Companies targeting consumers raised the most of any single category, $1 billion in venture capital. That category is made up almost exclusively of app development startups. Such companies have raised big rounds with VCs (Path raised $40 million; Instagram $50 million this year right before it was bought for $1 billion by Facebook).
The biggest surprise for in the data has been all the money pouring into early stage and later stage mobile device companies. “When I first came to Silicon Valley 11 years ago, there wasn’t a soul who wanted to invest in a device company,” Rajeev Chand says. “Now there’s a proliferation of device companies, ranging from mobile health to accessories for smartphones.”
But Chand warns that just because young mobile companies are finding it relatively easy at the moment to raise seed-stage cash – amounts ranging from $100,000 to $500,000 – doesn’t mean the largesse will continue as they go after funding that can range from $1 million to tens, even hundreds of millions. “It will be a lot harder for them to raise series A, B, or beyond,” Chand says. “Most of the companies that raised seed funding won’t make it to the next level.” What will make the difference? According to Chand, start with engaging your users, then deploy a business model that can convert all those rabid fans of your mobile product or service into steady, predictable revenue – ideally a lot of it. As Facebook has shown everyone, if you can’t make mobile pay, you don’t have much to sell.