Ten years after the creation of one of the first IoT clusters in the south of France: IoT Valley Toulouse, initiated by the founder of Sigfox, we will see how this logic makes profits to all the value chain and whether it can be replicated.
In the south of France, Toulouse is renewed for its sunny weather, food specialties, and aerospace industry, with Airbus and EADS. There is a large community of engineers living in the area for decades.
Ten years ago, IoT companies also began to aggregate in the area, under the impulsion of Sigfox, originally from Toulouse. Initially TIC Valley (TIC for Information and Communication Technologies), the cluster was renamed to IoT Valley in 2015, for a better focused positioning.
The IoT Valley in Toulouse is not an incubator but an ecosystem, a place where start-ups, students, SMEs, and bigger companies can meet, exchange and create new ideas. There are now 40 start-ups and partner companies on-site, with more than 700 people working there.
Now the project takes another dimension with the construction of an huge space dedicated to IoT Valley: 20.000 sqm for 5.000 persons. The end of the project is scheduled for the end of 2022 to then expand to 100.000 sqm.
How it started
If you see the European IoT clusters map (here), you will notice the considerable amount of clusters everywhere on the continent. But only very few of them — if none — are achieving such a wide and profound dimension as the IoT Valley in Toulouse.
The main reason is probably the energy and the vision of Ludovic le Moan (Sigfox’s founder). The concept was to grow a 360° ecosystem fully permeable between students, engineers, start-ups and corporate actors. It was not made to create a galaxy only around Sigfox and its connectivity, but beyond.
Contrary to other clusters in Europe, that have been initiated by national or local authorities, the IoT Valley was a purely private initiative. When it comes to IoT, it’s difficult to dictate the creation of an innovative cluster ex nihilo. It’s a very complex architecture that requires the coordination of many different actors — hardware, software, telecoms — and genuine expertise. It’s not only a matter of money (European funds or other subsides), especially at the beginning to ignite the spark.
People have to want to come live round the cluster. Engineers or programmers in 2021 don’t experience unemployment, they are well-educated and geographically flexible.
Sun, cultural offerings, restaurants, architecture, easy access to the seaside and mountains, are, among others, key choice criterias for engineers and their families. Toulouse offers all this.
Since the 70s, Airbus has had its headquarters and assembly lines in Toulouse. This is the real cradle of a very deeply installed tech and engineers community, for half a century. Its main purpose is to be a strong networking hub and a facility to take on board skilled and diverse engineers.
The proximity (5 km) of another renowned cluster, the Aerospace Valley, allows a very dynamic pipeline for the IoT startup with activities connected to the plane and space industry. For drones, as an example, they can have access to a test field with a gigantic drone aviary. A startup specialized in aircraft inspection by drones (Donelce), was born in the IoT Valley and naturally joined the Aerospace Valley, where its potential clients and partners gather.
If the spark has to come from a private initiative, public funds come in handy for scaling. 42M€ is invested, mostly by the Region (the level we could compare to a US State). It is thus important not only to finance the operation but also to guarantee the future development of the cluster.
Indeed, if the first step is to build 20.000 sqm, the idea is to expand to 100.000 sqm in the following years. In order to book the surrounding land for this long-term objective, the intervention of public authorities is necessary. They can preempt those plots and avoid the cluster to bear tremendous costs.
A long-term vision, as developed by Ludovic Le Moan, has to be supported by politicians to give it the proper impact.
Negotiations between Sigfox (leading the cluster) and politicians have been hard. The Region wanted to reduce the scope of the project, and their investment. Sigfox threatened to leave the cluster, which would basically nip it in the bud (Sigfox will occupy half of the cluster).
A constantly evolving project
If the IoT Valley has already launched an incubator and a training program, we can then see what started as a catalyst for projects, then produce our own initiatives. Conscious of the shortcomings suffered by startups and larger companies, the IoT Valley created its 3 months bootcamp, dedicated to entrepreneurship. Launching such an initiative requires a solid brand, in order to attract motivated students — most of them already obtained a Master’s degree.
The IoT Valley is also now extending beyond purely IoT projects to industrial data management expertise. We know this is the biggest pain point in the success or the fail of an IIoT project. Huge companies linked to transport (SNCF) or retail (Carrefour) are setting up a camp on the campus.
The new buildings alone are considered as the living labs, where startups can test their prototypes (door-opening sensors, connected furnitures …) and have feedback from the community directly on site, from those who are likely to be their early adopter, buyer persona.
So to sum up, we can say that what is important for the success of such a project is:
- a private initiative, carried by a recognized actor of the industry
- the previous presence of an engineers community in the area (as engineering schools)
- a surrounding of worldwide industry actors which already puts the area on the map
- public funds for scaling and facilitating — second phase
- a living project with evolving missions and objectives, with flexible rules where everyone can use the place as a test bed
- an attractive surrounding (sunny, cultural, easily accessible, with a large entertainment offering)
Replicating such a model clearly can’t be done everywhere. A local government deciding without taking all those criterias into consideration is likely to fail. The history and geography of the places are as important as the money and the brains. In Europe or North America, we have the opportunity to have a strong industrial history disseminated all around the continent, starting from the local industrial identities forged through decades or centuries, which is, I think, the best seedbed for a successful cluster.
Some genuine examples of a century-old industry compatible with an IoT cluster : the automotive in Denver (US), the textile industry in Lodz (Poland), the shipyard in Greece or Le Havre (France), viticulture in Bordeaux (France).
About me // French Marketer who specialises in B2B tech and IoT. With the background of lobbying and over 10 years experience as creative director, I help IoT start-ups achieving stable growth, meaningful branding and long-lasting demand generation. More on www.dxm-agency.com