From South Korea-based KakaoTalk to Israel-founded Viber, mobile messaging apps are being used by millions globally. And as mobile messaging startups continue to proliferate, venture capital investors are stepping in to fund them.
In the past 12 months, companies that provide mobile messaging capabilities reeled in $212M in venture capital financing across 35 deals. Over half of that funding came in Q2’13, as Snapchat, Kik Interactive and MessageMe all took financing rounds in the tens of millions from prominent VCs including Benchmark Capital, Andreessen Horowitz and Union Square Ventures. Stripping out Tencent’s $63M investment into KakaoTalk in Q2’12, we see that year-over-year funding to the mobile messaging space has jumped nearly 60%.
While funding to mobile messaging startups has taken off, deal activity has dropped off over the past three quarters after a proliferation of seed deals in Q4’12 including TalkBits and Taiwan-based Cubie Messenger. In fact, seed deals have captured the majority of venture deals in the mobile messaging space over the past two years at 42%. A whopping 82% of deals have been at the seed/Series A stages as VCs continue to fund new startups hoping to garner a share of the mobile messaging space.
Geographically, mobile messaging has evolved into a global, and rather fragmented, market. For example, international markets including Japan, South Korea, Finland and Canada all saw at least one mobile messaging venture deal over the past two years. Venture-backed mobile messaging startups in the U.S. tend to reside in either Silicon Valley (40% of all deal activity) or SoCal (17%).