The new year's got McRock Capital’s Research Squad cracking its knuckles, ready to crystal ball the biggest trends that could influence the Industrial Internet of Things (IIoT) in 2020.
 
Now that the hoopla around IoT has settled, a lot of companies have started treating it as less of a buzzword and more of a way to accelerate their growth trajectory. Consequently, we've identified five trends we think will dominate the industry this year, transforming the digital landscape as we know it.

Mother Earth is heating up in an unprecedented way; it's DEFCON 1, people!

As more countries start to take the threat seriously and strive towards sustainability, green technology is expected to take the lead in reducing waste and energy consumption while facilitating effective resource utilization. However, the high cost of implementation and dearth of awareness can impede the growth of the green technology and sustainability market. To combat this, we expect Industrial IoT to play a major role, since its entire premise is based on improving productivity, reducing uncertainty and providing greater visibility to all stakeholders.
 
Several Industrial IoT solutions have the potential to optimize processes, streamline operations, reduce emissions and create a positive impact on the environment. Take agriculture for instance. By employing ground humidity sensors and leveraging environmental data, farmers can accurately gauge the amount of water required to irrigate their land, minimize the use of exorbitant chemical products and increase crop output.
 
In a similar vein, electricity demand for a city or an industrial complex can be anticipated so that requisite energy is delivered to less populated areas. Even waste management is being revolutionized, thanks to cyberphysical systems. For example, Songdo, a smart city in South Korea, has integrated IoT and sensors to bolster its waste management system. In fact, the city aims to recycle 76% of its waste by 2020. 
 
We think corporations, governments, and tech companies are well on their way to partnering like never before to play their part in making a difference. Solutions addressing electrification in mobility, adaptive traffic control to reduce emissions in megacities, and waste management will gain unprecedented attention in 2020.

With predictive maintenance and Industrial IoT working in tandem, disparate systems and assets can connect, capture, identify, share, analyse and act upon data that require attention.
 

We crafted the body of the IoT over the past decade, now we are building its mind. 

Predictive maintenance, which employs condition-monitoring equipment to evaluate performance in real-time, is not a new concept. However, the key to optimizing it is IoT. With predictive maintenance and Industrial IoT working in tandem, disparate systems and assets can connect, capture, identify, share, analyze and act upon data that require attention. 
 
At the risk of sounding poetic, predictive maintenance is the utopia of asset optimization—a beautiful dream that all operators and CxOs in the industrial space fantasize about. 
 
Since the inception of McRock Capital in 2012, we have tracked the number of sensors that have been shipped. Their Compound Annual Growth Rate (CAGR) has finally come down from its previous triple-digit growth to 92%. Moreover, we have also seen machine-to-machine (M2M) communication soar. To us, this signifies that industrial machines and devices are now equipped with sensors and can communicate with the web by themselves.

Thanks to a surge in predictive maintenance, we can now start making sense of data using Artificial Intelligence (AI) and Machine Learning (ML) models. Rest assured, though, machine whisperers (aka plant operators) are not being replaced, just augmented, as predictive maintenance solutions will continue to evolve and become part of the overall maintenance workflow.
 
In fact, with better quality of data and advanced AI and ML models, the workflow will become semi-supervised, and inevitably, unsupervised. In simple terms, we won’t have to pore through data as much as we have in the past. The software will figure it out by itself. Predictions will become much more accurate, insightful and faster than we have ever experienced.

There’s a storm coming, Mr Wayne. It’s called 5G.

The ubiquitous smartphone and the advent of 4G have already metamorphosed the way we communicate. With 5G, we are on the threshold of the next generation of mobile communication. 5G, in congruence with IoT, is already powering the Fourth Industrial Revolution; much like steam, electricity, and silicon powered the previous three. This revolution is blurring the divide among the physical, biological and digital worlds that comprise AI, 3D printing, genetic engineering, and varied technologies.With enhanced capacity and accelerated response time, 5G is a solid foundation for this transformation.
 
We predict that this year, the private adoption of 5G will accelerate and take over its public deployment, yet have more machines as its customers than humans. Billions of devices will come to life, connect and exchange data at speeds we’ve never experienced. The biggest reason 5G networks will demand AI to do so is that they’re much more complex than previous-generation networks. In November 2019, multinational networking and telecommunications giant Ericsson estimated that by the end of 2025, 5G will have 2.6 billion subscriptions covering up to 65% of the world’s population. It went on to state that the number of cellular IoT connections will reach 5 billion worldwide, up from 1.3 billion then. If that's the number of connections humans will use, think of the number machines will. Unimpressed? What if we tell you that there are about 38.5 billion connected IoT devices worldwide as compared to 9.5 billion mobile phones right now?
 
Let that sink in. Not only will the smart brick in your hand connect to 5G, but so will everything from autonomous vehicles and robots to industrial pumps. Industrial and urban infrastructure will enable the 5G network and influence the rollout of Automated Guided Vehicles, real-time edge analytics for more secure operations, video surveillance, etc.

The robots are coming and the industrial jobs they are doing may surprise you!

Industrial robotics has remarkably changed in the past few decades. Customarily, robots are tailored for a certain task at hand, and industrial robots have revolutionized the manufacturing industry because they offer several bottom-line benefits. At the top of this list is efficiency. The robots synthesize speed and uptime to bring about higher production capability at reduced costs.
 
Moreover, industrial robots, when programmed accurately, are scalable—vastly improving the consistency of production, the quality of the product, and helping reduce waste. They also deliver excellent returns on investment (ROI) despite the high initial cost.
 
These robots are now transcending the world of manufacturing and supply chain/logistics because they have proven their worth in addressing the labour shortage and undertaking perilous tasks. However, in emerging markets, where robots have not yet made a disruptive impact, robotics companies can still get by with single-point solutions.
 
Either way, industrial robots will eat away at cobots in conventional industries. New sensors that can be applied to faster industrial robots will make them smarter, reliable and more cost-efficient. A word of warning to our little cobot friends: resistance is futile. 

Who’d a thunk that the 80s anthem will be so relevant in the industrial context by 2020? 

For our intents and purposes, ‘edge’ refers to literal geographic distribution. So edge computing is just computing that takes place at or near the data’s point of origin, rather than in the cloud. But fear not, the cloud is not going away any time soon; in fact, it is coming closer to you by transforming the way data from millions of devices around the world are processed. The dramatic growth of IoT and a slew of new apps needing real-time computing power is powering edge-computing systems.
 
Edge computing has gained momentum, as evidenced by the recent acquisition of the edge AI startup, Xnor, by Apple. Despite the current shift from centralised/cloud to edge architecture, the two share a symbiotic relationship. The faster network of today (to which 5G is a contributor) facilitates edge-computing systems to support real-time applications.
 
As we process and compute more data in real-time, edge computing will become more pervasive in the industrial setup and enable the execution of most mission-critical processes and functions, including self-driving cars and video analytics.
 
So, here we are, on the Edge with our 5Gs and Predictions. Mother Earth, forgive us. Mr Roboto, help us. Time to roll up our sleeves and dedicate 2020 to individuals and organizations that have the courage to do their part and change the world.
 
Author: McRock Research Squad

We have successfully exited our investment in mnubo, a Montreal-based Industrial Data Analytics & AI software company. AspenTech (NASDAQ: AZPN)  will acquire mnubo in a $102 million all cash transaction. This is the second company in McRock’s portfolio that AspenTech has acquired.
 
McRock initially invested in mnubo’s Series A financing in 2015 alongside White Star Capital. McRock invested further capital in mnubo’s 2018 Series B financing led by Munich-Re Ventures.  McRock’s Whitney Rockley has been a member of mnubo’s Board of Directors since McRock’s initial investment.
 
mnubo is widely considered one of the most innovative analytics companies. It helped ignite the AI movement in Canada and demonstrate that one analytics platform is capable of serving multiple markets including industrial ones. The acquisition of mnubo by AspenTech is further validation that we are building world-class tech companies that deliver exceptional returns to investors.
 
As part of todays’ announcement, AspenTech is opening a Montreal-based AI + IoT Center of Excellence to build on Montreal’s world-class AI talent pool. The majority of mnubo’s 60 employees are in engineering and data science. All mnubo employees are joining AspenTech and the business will continue to operate out of Montreal.

This is a huge win for the mnubo team, the Montreal AI ecosystem and McRock's investors.

Not a lot of things get me riled up these days. I don’t know if it is because I am older and have seen (and experienced) a lot over my 48 years but this weekend I was legitimately pissed. And it all started sitting in my car out front of my Taekwondo gym waiting for the instructor to arrive, so I could get my daily dose of kicking.

A friend of mine sent me a text encouraging me to read an article written by LiisBeth, a group that claims it is “the world’s only dedicated voice and advocacy organization for the entrepreneurial feminist movement”. I had time to kill so I launched the link and read the article. It was brutal. It was not focused on advocating for women. It was focused on crapping all over the first organization in the world that invests a lot (and I mean A LOT) of capital to advance tech companies with women in the C-suite.

The Business Development Bank of Canada (BDC) launched the world’s largest Women-in-Tech Venture Fund just under two years ago. And, the person who stepped into the arena to take on this fight is Michelle Scarborough. I cannot even imagine the amount of blood, sweat and tears Michelle and her team have shed to get this program off the ground while everyone else has been watching from the sidelines or merely lying dormant.  

And what does this LiisBeth group do? They decide to critique the one gladiator that has the courage to take on the first of what will be many, many fights. They start the article by saying “we are watching”. Yeah right. If they are really “watching”, they would not be watching her. They would be watching all the nay-sayers and silent ones wishing this feminist movement would just go away. They would be fighting alongside of her and helping her win. Instead they tell her to step aside and start over.  

So thanks LiisBeth for watching the one group trying to make a difference and not watching the hundreds of others that have no intention of ever changing. What you have shown us is that you are not a feminist and you certainly are not Lisbeth Salander, the character you aspire to be. You are just a mean “girl” who delights in being a bully from the bleachers hissing at the gladiator trying to change the world.

My call to those of us out there who have been fighting the real fight is to recognize that the really hard fights are just that. Hard. Mistakes will get made along the way. We will stumble and get marred because that is what needs to happen to make real progress. BDC, Michelle Scarborough and certainly not the female entrepreneurs they have backed need you to criticize them. For that, I give you a rating of “WTF”.   

​The tech sector and private capital industry will never get out of the starting blocks and jump over the first, second and third hurdles of this race if we have “supposed” supporters on the side lines with trip wires watching and criticizing our every move. We need cheering, encouragement and hope.  

We need the women and men in this industry to rally behind one another so major change can happen. Not just to improve the gender mix but to build a more inclusive industry with people from all different orientations, backgrounds and ethnicity. You don’t do that by critiquing the ones that are trying to figure it out.

So LiisBeth and the other nay-sayers out there. Piss off. You aren’t badass. You are pathetic.

​Author: Whitney Rockley, Founder & Managing Partner of McRock Capital

International IoT Day is April 9 and to celebrate we have asked our team to select their favorite Industrial IoT company. To be fair, we agreed not to name any companies that McRock has invested in (yet). Congratulations to the five IoT companies that made our list. They cut through the noise of thousands of companies and inspired our team. Happy International IoT Day 2019!

Tencent, the 20-year-old consumer Internet giant operates China’s dominant social media platform, WeChat, with over one billion monthly active users. The company announced it will begin focusing on industries seeking deeper business integration with internet technologies given the huge potential of the industrial internet.

“We believe that the first stage of the mobile internet, the consumer internet, is drawing to a close and the second stage, the industrial internet, is kicking off. With the digitalization process ongoing, the main battlefield of the mobile Internet has moved from the consumer internet to the industrial internet,” said Tencent Founder and CEO, Pony Ma.

The culmination of many technological advancements over the past 100 years has led to the power of today’s mobile Internet. A combination of affordable compute power, data storage, software applications and connectivity has created a powerful Consumer Internet. Along the way it has created some of the most valuable companies in the world like Amazon, Google, Facebook, Tencent and Alibaba.

Tencent’s founder believes the next phase of the mobile Internet is the Industrial Internet. Building off the technology of the Consumer Internet, the Industrial Internet is adding two important advancements. One, it’s connecting and digitizing the vast physical world of machines, equipment and infrastructure. This advancement has largely been the efforts of the past 5 years. The second major advancement is around next generation data analytics commonly referred to as Artificial Intelligence (AI). The way to conceptualize the relationship between the IoT and AI is like the body and the brain. The IoT, connecting data from physical devices, is akin to the body and software driven analysis and decision making, AI, is analogous to the brain.

As with the evolution of the Consumer Internet, the more people that are connected to the network, the more valuable the software application layer becomes. Likewise, as massive amounts of data are connected to the network from physical assets, the potential for AI to unlock new value is massive. It will create new competitive forces in every industrial sector, unlock new revenue streams and create entirely new business models.

Tencent has announced plans to expand into smart services for transportation, manufacturing and urban development. Their new direction is also in line with China’s wider ambitions to lift its industries up the value chain and better compete globally in emerging technologies, such as AI.

Tencent will also form a new technology committee that will create an internal platform for the sharing of fundamental technologies within the company and apply them to different industries. This should help Tencent rapidly build an ecosystem for supplying new technologies such as cloud computing, big data and AI tools to industries undergoing digital transformation.

What we are witnessing is the battle for the future of businesses. As technology innovation continues its accelerating path forward, only the existing industrial companies that execute an aggressive digital strategy will survive as a new breed of tech-savvy Industrial Internet companies emerge.

Author: Scott MacDonald, Founder & Managing Partner of McRock Capital

Today, the Honourable Mary Ng, Minister of Small Business and Export Promotion announced the second round of investments under the Venture Capital Catalyst Initiative (VCCI). Whitney Rockley, Co-founder and Managing Partner of McRock Capital, and several VC leaders were invited to attend the announcement in Montreal.

The VCCI program was created to provide capital infusion for innovation through private sector investments, with $400 million committed by the government over three years as approved in the Budget 2017. Five Fund-of-Funds were named to receive $350 million from the first stream according to an announcement made in June 2018. The awarded firms are HarbourVest Partners, Teralys Capital, Kensington Capital Partners, Northleaf Capital Partners and Hamilton Lane.

Under the second stream of the program, the government is allocating $50 million to investment managers with a diverse fund management teams or ones that demonstrate focus in supporting under-served populations or emerging regions and sectors.
The seven investment managers to receive investments under the second round of VCCI are:

• Garage Capital (Waterloo)
• Build Ventures (Halifax)
• Tandem Launch (Montreal)
• Highline BETA (Toronto)
• AmorChem (Montreal)
• Pique Ventures (Vancouver)
• Brightspark Ventures (Montreal and Toronto)

Each of the seven winning VC firms will receive anywhere from $5 million to $15 million. All recipients will continue to show strong support for diversity and the participation of women across the venture capital ecosystem. They must raise $1 for every $1 from the government and invest at least 60 percent of the fund in domestic startups.

The announcement reiterated the Trudeau government’s commitment to promoting gender balance and the future success of cultural minority groups in the VC industry and the tech sector. The program is making significant impacts in accessing venture capital investment dollars across the country to accelerate innovation, job creation and economic growth. This marks another important milestone for the Canadian innovation ecosystem when diversity and inclusion become the fuel to help increase Canada’s economic competitiveness on a global scale.

To celebrate International Women's Day 2018, we honour some of the inspiring female pioneers in the Industrial Internet of Things sector. There are obviously many more incredible women so please keep doing what you are doing and changing our world.

“Humans fancy that there’s something special about the way we perceive the world, and yet we live in loops, as tight and as closed as the hosts do, seldom questioning our choices, content, for the most part, to be told what to do next.” 
— Dr. Robert Ford in “Westworld”

“Westworld” is an HBO series about a Western-theme futuristic park, where its visitors are enabled to live their fantasies with robotic “hosts.” The hosts, while looking and acting human, are programmed to operate within a narrative. Any “host” who behaves differently from their storyline will be considered an error and needs to be fixed or dismantled. The hosts become victims in the world that’s supposed to be theirs.

It is fascinating how similar our human world is to the Westworld. Together as a society, we create plots for each individual, based on our race, our background, our genders, elements that we are born and raised with and are unable to influence. Let me tell you my original narrative: I was born in a Southeast Asian country, in a middle-class family, and in a generation that had yet to escape from the influence of Confucianism. I have the look of a plain Jane according to our culture, and a typical smooth upbringing with parents who loved and protected me from everything. I was expected to stay with them until I married (typically by age 25), after having children I would step away from my career to take care of my children, my husband and later, my parents. It was the best life that I was taught to wish for. Then I started to wonder why life had to be that way. I had lived so long in a circle of people with the same mindset, who accepted their designed narrative without questions. I had known at the time, that if I wanted to see other possibilities for my story, I had to break out of that loop. And that was why I moved away, to a city I never lived in, and then to a country half the world away from my homeland.

The loops are everywhere. Social expectation and people’s opinion influence our values. And when the voice of the crowd is honeyed and close enough, it tightens the loop around our minds. Truth is, the more privileged we are, the harder it becomes to challenge our status quo. A life with comfort and approval creates the illusion of belonging; it keeps us away from questioning our reality. That is the worst loop we could ever live in.

I remember the first night in a city 700-miles away from my hometown, I lay on the floor of a cold and almost empty room, worrying about my next day at the new job. I missed the safe and warm feeling of my bed, the routine pleasure of my old life; and I wondered if I had made a mistake.

There were days when I stayed late, looking out of the window from a fancy office on the 57th floor. A big city with blinding lights layered on my shy reflection. In a moment, I could see both beauty and ugliness, both clarity and doubt. And I did not know what to believe in.

No matter who we are, we will continue to encounter the loops. Whenever we get out of a circle, there is another one wrapping in. Society today encourages people to change for a satisfying life. We share stories about those who make it through, and how much better their lives become. Yet, by doing so, we create another formulated plot of happy ending, in which we tend to ignore the parts that involve constant pains, conflicts, and adversity. Indeed, all those untold sufferings are the essential forces that drive us to expand our thoughts, and eventually break us free.

There is no happy ending. In fact, there is no ending. I started to realize now, that the adventure to challenge our being is an eternal journey inward. Each of us may still be generalized into an archetype by the outer world, but it is the freedom of our minds that gives us courage, makes us alive, and enables us to write our own unique stories.

So, observe and think by yourself. Don’t let the world distract you. Don’t let people tell you about your narrative. Stay conscious. Ask questions. Challenge the rules.

Nothing could ever hold us back.

Author: Ha Nguyen

I nearly crawl out of my skin when I hear someone say the words “don’t be afraid to fail and fail fast”. As an entrepreneur, those words trigger me because anyone who has faced real failure will know it hurts in unimaginable ways.

As an entrepreneur, I lost count of the sleepless nights I had in the first few years of starting our business. My son, who was 10 years old at the time, kept asking, with hopeful eyes, whether we had secured our funding yet. I had to repeatedly say “close” when I knew we were still miles away. I woke up in sweats worried that I was approaching failure personally, professionally and financially. I knew that if my co-founder and I had failed, the wipe out would have been devastating. That fear of failure drove us to ignite our imaginations so we could figure out how to succeed. Had we “failed and failed fast”, we would NEVER be where we are today.

Being creative in difficult situations and adapting when things are trending poorly is not a moment in time worthy of the failure title. These moments are the exact opposite. They are the moments that define a person’s success. So, when I hear someone say, “don’t be afraid to fail and fail fast”, I know that they are not an entrepreneur.

If you use that expression, I would encourage you to change it up. For those entrepreneurs facing failure, challenge yourself to think even more positively. Have the courage to change tact and try new approaches. Push yourself to do better and better each day so you can get back on track. A positive mindset is everything and the word failure shouldn’t enter your vocabulary. Please stop glorifying the F word. Be afraid to fail and fight hard and long to find success.

That is my wish for entrepreneurs pursuing the crazy dream of changing the world.  

Author: Whitney Rockley