Mobilize: Will Mobile Investments Return Next Year?

The Mobilize 09 VC PanelA group of venture capitalists with experience in mobile startup investments and $2 billion in capital among them said at the Mobilize 09 conference in San Francisco that they expect investments in mobile startups to pick up in 2010. John Balen, General Partner of Canaan Partners, who recently invested in mobile startup mCarbon, said they expect to see a lot of activity from mobile entrepreneurs throughout the rest of this year and next. Bob Borchers, General Partner of Opus Capital, agreed, and said heading into 2010, we should see investments pick up.

Well they couldn’t get much lower, given how the recession has knee-capped venture capital investments in general. The moderator of the panel, Larry Aragon, editor of the Venture Capital Journal, presented a slide that showed venture capital investments in early-stage mobile companies for several years, with a sharp decline in 2009.

But Mitch Lasky, General Partner of Benchmark Capital, suggested it might be more than the recession holding back mobile investments this year. Lasky said while we’ve all been infatuated with the iPhone and finding a killer iPhone app, the emergence of the iPhone hasn’t been that great for mobile venture capital investing. Basically startups have started focusing on building applications for the iPhone, and they haven’t been able to create the kind of revenue that’s attractive enough for venture capitalists to want to invest. Lasky said he thinks that’s one reason investors have “held back” from mobile investments.

Actual dollar amounts might also be down for mobile investing this year because mobile startups don’t require as much capital as they used to, said Rob Coneybeer, Managing Director of Shasta Ventures. While everyone’s scared of the elephant in the room — Apple and its iPhone — it has succeeded at bringing down the costs of mobile development. Coneybeer thinks that there will be a wave of growth coming soon associated with new modes of mobile advertising promotion as well as location-based services.

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