On the one side of IoT you have the sexy world of wearables, uniting fun, fashion and utility in pretty little gadgets like the Apple Watch, fitness devices like iHeartalive and trendy connected sport glasses with heads up display and social sharing features. On the other side, you have the ugly; devices not meant to be admired for appearance, not to be worn as jewellery or as a ridiculously hyped status symbol. Despite this apparent lack of sex appeal, however, the utilitarian segment of the IoT will be the driving force behind the next ‘industrial’ revolution. SST Wireless, a small company based out of Delta, B.C., Canada, has embraced wearables ugly cousin and hopes to capitalize on this globally transformative trend.
The result of the aforementioned partnership was a tire pressure monitoring system comprised of wireless pressure and temperature sensors in the tires communicating back to a controller which then fed the information back to the customer’s operational staff for action.
This relationship with Kal Tire was double-edged sword as the benefit of having such a large patron as a customer provided a solid backbone from which the company could operate, but it also threw in a challenge as Chris explained, “As a small company based out of Vernon with a small engineering team in Delta, BC, initially they just didn’t have enough muscle to be able to move into other markets they saw as a potential for them.”
What made their journey more challenging was the sad fact of IoT as Chris illustrated, “Our products are not the polished glassy things you wear on your wrist or clip on your waist. This is stuff you stick in the mud, expose to extreme temperatures, submerse in oil, or whatever, but even though it’s the less visible component of the Internet of Things or Machine to Machine, it is the vital driver of the market. The trick is making those products visible for the investor in a way that they understand their worth despite the lack of expected sex appeal. As I said in a recent wearables conference, it’s the dirty end of Machine to machine or as more popularly known, the Internet of Things.”
The wearables space and the tech sector in general have ridden to the forefront of investors’ minds creating a funding feeding frenzy with over-valuation becoming a serious problem within the marketplace. With so many start-ups selling a dream, this bubble trading environment is especially problematic for the potential investor. In this, SST Wireless has differentiated itself from the competition as Christopher outlines, “We are a company that actually has working products generating revenues. We have large customers and channel partners signing agreements with us. And we are pushing our products internationally. In fact, we have embarked on trade missions including one to Asia with BC Premier Christy Clark and to South America and Europe with the assistance of Wavefront, a venture acceleration program based out of B.C.”
“Next part we have to consider is how much of it do we want to stock? Especially if we know that some critical component is nearing the end of its life, because we still need to have enough room to transition to a new component if we have to and we don’t want to get caught short if we don’t have enough components.”
Next up, I asked Christopher how SST Wireless fit into the financing scene in Canada, “From a private capital point of view, Canada has always been a bit of a challenge. We’re at a point where early-stage investment is not applicable to us, because the money costs too much in terms of what we would have to give up getting it. When you talk about Venture Capital firms in Canada, most of them are looking for much larger plays. Our challenge in Canada is finding an investor or group of investors with the money we require and the interest in both our company’s size and the sector we play in. We have tremendous potential world-wide, a healthy margin and hardly any competition in the marketplace, so why are we having such a hard time? This is a question I see a lot of Canadian tech companies asking. When I talk to my U.S. friends, they say, move your company south, we’ll get you financing down here.”“I think this is an issue for a lot of Canadian manufacturers where moving operations below the 49th parallel can be far more attractive in terms of funding. As far as SST Wireless is concerned, there is a definite draw south to be closer to our largest market.”What about the public markets as a source of financing?“Absolutely, there’s trade-offs to everything, like becoming a public company through something like an RTO, which many Canadian companies have done. It is a useful tool as long as your entire organization is structured toward doing that. We definitely will look at it, but my thinking may be different from our shareholders. However, it does provide them with an opportunity to exit without having to wait down the road for another type of transaction. SST Wireless is at that tipping point where we see progress and success, and I thank our shareholders for being so patient during our journey.”