Gartner expects the Internet of Things (IoT) will be driven by small entrepreneurs rather than big tech companies. And that means funding for those entrepreneurs is going to be crucial.

So far, compared with the funds available for start-ups in other areas like social or information management, there is relatively little investment in IoT start-ups. However, Reply, a London-based consulting, systems integration and digital services company, is taking up the torch and setting up a new trans-Atlantic initiative called Breed Reply.

Reply’s Form

That Reply should get involved here is not really surprising because it has a track-record in developing emerging digital and communication technologies. While there are a number of interesting elements in this announcement, one of the most striking is the trans-Atlantic dimension.

The Breed Reply Incubator will fund, accelerate and support the growth and establishment of ideas and start-ups around the IoT across Europe and the US from its offices in the UK, Italy and Germany.

Mario Rizzante, Reply Chairman noted in a statement that Reply has been investing in expertise and solutions for the Internet of Things since 2009. "We are now witnessing a further acceleration in the fragmentation of this market, impacting all sectors and consumers’ daily life," he explained.

Breed Reply will help it "seize the most interesting innovative opportunities," he added.

In a statement, Reply noted that it will offer three fundamental services: 1) funding at seed and early stage development; 2) business, managerial and technological expertise; and 3) medium-term involvement to establish start-ups in their market.

If you are an IoT entrepreneur reading this, it is worth noting that Reply is currently running a competition through mid-November. It's offering start-ups the opportunity to present their ideas and projects through an IoT Best in Breed an initiative aimed at identifying the most innovative ideas in the IoT sector. As it explained:

Breed Reply look for young talent with a strong bent for change and innovation in the IoT space, that are aware of the market needs and that have a desire for the challenge that is business. Ideas and projects can be submitted to Breed Reply through the application form at www.breedreply.com. The selected ideas will immediately begin the exciting growth process with Breed Reply."

Second Venture

This is not Reply’s first venture into IoT funding. It is already involved with a growth project with Xmetrics in the US, which builds sensors, electronic components and software via mobile devices to enhance the training sessions of professional and amateur swimmers.

Not exactly the kind of household device that we expect to lead the IoT charge, but interesting all the same.  Reply has invested about $1 million in the company, a substantial sum to pump into a start-up.

Reply describes the investment as part of its development strategy for the IoT and, in particular, the wearable technologies area. Reply first made an investment in this sector in July 2014, when it acquired 20 percent of the capital of the US based Sensoria.

Sound Strategy?

Is Reply’s investment strategy a safe one given the level of involvement of some of the larger IT gorillas in the IoT already? Probably.

Many analysts are expecting the IoT to rise on the back of smaller, agile companies that can respond to the reality of the consumer IT market and its rapid changes.

Microsoft has clearly seen the writing on the wall and earlier this year announced a list of 10 start-ups it has selected for its home automation accelerator program. These companies have been developing IoT technologies that specifically target the home, with the emphasis on products that are user-friendly and affordable. 

There is also huge public interest in the IoT. Recent research from Acquity Group shows 71 percent of consumers would be willing to buy a smart refrigerator, for example, if it was offered in the same store as a conventional model.

While there is considerable variations around the number of devices that will be ultimately connected through the IoT, all the estimates agree that by 2020 the IoT will consist of a minimum of 26 billion devices and will grow at an astounding rate thereafter.

Getting in now is key, and for those that are looking to build a business around it, getting in early is the best advice from all quarters. Reply has been quick off the mark here and looks set to build its IoT portfolio while many are still in a flap as to what to do about it all.

Title image by Rob Ellis  (Flickr) via a CC BY-NC-SA 2.0 license.