Some revealing numbers out from the analysts at Rutberg & Co. that point to how big mobile is in terms of tech investments today, and how consumer applications are the source of the most action at the moment.
The analysts say that mobile investments accounted for 42.4 percent of all technology investment in 2011 — or $6.3 billion for mobile startups in a year where, overall, venture capital investment in technology totaled $14.9 billion.
That’s a record proportion for the sector, and a massive spike on 2010, when mobile represented 30.4 percent of all tech investments worldwide, or $6.1 billion of investment. (See table at end of post.)
Ironically, while mobile is representing the greatest amount of investment, $6.3 billion falls just short of the biggest-ever year for mobile investment: that honor goes to 2006, when VCs pumped $6.4 billion into mobile technology.
Drilling down: As for the single-biggest category for investment in 2011, it’s consumer applications that have won the day — a sign of how the smartphone boom is leading to a big rise in the amount of companies rushing in to service those new consumers, and a subsequent rush of money men scrambling to finance them and get a piece of the action.
While no single consumer application made it into the top-10 mobile investments of 2011, the sum total of all the investments in the category pushed the total number of consumer applications investments to $1.33 billion.
Media infrastructure was the second-largest category for investment with some $900 million put into companies working in the category (services like mobile advertising are part of this latter group). Collectively, infrastructure was the biggest sector receiving VC money.
Infrastructure covers a diverse range of mobile-related startups, from mobile advertising (InMobi’s $200 million from Softbank being the second-largest deal of 2011), to technology used in backhaul and radio towers (Tower Cloud’s $155 million, and Eaton Towers’ $150 million respectively in these categories).
While consumers apps didn’t make the top 10, plenty of them made the top 20. The biggest of them all was for a service that is disrupting more traditional telecoms business: video calling service Tango picked up $50.7 million. Swiftly behind that was note-taking application maker Evernote, news aggregation site Flipboard, and check-in darling Foursquare — each picking up $50 million. Further along, Angry Birds maker Rovio picked up $42 million and photo sharing company Color picked up $41 million.
All these companies certainly saw a lot of attention in the last year, and they all cover hugely different areas of services. But one of them, Color, has already had to make a major pivot, losing one of its key founders in the process, and it’s still unclear what will happen with it next. Similarly, while Evernote has had a huge amount of attention for its core, note-taking app, the follow-up services have made significantly less impact on the mobile public.
Mobile is certainly a volatile area, with more than a little of a tech-bubble feel to it: Which of these, do you think, will be able to sustain their momentum and become profitable businesses in the years ahead?
Worth pointing out that this is not just the case for consumer apps, though: the single-biggest VC investment in mobile this year went to LightSquared, the LTE startup that picked up $265 million from a consortium of investors. The company is still trying to build out a network for its services, hence the huge capital buy-in. However, there are still big question marks over what will happen: the most recent report is that Carl Icahn has picked up $300 million in LightSquared debt, perhaps in anticipation of the company being unable to get its services off the ground after some regulatory hurdles around spectrum interference.
Sequoia Capital was the biggest VC in 2011, making 24 investments including several in mobile apps and media services. They included Bubble Motion, Bump, Clickatell, Color, Cotendo, DailyBooth, Evernote, Flite, Inkling, Inkling, Just Dial, MeLLmo, Meraki, MobileIron, MoboTap, Onavo, Quantenna, Sencha, Sourcebits, Square, Stoke, Synapsense, Trippy and Unity.
Rutberg also notes that more than one in five of all VC investments this year were strategic investments: those buy-ins made by companies like Intel (NSDQ: INTC) and Google (NSDQ: GOOG) that might potentially acquire the companies or use their services in the years ahead.
A couple of other notable points from Rutberg’s numbers: investments in mobile advertising services increased nearly five-fold last year: to $592 million from $128 million in 2010; and mobile payments investments more than doubled to $558 million from $276 million in 2010.
How does all this stack up for 2012? Mobile will continue to figure big: “We expect mobile to continue to be significant percentage within venture overall,” says Rajeev Chand, MD and head of research for Rutberg, but the fate of upcoming IPOs will also play a role. “Right now growth of overall venture is uncertain, depending upon how tech IPOs play out and what impact that has to late stage pre-IPO financings.”