Allegion Ventures creates $100 million fund

Allegion has created a second venture fund with $100 million in capital to invest in IoT-related startups. The company, which is the parent of Schlage branded locks, plans to continue investing in software startups that provide cybersecurity and privacy services. The corporate venture fund will also look for investments in construction and property and asset management. Allegion plans to invest between $500,000 to $10 million in each company.

Allegion created its first corporate venture firm in 2018 with $50 million and has invested in an array of smart building and security startups. On the smart building front, it has invested in VergeSense, which provides sensors that count people in buildings, and Mapped, which provides APIs for connected building infrastructure. Most of its other investments were in companies that helped provide access to people in rental properties, while hot-desking at workplaces, in apartments, or other situations. It also invested in Pindrop, a voice security company. In the first fund, Allegion has seen one exit so far with Openpath Security, getting acquired by Motorola Solutions earlier this year. Prior to creating the initial fund, Allegion also invested in a smart home cloud provider Yonomi, which Allegion purchased and brought in-house.

“In fund one we learned the benefit of analytics and user data for how people move and how do you bridge physical and digital security,” said Bobby Prostko, managing director of Allegion Ventures Fund II. He added that a lot of the companies Allegion is looking at for the second fund have a cyber focus. Some are using AI and machine learning to assess threats while others are focused on authenticating users across different devices and platforms. Prostko is also interested in newer technologies such as zero-trust proofs and passwordless security.

Allegion’s business consists of far more than smart locks. The company is a major provider of access products such as the ubiquitous push bars used in commercial doors, commercial locks for assets, door hardware, and more. The company is trying to partner with companies that provide access software and other software that can help businesses make use of Allegion’s hardware in smarter ways. And, like many old-line manufacturers of physical devices, it is trying to find ways to keep from becoming a commodity as value accrues to software and connected devices.

More broadly, I’m glad to see Allegion continue to invest in IoT as part of a corporate investment strategy, simply because it feels like there has been a bit of lull in new funds from big companies focused on the sector. However, according to data from CB Insights, corporate firms have continued to invest even during the pandemic.  Amazon has its Alexa fund, which is somewhat tainted by Amazon’s history of investing in companies, and then releasing a competing product, and a few chip firms that have historically invested in IoT companies have slowed down.

Allegion will continue working with outside firm Touchdown Ventures to assess and vet deals.