Smartphone Sales Up, But Mobile Startup Funding Down

siliconvalleyinvestmentmobiles.gifThe booming sales of smartphones such as the iPhone and the growing popularity of mobile app stores has prompted a renaissance in the mobile industry and of course a big surge in startup activity. It’s reflected in the growing investments in mobile companies based in the San Francisco Bay Area, according to a report released by industry group Mobile Monday Silicon Valley. The group is going to discuss its findings (posted below) at an event later today on Monday.

The group points out that in 2000, only 14 companies received venture capital but in 2008, that number had grown to 90. There now are over 160 mobile companies in Silicon Valley. I take issue with them including companies such as Ribbit and Jaxtr, but still, the total number of mobile startups is going up — no question about it. And this data doesn’t include information about startups in, say, New York or Seattle.

According to the data collected by the group, nearly $1.17 billion was invested by venture capitalists in 2007, a number which was cut to $851 million in 2008. While the total dollar amount went down, the total number of companies that received VC dollars went up, to 90 from 75 in 2007. The downward trend in mobile-focused investments has continued through the first half of 2009, with only $354.7 million invested. (Related post: What Happened in Mobile in Q2 2009. You can also sign up with GigaOM Pro to get the latest research on the mobile Internet for $79 a year.)


Last year there were three major deals adding up to over $600 million. These included Microsoft’s purchase of Sidekick-maker Danger for $500 million. In the first half of 2009, there were quite a few acquisitions, though many of them were small, such as Amazon’s acquisition of SnapTell or RIM’s acquisition of Dash Navigation for $8.3 million. I wonder if the current iTunes App Store fiasco is going to dampen investments in the mobile sector further. Thoughts?