Venture Goes Mobile as 3rd Quarter Deal Activity Hits 12-Year High

Xconomy National — 

Venture deal activity hit a 12-year high during the third quarter, and big VC investments in Uber, Kymeta, and Flipboard helped push venture funding for U.S. mobile startups over $1 billion for the first time, according to a report today from CB Insights.

The New York financial data firm says the 857 venture deals nationwide represented the highest deal count since 2001, marking a 6 percent increase over the 807 deals in the previous quarter and a 2.6 percent rise over the 835 deals in the same quarter of 2012. The $7.2 billion in VC investments was only 3 percent more than the $7 billion invested in the previous quarter and was a 4 percent slip from the $7.5 billion invested in the third quarter of 2012.

Money going to seed-stage companies accounted for 29 percent of all deal activity, and was likely a factor in the higher deal count in the three months that ended Sept. 30. CB Insights says it was the highest level of seed-stage deals since the third quarter of 2012.

The Internet sector continued to claim the biggest share of venture dollars (over $2.9 billion) and deal flow (408) during the quarter. But CB Insights says the $1.1 billion VCs invested in mobile and telecom startups was the first time venture funding has topped the $1 billion threshold in a quarter. The 150 mobile deals also was a new high and exceeded healthcare’s deal count (110) for the first time.

Q3VCtrend2013“For venture investors, mobile is the next frontier,” CB Insights CEO Anand Sanwal told me by phone yesterday. Three mobile deals accounted for nearly 42 percent of the venture dollars invested in mobile, with San Francisco-based Uber raising $361 million; Redmond, WA-based Kymeta raising $50 million; and Palo Alto, CA-based Flipboard raising $50 million.

Venture activity nationwide was distributed throughout 15 segments of the mobile sector, with a once-hot segment, mobile gaming, declining to just 2 percent in the third quarter (from 5 percent in the prior quarter). Apart from the Uber, Kymeta, and Flipboard deals, the biggest slice of venture funding in mobile (6 percent) went to startups focused on business intelligence, analytics, and performance management. The biggest percentage of deals (9 percent) went mobile startups focused on customer relationship management. (In the CB Insights report, Uber, Kymeta, and Flipboard were classified as “other,” a catch-all 16th segment that comprised 38 percent of the total mobile deal count and 59 percent of the VC dollars.)

In trend-setting California, mobile was the … Next Page »

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