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The "Internet of Things" (IoT) category is starting to mature in terms of startup investments, according to a new report from Silicon Valley venture capital firm Wing.

Why it matters: Like any other trendy area of tech, IoT is in the midst of its own hype cycle, so it's important to get a more detailed picture of how the money is flowing.

In short: More money into fewer companies, with an emphasis on automotive and health tech. Investment in security-related IoT startups remains lacking.

Expand chart

Data: wing.vc; Chart: Lazaro Gamio / Axios

Fewer but bigger deals: Wing identified 760 deals in 2016, down from 829 the prior year. Yet total dollars invested continue to grow ($6.2 billion in 2016), suggesting that dollars started to concentrate into a pool of more established startups that were raising bigger rounds.

Wing's analysis also shows an uptick in funding mid-sized rounds between $5 million and $30 million, also a sign that "these young startups are starting to prove themselves and are attracting follow-on investment," as Wing VC partner Martin Giles told Axios. In 2016, these rounds made up 26.3% of total deals, up from the roughly 19% they represented the previous three years. Giles added that there was a recent dip in sub-$1 million rounds, suggesting either a decrease in early stage investment, or that early deals are now bigger in size.

Category standouts: While most subcategories saw a decline in number of deals, two continued to grow and even exceeded Wing's forecasts—automotive and health tech.

  • The automotive category is no surprise with the recent boom in autonomous driving startups. Companies working on various sensors and software attracted a lot of investor attention last year. LiDAR maker Velodyne, for example, raised $150 million last summer from Ford and Baidu.
  • As for health tech, tracking devices continue to get a lot of investor attention, though these devices a more specialized—to track asthma, sleep, etc.—and less about general fitness or health.

Deficiency: Security startups focused on IoT devices and networks continue to see much less investment activity than the security category at large — just 47 out of a total of 1,432 since 2013. This, of course, means that there's a massive opportunity for entrepreneurs in that area, said Giles, adding that 2017 may be the year we see more of these startups crop up.

Go deeper

Ina Fried, author of Login
39 mins ago - Technology

Intel CEO wants to compete against Apple

Intel CEO Pat Gelsinger hasn't given up on the idea of the Mac once again using Intel chips, but he acknowledges it will probably be years before he gets that chance.

  • In the meantime, he is focused on powering Windows machines that give Apple CEO Tim Cook a run for his money.

Why it matters: In getting pushed out of the Mac, Intel not only lost a customer, but picked up a new rival.

43 mins ago - Health

Education secretary reveals limits to Biden’s mask push on states

U.S. Education Secretary Miguel Cardona, in an "Axios on HBO" interview, said he's reluctant to withhold federal funding from states that won't enforce school mask mandates because he doesn't want to hurt students.

Why it matters: Cardona's comments suggest there are limits to how far the Biden administration will go in pressuring states to adopt universal masking — or vaccine mandates.

Mike Allen, author of AM
54 mins ago - Axios on HBO

GOP senator smacks Trump

Sen. Bill Cassidy (R-La.) told “Axios on HBO” he’s not sure former President Donald Trump would win the Republican nomination if he ran in 2024 — a rare voice of criticism from within the party.

  • When I raised the conventional wisdom that Trump would be expected to win the nomination, Cassidy jumped in.“
  • I don't know that,” the senator said during our interview in Chalmette, La.

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