Investment Activities in Industry 4.0
In this Innosight:
The Fourth Industrial Revolution
Industry 4.0 is the fourth industrial revolution that has occured in manufacturing. As the name implies, there have been three previous revolutions; 1.0 – mechanisation through water and steam power; 2.0 – mass production with the use of electricity; 3.0 – adoption of computers and automation.
Industry 4.0 comprises machine learning and other smart, autonomous systems that use data as their power source. The adoption of computers in Industry 3.0 caused some inconvenience as brand-new technology had to be purchased. Now that the hardware is already in place, similar problems should be avoided.
In order to implement Industry 4.0, communication between existing systems must be digital.
As Industry 4.0 is all about having machinery connected and communicating together, artificial intelligence and IoT are central components, as is the use of other innovative technology.
This is why we decided to look at investment in advanced manufacturing. Advanced manufacturing is described as the use of innovative technologies to improve a process or product. It’s used in different sectors and is vital to the fourth industrial revolution.
Constant Investment for 5 Years
The data gathered from our pool of over 1M emerging tech companies provides valuable insights, and can help predict future trends and support a better understanding of the market. This study was conducted within somewhat different parameters to our normal ones, for demonstration purposes. The companies have all been founded since 2010 in Northern Europe.
There was a clear growth in investment in advanced manufacturing industry during 2015, before which investment volume remained relatively low. Since then, the volume has remained fairly constant, with investment each year of around €200M.
The continuity of interest can already be seen from the first half of 2020. Investment levels were at 70% of the total for the whole of 2019, with 50% fewer deals.
This research was breakdown to highlight what was being invested in. It categorises companies by industry verticals- which is more specific than simply grouping by industry.
Significantly, Software-as-a-Service (SaaS) received the greatest amount of traction in advanced manufacturing. With 243 deals made, it is the clear leader among the verticals.
A lot of the technologies below are crucial to the fourth industrial revolution. They’re very much about cloud-based connectivity and data application
Top Industry Verticals
Technology that allows for the use of cloud-based apps over the internet
Artificial intelligence & machine learning
Software as a Service apps
Technologies and companies that aim to improve environmental sustainability
Huge complex sets of data
Many studies suggest that cloud computing is a crucial component of Industry 4.0. Cloud computing provides various computing infrastructures, such as Software as a Service (SaaS). It allows people to connect and use cloud-based apps over the internet.
It’s pretty obvious why SaaS has gained this much traction in advanced manufacturing. Cloud-based systems are essential for Industry 4.0 to succeed.
SaaS is also critical for information sharing. It enables real-time data and information to be shared efficiently and reliably.
Artificial Intelligence & Machine Learning
Artificial intelligence (AI) is a driving force within Industry 4.0. AI and machine learning is the way data will be put into use. AI is, infact, the thing which has enabled Industry 4.0 to arise.
AI can be put to use in countless ways. It could for example be used to optimise an entire operation through predictive repair and maintenance. In addition, AI algorithms make everything run smoothly. Sensors can detect when something is running out (e.g. ink), which will be ordered and replaced before it’s actually finished.
Machine learning, a subset of AI, can impact production significantly. If machine learning algorithms are well implemented, the system will analyse the data, learn from it, and make any necessary changes to optimise the system.
Short for clean technology, cleantech refers to technologies and companies that aim to improve environmental sustainability. Investment in cleantech has increased ever since the term was popularised in the 1990s.
For some companies it may simply be a PR stunt (Greenwashing), while for others there’s a genuine interest in environmental challenges. Either way, there is clearly a movement towards sustainable investment.
Cleantech relates to Industry 4.0 in a different way from the other technologies mentioned. Industry 4.0 enables cleantech rather than the other way round. With more happening digitally, less waste is produced.
As the name implies, big data refers to huge sets of data, both structured and unstructured. This data is virtually impossible to process with just one machine, whether the data is structured or not.
Data can be in all kinds of formats, and carry hidden patterns and algorithms which can be unlocked using different tools.
This ability to analyse large amounts of data is one of the things that has made Industry 4.0 possible. With the use of big data, previously discrete systems can be united. It also automates data collection and analysis, providing a more comprehensive system.
While all the previously-mentioned technologies are vital for Industry 4.0, without big data it would be impossible to decipher all the gathered information. Big data makes Industry 4.0 what it really is – an industrial revolution.
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