Mobile App Funds Still ‘Bullish’ But Much More Choosy
It was just a year ago when two venture capital funds aimed at mobile applications launched to great fanfare: Kleiner Perkins Caufield & Byers’ $100 million iFund aimed at iPhone application developers, and RIM’s $150 million Blackberry Partners Fund created with Canadian firm JLA Ventures and the Royal Bank of Canada . A year later, with handset sales flagging and consumer spending down as the economy continues to struggle, the hype around mobile apps has all but disappeared, along with the “enormous wave of investments,” and the “glut of new companies” that analysts and industry watchers had predicted.
Instead, the funds are taking a much more cautious approach to the start-ups they invest in, according to the WSJ.com that spoke with both. Kleiner partner Matt Murphy who manages the iFund told the paper, “We’re not interested in funding lifestyle apps, or a garage business of one or two people…We’re looking for apps with proven traction….This is not a grant fund.” Royal Bank of Canada VP and head of its venture unit Kevin Talbot had similar news, and said Blackberry Partners Fund have “raised the quality bar higher than it was six months ago. He added, “There’s no competition for deals, so we’re just taking things slower.”
More on the funds after the jump.
In fact, the number of start-ups the funds have invested in is in the single digits, this despite being inundated with pitches. Kleiner got 1,500 pitches in the first month alone. So far, it’s invested in five developers, mobile social network Pelago, home-security app iControl Networks, mobile games publisher Ngmoco Inc., lifestyle-and-motivation app Booyah, and marketing platform Gogii. Blackberry has invested in five developers as well, including four that were disclosed: LBS city guide Buzzd, mobile payment app Digby, travel-management app MobiMate, and analytics firm Neuralitic Systems. Much of the money in both funds have not yet been invested, and though the VC’s say they are continuing to look out for potential investments, they will fund about the same number of firms as they did last year. Meanwhile, the emphasis is on apps that can monetize. Talbot told the WSJ.com “We’re still bullish. The question remains, how do they monetize?”
Related StoriesPosted In: Money, M&A & Venture Capital, Venture Capital, Companies, Apple, RIM
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