware, software, services, infrastructure – will likely undergo significant changes and new value will be created at each level. I believe the companies that own the hardware, software and service in a given market will create significant barriers.
Why now? Startups are bringing these devices to market faster and cheaper than ever before thanks to a number of factors. First, vibrant innovative online communities are growing (e.g. Quirky and Thingiverse) and low-cost / high performance web-based CAD tools are emerging (e.g. Lerer-backed Sunglass). Additionally, the rise of 3D printers enable engineers / makers to rapidly prototype and manufacture parts, components, etc. all from their garages. Equally as important, crowdfunding sites (e.g. Kickstarter) now provide access to capital for thousands of entrepreneurs who were previously shunned by VCs “who don’t invest in hardware companies.” Finally, we’re starting to see a few of hardware focused-incubators spring up on the west coast (e.g. Lemnos Labs) and I know we’ll see many more in the next few years. Hopefully, a few in NYC soon.