Rising inflation and interest rates threaten to slow down the economy and have already taken a toll on venture capital investments. But, many internet-of-things and wearables continue to attract funding from angel investors and venture capitalists despite the downturn. These startups focus on everything from nutrition to biometric authentication.
Let's take a closer look at five internet-of-things (IoT) and wearables startups that recently secured funding.
Today's Funding Environment
Venture capital deal flow slipped to less than $62 billion during the second quarter of 2022, according to VentureBeat, with the number of deals falling 24.5% relative to the first quarter of 2022. The good news is that median valuations remain steady, suggesting that it's high-flying companies – particularly in crypto – that have seen less funding.
Venture capital funding slowed in 2022 but remained historically robust. Source: NVCA
With more than $230 billion in dry powder, there's no lack of capital from the venture side. The problem is that the weak public markets are depressing exit valuations, leading many VCs to take a cautious stance until the markets improve. In practice, that may mean more Series A and smaller deals and fewer late-stage Series B or C deals.
Ultimately, the future of VC funding will depend on the wider economy. If inflation begins to slow, the Federal Reserve may slow its aggressive interest rate policy and avoid a recession. However, if the U.S. dips into a recession, startups could see a few more quarters of slow fundraising as venture capitalists wait for the public markets to come back.
#1. Levels Raises $38 Million Series A
Levels is a New York-based software startup that provides real-time feedback on how food impacts health. In particular, the company leverages data from biosensors, including continuous glucose monitors (CGM) to provide real-time feedback on how diet and lifestyle choices impact metabolic health – and how consumers can improve.
In April, the company raised $36 million in Series A funding at a $300 million valuation with backers including a16z and the Airbnb Alumni Syndicate. The company plans to use the capital to expand from its current beta community of 25,000 paying members to full customer availability and eventually expand into global markets.
#2. Token Raises $13 Million Series B
Token is a biometric wearable maker focused on authentication rather than health data. The company's products enable passwordless, multi-factor authentication with fingerprint biometrics for logistical access control to networks and critical assets. And ultimately, it aims to prevent data breaches through social engineering or ransomware.
In June, the company raised $13 million in a Series B round to support ongoing development and demand generation. Grand Oaks Capital and Paychex founder Tom Golisano led the investment round. The new capital follows a $1.75 million investment from Empire State Development back in 2018 and brings its total raised to about $23 million.
#3. Strive Raises $6 Million Series A
Strive develops smart compression clothing that features EMG, GPS, accelerometer, magnetometer, and 3-axis gyroscope sensors along with a cloud-based software platform to make sense of the data. The goal is to help athletes enhance return-to-play protocols, prevent injuries, maximize training, and achieve peak performance.
In July, the company raised a $6 million Series A funding round led by Future Communities. Previous investors SeaChange Fund and SeedToB Capital also participated in the round alongside new investors like Indianapolis Colts running back Jonathan Taylor and former NFL quarterback Troy Smith – helping to increase its profile.
#4. Onomondo Raises $21 Million
Onomondo is developing a dedicated wireless network for IoT devices, enabling visibility from any cellular antenna across the world to any cloud architecture. While several startups have similar concepts in development, the company's unique power tools atop its IoT tech stack make it fundamentally different from its competitors.
In July, the company raised $21 million in a funding round led by Verdane with participation by Maersk Growth, People Ventures, and The Danish Growth Fund. The new capital will support productization, go-to-market efforts, and marketing as the company scales its business to 100 employees by the end of the year.
#5. Watz Raises $2 Million
Watz is an artificial intelligence-focused startup dedicated to the consumer biotechnology space. In particular, the company aggregates insights from thousands of wearable or IoT data points and delivers insights to athletes, coaches, and consumers to help them reap the benefits of these technologies and maximize their performance.
In June, the company raised $2 million from Sophon Ventures to fund research and development, operations, offices, and branding. The company works with several wearables brands and competes with Strava, Apple Health, Kitman Labs, and other software vendors that provide similar data-crunching capabilities.
Are You Raising Capital?
The most effective way to raise capital is to build a high-quality product that achieves product-market fit. If customers are lining up to buy, you will have little trouble finding investors willing to provide the capital you need to scale up. On the other hand, it's much harder to attract capital in the early stages before you achieve product-market fit.
At Intent, we specialize in helping IoT and wearables startups optimize their user experiences and achieve product-market fit. We've worked with companies like Oura and Roku to drive engagement through beautiful and intuitive mobile applications.
Contact us today to discuss your project and learn how we can help you achieve product-market fit.
The Bottom Line
The economy may be slowing down thanks to rising inflation and interest rates, but angel and venture funding continue to flow into IoT and wearables companies. In addition to the five startups above, many others have successfully raised eight-figure investment rounds, helping them prepare their products to scale up in niche markets.