With Google's $3.2 billion acquisition of Nest, and Apple's recent acquisition of Israeli 3D sensor company PrimeSense, sensors are making quite the splash these days. Increasingly, sensors are being deployed all around us measuring, interpreting, and transmitting troves of actionable data. Whether it's for a smarter building where an occupancy sensor detects if anyone is in a room, a manufacturing environment where sensors ensure tight process control, or in a car where rotation sensors detect a slipping wheel, sensors impact most major industries today.
A sensor is defined as a device that detects or measures a physical property and records, indicates, or otherwise responds to it. How sensors measure and respond to these myriad physical properties (temperature, strain, pressure, voltage, humidity, magnetic field, presence of chemical species, etc. etc.) is almost as diverse as their applications. Furthermore, the list of materials that are used in sensors is perhaps equally as long as the list of sensor applications and their operating principles.
From a venture perspective, sensors and the advanced materials they're composed of represent both an exciting and a challenging area. First, the good stuff:
The global sensor market is huge, estimated at over $50 billion. Compared to many other devices like logic circuits or displays, sensors tend to be a bit simpler in nature making it easier to incorporate new materials and/or device architectures in novel products. Many of the first commercial applications of materials innovations are for sensor applications. In tandem, some current macro trends like building automation, energy efficiency, and increased device connectivity (the Internet of Things) are helping to push sensor integration in new areas. Materials innovations help improve the sensitivity and reliability of sensors. They also help shrink the size and power requirements of these systems, two key aspects in the integration of sensors for uses like smart packaging. Low power consumption enabled by improved sensing materials, device designs, and power electronics opens new doors for energy-autonomous, maintenance-free wireless sensor networks. Combined with continually improving energy harvesting and energy storage technologies, we seem to be getting closer to a future with integrated sensors that don't require an active power supply or regular battery replacements.
However, sensor commercialization and large venture returns in this space face some challenges. Going from components & sub-systems where materials-focused startups tend to work to products & end markets can make it difficult for a startup company to capture a significant share of the value created by an innovative sensor technology. Sitting far away from the end user makes it more difficult to garner good margins. A smartphone user doesn't care much about what company's gyroscopic sensor is in her phone; she just wants it to work well. Picking the right market segment and business model can also be difficult for sensor manufacturers as many innovations are of the platform variety enabling many opportunities and many potential pitfalls. Most startups don't have the bandwidth to attack all of these opportunities, and choosing the wrong segment can be a death sentence.
Ultimately, the real value of sensors is in the data they collect. Therefore, software and data analysis are perhaps more important than the sensor hardware itself. You don't think Google just bought Nest because they really want to sell cool looking thermostats and smoke alarms, do you? Google wants a more connected environment in the home. While sensors help enable this, the software innovations and learning algorithms are often where the biggest value is created.
Here at Pangaea, we proactively seek out breakthrough advanced materials innovations that can significantly improve sensor performance while simultaneously reducing cost, size, and device complexity. Developments in fields like metamaterials and photonics push the technical envelope and I am excited to see where things go from here. As far as I'm aware, no sensors have been designed to tell Pangaea about these developments, so we'll keep our eyes (arguably one of the top 5 human body's best sensors) wide open.