Why the Internet of Things Is Primed for Takeoff in 2015

If the Consumer Electronics Show is any indication, 2015 could be the year that the Internet of Things really takes off.

In Las Vegas this week a cavalcade of companies are showing off a range of Internet-connected devices. There are wristwatches, rings, and other wearable items to help you monitor body rhythms and even moods. Others, like Google-owned Nest, let consumers hook up thermostats and lights to the Internet and their cars.

As further evidence of the uptick, venture capital research firm CB Insights released a white paper that shows how the market has been gaining traction in recent months. The paper combines much of the data the firm collected on the Internet of Things, or IoT, through September 2014. And it turns out that last year, such companies, specifically in the wearables market, were on track to rake in more than $1 billion, compared with less than $1.4 billion over the previous five years.

The most active investors are familiar names by now, including True Ventures, Andreessen Horowitz, Khosla Ventures, First Round Capital, Bessemer Venture Partners, and Intel Capital. Khosla has invested in three of the top 10 best-funded ventures.

Of those, Jawbone, which produces a wearable wristband that tracks movements and vital signs like heart rate, has led the pack for financing, and had raised $471 million in venture funding as of September. Similarly, Fitbit, which uses a dashboard that correlates movements to an individual’s calorie burn, and MC10, which produces a variety of health and wellness devices, have raised a total of $60 million as distant seconds for the same time period.

And it’s still a really nascent market. More than two-thirds of all Internet of Things companies have raised early-stage funding through seed and Series A rounds, with a total of 56 early-stage rounds in the past two years. For the three full years from 2011 through 2013, 173 companies raised early-stage funding worth $366 million. Nearly three-quarters of that funding total, however, was raised in 2013.

So far, there have been only two notable exits, CB Insights reports. Those are wearable high-definition camera maker and Inc. 5000 company GoPro, which went public in 2014 at a value of around $3 billion, and virtual-reality headset creator Oculus, which Facebook purchased in 2014 for $2 billion.

Additionally, the coming year should see more active investing from corporate funds in these types of companies.

“Corporate venture groups are perhaps the most bullish on the promise and future of IoT,” CB Insights writes in its report. Look to Intel Capital, Qualcomm Ventures, and Cisco Investments to lead the way.