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Mobile delivers high exit multiples despite broader market slowdown

Mobile delivers high exit multiples despite broader market slowdown
From TechCrunch - January 31, 2018

In the world of mobile apps, numbers come in two sizes: big and bigger.

More than one billion people use Facebooks mobile app every day. Instagramanother Facebook propertyhas well over 100 million photos and videos uploaded to the platform every 24 hours. And untold millions of emails, instant messages, small financial transactions and other interactions are facilitated by mobile devices every day.

But what about the financial side of the mobile business; specifically, venture investment and returns? All of that activity should bring in some considerable revenue, and a lot of startups are seeking a niche in this expansive ecosystem. By taking a look at the numbers behind two different ends of the startup life cycleseed and early-stage funding on one side and exits on the othera reasonable understanding of the mobile market today can be had.

In doing so, well see just how much money has gone to startups in the mobile sector, and the (often good) returns they generate for investors.

Early-stage venture investment in mobile may be a bright spot

In prior coverage,Crunchbase Newsexplored the performance ofU.S. venture funding, and, at least as far as seed and early-stage investment goes, 2017 was not a great year.

At the early stage, which consists of Series A and Series B rounds, deal and dollar volume is down from highs set around 2015. And while weve asserted that this trend is widespread, there are bright spots in the early-stage market. Mobile may be one of them.

In the chart below, we display seed and early-stage funding round data for startups inCrunchbases mobile categorygroup from 2007 through the end of 2017.

This broad group includes companies in a number of categories, encompassing everything from mobile payments and mobile health apps to iOS, Android and, yes, even Windows Phone and Palm OS. And despite declines in overall deal volume (mostly attributable to reporting delays), the pullback from 2015 highs havent been as precipitous as other categories or the market as a whole.

Since 2012, the average seed or early-stage round in Crunchbases mobile category group has been on the upswing, according to reported data.

Emerging industries may be driving growth in round size

Part of the increase may be driven by the types of companies that are being funded.

One of the main trends over the past several years is the emergence and growth of mobile-facilitated sharing economy services. Sure, most of us are familiar with ridesharing services like Uber and Lyft, but the market has grown to include a much wider array of services.

A vibrant and highly competitive market for dockless bikes emerged seemingly out of thin air, asCrunchbase Newshaspreviously covered. Just in the last quarter of 2017,LimeBike raised $50 million in its Series Bat a pre-money valuation of $175 million, and China-basedMobikeraisedan as-yet-unknown amount of private equity fundingfromLINE, the Japanese mobile messaging company.

Other mobile-focused apps in the sharing economy are gaining traction too.Hyr, a marketplace that connects traditional businesses with workers to fill hourly paid shifts, on demand, recently closeda $1.3 million seed round. And at the intersection of the real world and mobile, San Francisco-basedOmni, which helps its users store and rent out their extra stuff,closed a $25 million Series Bin January 2018.

The economics of mobile are conducive to massive exit multiples

Why the decent funding and exit multiples?

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