As most consumers nowadays would agree, one of the most useful consumer devices is the smartphone. VCs happen to concur. With that said, they find some spaces in the mobile tech sector to be more exciting than others. Below is a list of the 6 top sectors that get VCs excited:
1. B2B Business Solutions Mobile Applications
More and more, businesses are turning to mobile applications to streamline their business and/or adopt an entirely new business model that is dependent on these technologies. Some usch mobile applications include Flurry (mobile analytics), AdMob (mobile advertising) and Urban Airship (mobile push messaging). What makes these solution providers so attractive is their straight forward business models and large market opportunities.
2. Location Enabled Applications
Businesses such as Uber (ordering a ride when you need it) and HotelTonight (finding a place to stay overnight) also employ a straightforward business model, they take a percentage of every transaction. Noticing a trend?
3. Mobile Automation
Another space that VCs are investing in are mobile applications that control non-mobile products such as Nest (mobile control of building thermostats) and eSecure (mobile control of building alarm systems). These applications make other services much more useful and provide on-the-go access. They also provide opportunity for large acquisitions by major industry players.
4. Mobile Payments
Mobile payment applications such as iPhone’s square also employ a simple business model, they take a transaction fee. They also provide businesses with loyalty programs and couponing services. The beauty in the business model here is that they have a strong value proposition for all parties involved.
5. Mobile Games
Though mobile games are a dime-a-dozen and it is very much a hit driven business, the leaders of these simple games (Angry Birds, Minecraft, etc) generate hundreds of millions of dollars in sales.
6. Photo Applications
The success of companies like Instagram, Snapchat and Vine is no secret. In a similar boat are mobile messaging applications such as WhatsApp and Voxer. While these companies do not have early proven business models, those that make it big can implement one down the road.
Keep in mind, the key to VC investment in mobile and the internet in general is to invest in what hasn’t already been introduced. Rather, VC investors are looking for the next best thing. Nonetheless, what we can learn from the categories above is that they like simple business models that can scale, quickly.