KPN Ventures Research Series: European smart home investment landscape

A smart device is a collective term for devices that can be controlled remotely through an internet connection and with abilities to communicate with other devices, to provide data insights and to automate tasks. In the Netherlands, smart thermostats are the most popular category, followed by smart lighting (source: Adformatie)

From an investors point of view, we see that the total investment amount in Europe has increased while the number of rounds has decreased since 2015. Further investigation shows that the investment amount and the number of rounds in seed capital and venture capital both have declined, while the investment amount in growth capital and late-stage capital have increased. The number of investments by corporate investors are limited. However, the amount invested is high compared to other investors and show growth from €2M in 2013 to €44M in 2018.

In Europe, the most active countries in terms of investment are the United Kingdom and Sweden, completing fourteen and nine deals respectively. Moreover, the United Kingdom possesses the highest density of accelerators specialized in the smart home sector, resulting in the most robust ecosystem for entrepreneurs to grow. Germany stands out in 2018 with the top three most significant deals in terms of value, wherein the investment in the smart thermostat supplier Tado was the largest at €100M.

The overall global market is expected to grow steadily, reaching a market size of $53B in 2022, and the smart speaker category will grow the fastest with a CAGR of ca. 39% from 2018 until 2025. Even though our focus was on the EU ecosystem, we noticed the US is leading the industry. The later possess the most active companies, such as Google and Amazon, with their respected services known as Google Home, and Amazon Echo. On the other hand, furniture giants are entering the smart home sector, IKEA being the most obvious one. The introduction of IKEA’s new smart home devices such as their intelligent blinds launched earlier this year will broaden the overall market in Europe. This trend could eventually lead to the mass-distribution of smart devices for a reasonable price. CSS Insight names furniture retailers to take the spot as market leaders in the future.

KPN has been an active player in the smart home through its SmartLife proposition, offering third party devices and a central platform for customers to integrate and control their devices with. So far, KPN’s investment arm KPN Ventures has invested in three smart home startups: Minut (offering a wireless home alarm), Cujo (home network analytics and advanced protection), and Nello (offering a smart intercom and keyless access system).

In case you have any questions regarding the market developments, data or activity within KPN Ventures, feel free to comment or ask questions by sending us an e-mail at kpnventures@kpn.com.

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