Mobile commerce startups draw billions in venture capital

Venture capital is proving to be a great source of funding for mobile web startups, new data shows.

With mobile penetration growing worldwide, it’s hardly surprising that there’s a bustling startup scene with young companies making the most of the opportunities offered by mobile internet. The rest of the world is also catching onto these firms’ potential, and investment is flooding into the sector.

The latest Mobile Internet Investment Review for Q3 2014 from Digi-Capital shows that over $19.2 billion (£11.9 billion) has been invested by venture capitalists, private and corporate investors and equity groups in the past 12 months. Compared to the same quarter last year, that’s a dramatic increase as an eye-watering 232 per cent.

Mobile commerce was the biggest beneficiary, with $4.2 billion spent on startups in that segment alone.

That’s perhaps justified, given that mobile shopping, peer to peer payments and other associated services are growing rapidly worldwide and there’s a particularly strong demand for supporting tech.

Close behind came the travel and transport category, which received $3.3 billion in investment from external sources over the period. Utilities took third place with $1.8 billion, after which the ever-popular gaming sector received $1.1 billion.

Gaming startups have lost a little of their sheen recently, after disappointments such as Candy Crush maker King’s unsuccessful initial public offering a few months ago, but it’s encouraging to see that investors haven’t been put off some of the original and promising new firms out there.

These major categories may have attracted the headline levels of investment, but mobile internet startups have attracted investment in a number of important sectors. Food and drink, enterprise/b2b and social startups all drew around $0.9 billion, with tech not far behind at $0.8 billion.

As firms look to capitalise on the trend towards mobile usage, it’s unsurprising that prospects are also good for advertising and marketing startups in the mobile sector.

Investors clearly see the potential, having injected $0.8 billion to the sector worldwide in the past year.

With messaging, music, lifestyle and finance also among the popular categories, mobile internet startups are nothing if not diverse. But they’re also great choices for investors, since they tend to offer strong returns.

“Institutional investors have seen their faith in mobile internet justified, with the Digi-Capital Mobile Internet Index of 78 public companies in and around mobile internet giving a 28 per cent return in the last 12 months,” said Tim Merel, Digi-Capital director.