Is Mobile the Graveyard of VC money?

Are Mobile Start-ups there?

Can you name one successful mobile software start-up, e.g. one that sold for $100m+ and generated nice returns to its VCs?  If you cannot come up with a name, you might agree with a VC partner I recently met, who claimed that Mobile has so far been the graveyard of VC money.   With that in mind, I went crawling the web for the successful mobile exits.

The mobile telecoms industry is one of a mere few trillion-dollar industries, like automobiles, tourism and military.  It generates more revenues than either the advertising, TV, Internet or software industries.  Is it conceivable that despite its size it did not produce a single YouTube, Flickr, Hotmail, Skype or a Facebook?

I tried hard, but really could not find a single big exit for a mobile start-up. There are only a few that could be considered runner-ups to the titles “successful” but each has its issues:

  • AdMob is still private but going after the big prize of the #1 mobile advertising network.  They might make it to a $100m+ sale but with CPMs plummeting they will have to hang in there for a few more years at least.
  • Zyb generated a nice return to its VC but was still only a $49m deal.
  • M:Metrics at $44m, was not a huge deal either.
  • Loopt is still private, well hyped and with zero revenues, despite ABI’s dreamed-up target of $3bn for this segment.  With Google Latitude zero rating location-based-services, I doubt if their revenue model will stand.
  • JumpTap has with already raised $73m in funding since ’05, so I sure want to see how they drive a 3-5x return with Google, Yahoo and Microsoft buying operator deals for nine-figure sums.
  • Don’t get me started about MVNOs like this one, or this one or any of these ones.
  • Others like Shozu, Amobee are even further away from becoming the next big thing.

Unless someone can come up with a start-up which I have missed, it does indeed look like Mobile has been a graveyard for VC money so far.

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One thought on “Is Mobile the Graveyard of VC money?”

  1. You’re right…there haven’t been many major exits for VCs in the consumer-facing mobile services area. Perhaps this is because mobile-specific services are not an end in themselves from the consumer perspective, but part of a wider user experience?

    You could, however, argue that things like eBay, Facebook, Youtube etc… are actually ‘mobile’ services because so much of their access/content now comes from mobile devices. Perhaps consumer-facing companies which have tightly integrated mobile capabilities, but also span many digital channels are most likely going to produce the biggest exits?

    It is, however, a different story if you look at the business-facing, supply side of the mobile industry. There have been lots of USD 100m+ exits for VCs in this area.

    This serves as a reminder that most of the value in mobile has traditionally gone to the operators and handset manufacturers, hence the higher exits for companies which help those two sectors to deliver on their strategic objectives.

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