Gadget gurus proliferate in NY’s tech scene

The economy for the ‘Internet of Things’ is expanding.

It’s often grueling for startups to bring complex, health-related devices to market. But serial entrepreneur Bez Arkush, founder of Manhattan firm QoL Devices, has discovered that one thing is making it a little easier: the declining cost of creating such gadgets.

The two-year-old, pre-revenue startup specializes in products that communicate with smartphones and tablets. Its first offering, Alvio, which helps asthmatics improve their breathing, relies on special sensors for which the price is coming down.

“It’s amazing,” said Mr. Arkush. “The cost of the technology is getting cheaper while the computing power you have in your pocket keeps growing.”

QoL is one of an increasing number of New York City tech startups that—amid lower prices for components and advances in technology such as 3-D printers—are diving into what’s known as the “Internet of Things”: meaning that systems in devices embedded with sensors can communicate wirelessly or via cellphone to other equipment.

Alvio, for instance, lets asthmatics and others with respiratory problems control a video game they watch on a smartphone or tablet. Sufferers inhale and exhale into a “breathing trainer,” which looks a little like an inhaler, to improve their respiration. The device wirelessly communicates with their phones or tablets to operate the game and sends data on the patients’ performances into the cloud so that caregivers can monitor it.

Hardware hard going

Firms that make products like this account for a growing percentage of the city’s burgeoning hardware-startup scene, say tech experts. According to entrepreneur Haytham Elhaway, who founded a meetup for hardware companies two years ago, about 75% of the group’s 2,000 members are involved with Internet of Things startups. “I’m seeing a new wave of these companies,” said Mr. Elhaway, who also is “hardware mentor in residence” at crowdfunding site Indiegogo.

Still, the going can be rough for these companies, which must address manufacturing problems that their Web 2.0 counterparts don’t face. “There’s a higher level of complexity and risk—and the process of scaling up turns out not to be that simple,” said Amit Kumar, who is closing down Bitponics, his three-year-old Brooklyn-based startup that has been selling an Internet of Things product for hydroponic gardening, a method of growing plants in water using nutrient solutions.

While these companies target a wide range of markets, in New York City there is a preponderance of them concentrating on health and fitness, as well as home security and automation, according to Richard Ting, an executive with R/GA, a Manhattan-based digital-marketing agency that started the one-year-old R/GA Accelerator, which focuses on Internet of Things startups.

Message in a bottle

Take AdhereTech. The three-year-old Manhattan-based company sells a smart pill bottle that knows whether patients who have been prescribed high-cost medicine for such conditions as HIV are taking the drugs as instructed.

Two sensors in the bottle detect whether the cap is open or closed and how much medication is left. The information is transmitted through the cloud to AdhereTech’s servers, where it is analyzed, and patients deemed to be noncompliant are sent an automated voice or text message.

The four-employee company, which has revenue in the “hundreds of thousands,” according to co-founder and CEO Josh Stein, recently raised a Series A funding round of $1.75 million.

Internet of Things startups are finding a plethora of early-stage backers.

QoL is in the processing of raising $1.4 million from angels and strategic investors.

Enertiv, a three-year-old, 10-employee firm in Manhattan, sells a sensor-based system stationed in a building’s breaker box that can tell how much energy each room is consuming in real time, so owners can cut those costs. It recently closed a $1.15 million seed round.

The company, which has “under $1 million” in revenue, was all set to settle the financing at $750,000, but, said CEO and co-founder Connell McGill, “we got a ton of phone calls from angel investors in the New York City real estate scene and ended up raising more.”

Continue to Crain's New York to view the source article