It’s incredible to think that Aug. 9 was the 20th anniversary of Netscape’s IPO. That listing symbolized the launch of the internet, and it’s amazing to realize how the online world has invaded and enriched so many facets of our lives in just two decades.
The reason this resonates so strongly with me is I believe the Internet of Things (or machines communicating with one another over the internet) is now at about the same point the Internet of people was when Netscape went public. We’re in the infancy of this movement, and it’s mind-blowing to think what might come about in the next 20 years.
This revolution in connectivity offers a huge opportunity for Canadian industry, if only we choose to seize it.
It will be tough for Canada to make huge waves in the Consumer Internet of Things – there are just too many huge players in the western U.S. too far ahead of us. But the Industrial Internet of Things, or IIoT, is another story. There’s a lot Canada can do in IIoT largely because we have software specialists who understand the inner working of our industries.
Think of some of our traditional industries like manufacturing, pulp and paper, mining and oil and gas. The companies within these sectors employ software developers with intimate knowledge of how these industries work. These developers – and those working at startups that are the partners of these industrial giants – could spearhead Canada’s move into IIoT.
McRock Leads $3M Funding of RtTech
You may ask whether corporate Canada is gearing up to grasp this opportunity. My answer is we could and should be doing more, but you can see evidence that we’re making progress in three segments of the industrial community.
First, the Canadian subsidiaries of major multinationals certainly understand the opportunity. We work closely with companies like Cisco Canada and GE Canada. They are moving into the IIoT realm because their parent companies are attacking it so aggressively.
Second, there are major Canadian corporations, and we’re seeing more and more indications that they are at the very least researching the segment. At our most recent McRock IIoT Symposium, there were numerous executives from CN Rail. The major telecom companies are also making moves into this space. There are still too many senior executives in Canadian industry that are suspicious of emerging technologies like cloud computing, but corporate Canada is slowly moving in the right direction.
In stark contrast, companies like Netflix have already moved 100 per cent to a public cloud infrastructure and are scaling their business rapidly by adopting technology.
And third, there are the startups that can produce new technologies that analyze the data generated by machines and respond to it in real time.
In February, our new $65 million fund McRock iNFund LP led a $3 million investment in RtTech Software of Moncton because we believe it is an exemplar of these young companies. RtTech’s products can pinpoint when and where part of a system is using excess energy and adjust it accordingly. They can also examine specific processes to find the cause of downtime and poor utilization issues.
We were really impressed with the quality of the development team at RtTech and by how well they worked with the engineers at the nearby Michelin plant.
RtTech was the first investment by McRock iNFund. In May, we made our second investment, joining in a $6 million financing of Montreal-based mnubo, an IoT realtime data analytics startup. What we like about mnubo is that it helps industries figure out what their data means and how they can use it to improve performance and create new high-margin revenue streams.
We’re looking at other Canadian startups that are making waves in the IIoT world. What we like about
Canadian companies in particular is the quality, cost and loyalty of talent in these companies. When we say loyalty, we mean that staff tends to stay with these companies as they grow. That means our portfolio companies have a good chance of continuing to innovate because they will be working with top-flight development teams over the long haul.
Let me emphasize again that IIoT represents an absolutely massive opportunity for the Canadian economy. There are estimates that the segment will be worth $19 trillion by the end of the decade and that 50 billion devices will be connected to each other. There is an economic opportunity in developing companies that produce the technology that connects machines and creates value from that new intelligence. There’s also an economic benefit when our traditional industries use this technology
to improve profitability and capture more global market share. We need to start seizing this opportunity.
Scott MacDonald is the co-founder of McRock Capital, a Toronto-based venture capital firm focused exclusively on the Industrial Internet.
