With seed investment activity into the mobile sector growing, we dig into which industries within mobile are having the toughest time raising follow-on financing from investors.
Seed investing to mobile companies hit a five-quarter high in Q1 2014 with 44% of all mobile VC deals in the three-month period at the seed-stage. But as mobile seed investments continue to grow, the good ol’ Series A Crunch / venture capital funnel math will inevitably come into play.
And while company traction will be one of the primary drivers of follow-on investment, sentiment of the underlying industry in which the company competes plays a critical role as well. As a result, we wanted to take a look at which mobile sub-industries are having the toughest time raising follow-on financing after the seed-stage.
Here’s the data.
The chart below highlights the top 20 sub-industries based on the total number of seeded companies between 2009 and Feb. 2013.
Topping the list of sub-industries by seed activity was Location-based & Navigation services, followed by the consumer-facing Gaming and Social markets which have all notched over 60 mobile seed deals in the period. In addition, Advertising, Sales & Marketing and Customer Relationship Marketing have seen notable mobile seed deal activity as well.
Next, we looked at the number of companies that have not received follow-on funding or an early exit in 13+ months across the same cohort of mobile seed sub-industries (our earlier Seed Investing Report found it takes a little over 13 months to raise seed follow-on funding).
Unsurprisingly given its hits-driven nature, mobile gaming saw the highest percentage of seeded companies fail to receive follow-funding. Interestingly, despite the rise of funding to and bullish sentiment on digital health, mobile health and health & wellness companies have also seen a large share of seeded companies unable to receive follow-on funding.
Conversely, two enterprise areas – customer relationship management and application & data integration – have the highest rate of receiving follow-on financing. Somewhat surprisingly, mobile photo startups have also done well over the period on the follow-on front, with nearly 60% either obtaining additional financing or being picked up by a acquirer. The full list of industries with the % failing to raise follow-on funding by industry is given below.
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