Архив метки: Rutberg Co

Consumer Is King: Record $4B Raised In Mobile VC In The First Half Of 2012, 25%+ In Consumer Apps


Attention mobile entrepreneurs: if you are looking for funding for your big idea, now might be a good time to work in a consumer angle if you haven’t already. According the latest figures from boutique investment bank Rutberg & Co., consumer apps were by far the most popular area for investment among VCs in the first half of this year, accounting for $1.008 billion in value, or just over one-quarter of the $3.9 billion invested in mobile companies worldwide — itself the highest level of mobile investment activity since Rutberg initiated coverage in 2001, and growing by $1 billion over the same period a year ago.

That makes consumer apps the single-biggest area for VC investment at the moment, but the story here is one of quantity of deals, rather than the size of individual fundings: when looking at the 10 biggest investments in mobile, the most valuable investments remain in non-software, capital-intensive areas like devices and carrier infrastructure. The biggest VC deal so far this year has been for Xiaomi Tech, which picked up $216 million in a Series C round from undisclosed investors. The first consumer app in the rankings is Evernote’s $70 million Series D round — coming in at number-seven.

And the next recognizable consumer names are hotspot shield AnchorFree, at number 10 for its $52 million round; Foursquare, coming in at number 12 for its $50-million round in March; and SoundCloud for its $50 million round.

Indeed, although consumer apps represented 26% of all VC value, it is strength in numbers: they made up 35% of all deals. In all, Rutberg tracked 166 VC investments in consumer mobile apps, out of a total 479 investments in the first six months of the year.

Investor interet in consumer applications, as you can see from the table below, has been rising over the last couple of years — a consequence of the growing popularity of smartphones and tablets and the apps  that run on them and other mobile devices like feature phones. But as the number of investments has grown, their mean value has declined.

Whereas the median value of investments in consumer apps prior to the introduction of the iPhone was as high as $9 million in one period (2nd half of 2006), today it is at a much more modest $2.5 million.

This is not a straight dilution in value, though: there has been a rising interest in lower-value seed and other early stage rounds. Rutberg notes that taking the full 479 mobile investments in H1, 61% them had round sizes of $5 million or less. Investors seem to be spreading their investments much more widely, and getting in on the action earlier, these days.

Mobile now represents 46% of all VC investments — so not quite the majority, but the highest proportion of total investments it has had to date.

Just as consumer app interest has grown very steadily, it looks like interest in other areas has been significantly more choppy. Some areas, like telecom infrastructure and semiconductors — once taking a significant proportion of mobile VC funding — appear to have fallen off the radar by quite a lot. That could also have to do with the maturity of the sector: a lot of the building work has been done (for now), and now it’s time to milk those networks for all the revenue they can give.

The full slidedeck telling the story is below:

Consumer Is King: Record $4B Raised In Mobile VC In The First Half Of 2012, 25%+ In Consumer Apps

Rutberg: 2012 Mobile Exits Tally At $6.5B So Far. More To Come, Mainly In The Form Of M&A, Not IPOs

money in hands

2011 was an impressive year for mobile exits: according to investment bank Rutberg  & Co. it topped out as the biggest-ever for mobile IPOs and acquisitions: $15.5 billion in total transactions, 63 percent higher than previous record holder, 2007. But halfway through 2012, Rutberg believes that this year could be either just as big or bigger: in the year to date, there have been $6.5 billion in transactions, according to new research out today.

Led by the (still pending) $1-billion acquisition of Instagram by Facebook and the $1.093 billion IPO of mobile ad company Millennial Media, 2012 has rung up exits totaling nearly as much as all of 2010. 2007 saw $7.1 billion in mobile exits, with values split nearly equally between IPOs and M&A. In contrast, 2012, up to now, has been much more uneven: $4.6 billion in M&A, with $1.9 billion in IPOs.

That is a trend that Rutberg’s MD Rajeev Chand believes will continue as investors continue to ruminate on the “dark cloud” of Facebook (and, perhaps to a lesser extent, Groupon and Zynga’s debuts) in the public markets. “Facebook’s IPO will have a delay effect on all tech IPOs,” he says, including those for mobile companies.

Over the last 11 years, as you can see from the graphic below, Consumer mobile services appear to have grown the most as IPO targets, although some of that may have been related to activity during the big dot-com bubble at around 2001.

The fact that Millennial Media and Instagram are the most valuable exits so far in 2012 point to another trend: the shift in value from infrastructure to other sectors like apps and services — a growth that Chand traces back to the rise of Apple’s iPhone in 2007 and the effect that it had on the whole ecosystem, spurring the development of apps and services catering to that business (such as mobile ads).

But infrastructure is still there, and ironically the two acquisitions Apple has officially confirmed in 2012 speak to continued attention to both sides of the equation: Israeli semiconductor and flash memory maker Anobit, reported to be bought for between $400 million and $500 million; and app discovery and analytics giant Chomp, reportedly for $50 million.

Among other non-infrastrcuture exits, after Millennial Media and Instagram, the next two most valuable exits were by operators acquiring to pick up new business and expertise — part of the trend Chand describes as “inorganic growth strategies” by businesses wanting to have more fingers in the mobile pie: the $321 million sale of mobile marketing and ad company Amobee to Singtel and mobile content company Buongiorno’s sale to Docomo for $289 million.

Funzio’s sale to Gree for $210 million, OMGPOP’s acquisition by Zynga for $180 million, and Clairmail’s acquisition by Monitise round out mobile content exits in the top 10.

Chand believes that mobile, along with other innovations in cloud and social media technologies, are fundamentally changing how consumers behave and businesses operate. Like others, Chand believes mobile is also gradually ceasing to be a category unto itself.

“In our view the PC Internet was a ‘dress rehearsal’ for what will come with mobile,” Chand writes. “We are ‘half a shade’ away from a time when the term mobile as an identifier will disappear.”

Even so, Rutberg has chosen to not include companies like Facebook in its mobile IPO tally, despite it having some half its 900 million+ users already accessing the site using mobile devices, and clearly focusing on the mobile platform as an engine for future growth.

“Our exits analysis focuses on private companies which are mobile first or principally mobile (revenues, users, usage),” Chand explains. “Facebook did not start as mobile first or principally mobile and is not included in our numbers.”

Ditto for one of the biggest M&A mobile plays, the acquisition of Motorola Mobility by Google for $12.5 billion, which closed in May. This, he says, is not included because Motorola is a longstanding public company, and “this chart focuses on venture-backed exits, to show the opportunity for entrepreneurs and venture investors.”

Judging from the graphic below, however, there seems to be a slight tailing off in terms of VC funding versus exits, perhaps a sign of how the space is maturing and attention is going elsewhere?

Image: 401k, Flickr

Rutberg: 2012 Mobile Exits Tally At $6.5B So Far. More To Come, Mainly In The Form Of M&A, Not IPOs