Oil industry’s loss is IIoT’s gain in Canada
- Canada’s thriving industrial Internet of Things (IIoT) market is set to exceed USD$4.9 billion by the year 2018
- The recent slump in energy prices and oil demand presented a challenge for IIoT innovation driven by natural resources investment
- Canada’s transition from natural resources towards alternative areas of innovation has accelerated investment
- Strategic exits are now dominating activity among burgeoning IIoT companies
Canada’s thriving industrial Internet of Things (IIoT) market is set to exceed USD$4.9 billion by the year 2018. However, if Canada is to realize the full potential of its industrial IoT market it must navigate several challenges – namely, the double-edged sword of a weak dollar environment.
Canada’s geographical vastness and relatively small population have proved problematic to its burgeoning IIoT industry. The isolated locations of Canada’s various energy and mining projects beget innovative start-ups such as Alberta-based companies GEOTrac and Pure Technologies, (which provide fleet management tech and pipeline inspection robots respectively).
The recent slump in energy prices and oil demand presented a challenge for IIoT innovation driven by natural resources investment. With natural resources comprising around 15% of its national GDP, Canada was particularly hurt by the decline in oil prices.
Yet Mike Woollat, CEO of the Canadian Venture Capital Association (CVCA), says Canadian venture capital funds are seeing increased investment opportunities in Canada’s transition from natural resources towards alternative areas of innovation. Most of this new activity is being pushed by relatively low valuations for Canadian start-ups compared to Silicon Valley, especially with the Canadian dollar trading at a 30% discount to the USD.
“Everyone’s pretty interested in Canada, the dollar is at 70 cents, there’s tons of opportunities, a lot of companies growing like crazy, but there’s less competition for financing than in the Valley,” explains Woollatt.
Strategic exits are now dominating activity among burgeoning IIoT companies. Last September, Atlanta-based Acuity Brands acquired Distech Controls – a leader in smart building automation and energy management solutions – for USD$242 million. This follows the acquisition of SkyWave Mobile Communications by the New Jersey based global equipment tracking company Orbcomm.
For example, as automation becomes more extensive, machines and computers will replace human workers across a host of industries, from farm-hands to stock-brokers and accountants to drivers. One source estimates that as many as 47 per cent of U.S. jobs are at risk from automation.
Numerous experts argue that the fourth industrial revolution will disproportionately benefit the rich over the poor, especially seeing as most low-skill, low-wage jobs will be superseded by automation. However, this is not a new phenomenon. Industrial revolutions have historically always caused increased inequality followed by periods of political change. The industrial revolution of the 19th century initially caused a massive disparity in wealth and power, which was then followed by a century of change that included the expansion of suffrage, trade unions, progressive taxation and the development of the welfare system.
It is fair to say, then, that our existing social, political and business structures may not be prepared or currently capable of dealing with the disruption that a fourth industrial revolution necessitates, and that radical changes to the very framework of our society may be inevitable.
Despite these challenges, the Canadian IIoT industry continues to grow and attract investment from both domestic and US venture players, such as the Toronto-based VC firm McRock Capital which specialises in IIoT. Toronto based MMB Networks is also generating investor interest, recently closing USD$4.5 million in series B financing led by Roadmap Capital. Other notable start-ups include: Sensor Suite (smart building monitoring and energy efficiency); Miovision (traffic data collection and signal operations); and Blue Rover (IIoT connectivity and asset monitoring).
Canada’s economic priorities are in the process of shifting away from natural resources and into alterative areas of innovation. This is great news for Canada’s burgeoning IIoT market but it faces stiff recruitment competition from south of the border. Even with these obstacles, Canada’s IIoT industry is thriving in the face of adversity.