Startups in the space raised over $1.5B during 2014 through 102 deals, a ~ 276% increase in funding along with a ~27% increase in number of deals when compared to 2013
In Tracxn’s latest report on the Mobile Communication space, we look closely into mobile communication companies i.e. OTT (Over The Top) communication applications or network based apps that facilitate mobile communication to/from mobile devices without any physical connection through wireless network. According to the report, approximately $4B has been invested into the sector with SV Angel, KPCB and Betaworks being among the most active investors.
The last couple of years have been especially interesting for the Mobile Communication space, witnessing a significant increase in funding, with a majority of the dollars coming in during 2014.
Startups in the space raised over $1.5B during 2014 through 102 deals, a ~ 276% increase in funding along with a ~27% increase in number of deals when compared to 2013. The year also saw an increase in the number average ticket size coming in through various late stage rounds. The reason for the bullish investor sentiment towards the space during 2014 could be the two large scale acquisitions that took place: Whatsapp’s acquisition by Facebook for $19B, and Viber getting acquired by Rakuten for $900M.
2015, on the other hand, saw the total funding amount drop marginally to $1.5B. The number of deals have also dropped to 55 signifying a substantial increase in the average ticket size indicating that 2015 saw lesser number of companies, probably the sector giants, garnering higher volumes of investments, signifying early signs of consolidation.
Notable rounds during 2015 include Snapchat raising $538M from Alibaba Group, and MiaoPai raising $200M in its Series D round led by Sequoia & others.
The theory of 2015 seeing smaller number of companies raising large volumes of funding is reflected in the drop of early stage and late stage deals. The sector has seen a dip in this regard, especially when compared to the highs of 2014, which saw an increase in both early and late rounds of funding.
In fact, due to the increase in funding activity in 2014, the year has also witnessed the emergence of the highest number of companies, at 147. In fact the sector has seen an upward trend in the number of companies founded in last 10 years, with ~ 60% of these companies being founded between the 2013-2015 timeframe. On the other hand, 2015 which has shown early signs of consolidation, has seen a dip in the number of companies founded.
When we look into the business models which are seeing the emergence of new companies, we have seen startups entering newer verticals like ephemeral and business messaging from 2012 onwards.
Business Models in Mobile Communication
The startups in the ephemeral space have seen the most success in terms of funding activity, raising $1.3B in the last 10 years. The sector, which includes companies that provide messaging services which are short lived, saw immense popularity during 2014, taking in a total of $859M in the year, with Snapchat alone raising $540M. This is especially interesting as the ephemeral space is considered to be a relatively new and upcoming sector, indicating that the success has so far been driven by SnapChat.
Messaging startups on the other hand is the most mature segment, and the second most funded, at a total of $792M. In this case, the segment is driven by MiaoPai, which raised $200M of the segments 2015 total of $297M.
In fact, in 2014 all-time funding high, ~ 50% of the deals took place in the Messaging & Ephemeral sectors, contributing to most of the last stage funding.
Preview the Mobile Communication Report here
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