LONDON — IAR Systems Group has created a dedicated fund to invest in and incubate internet of things (IoT) security startups, committing $2 million a year over three years, initially. This will be done through a new business incubator called Ymir, located in Stockholm.

The IoT market, which could grow to 27 billion connections in 2025 according to Machina Research, faces significant security challenges, enabling attacks such as IP theft, counterfeiting and overproduction, as well as data theft and potentially life-threatening sabotage. Despite these threats, only 4% of products have security designed in, according to ABI Research.

Hence with security increasingly becoming a concern for developers of electronics products, a large number of startups are emerging with innovative solutions for simplified and strengthened security implementation.

Stefan Skarin, CEO of IAR Systems Group, said that investing in these new technology startups will help gain greater insights into new technologies and enhance the company’s security value. “Within Ymir, we will go for an initial limited ownership with open possibilities to grow, divest and acquire these startup companies," Skarin said.

While the physical incubator is in Sweden, the fund is targeting global startups.

“In terms of hot spots we are obviously looking at the UK, with the Cambridge team as its focus; Stockholm as a Nordic start-up hub; and Munich," said Haydn Povey, CEO of Secure Thingz, which was acquired by IAR in 2018. "However anywhere in Europe, North America, Asia-Pacific, India or elsewhere are on limits for the right opportunity.”

Povey added that the key focus will be to help align them to leverage the IAR partnership, with a global customer base.

The fund will look at seed and pre-seed companies, with investments ranging from around $100,000 up to around $1 million.