The increased usage of smart mobile phones around the globe has caused an increase in demand for mobile applications and messaging. The Venture Capital Activity in the Mobile Applications Industry - August 2013 blog post shows that from 2008 to 2013 YTD there has been an increase in the financings of portfolio companies with a primary focus in the mobile applications industry. This blog analyzes the performance data of venture capital funds which have exposure to mobile applications and mobile messaging.
Preqin’s Performance Analyst has performance data for over 1,600 venture capital funds, of which 260 of these funds have exposure to investments in mobile applications and mobile messaging. Examining the median net multiples for these funds with a vintage from 2000 to 2012 shows that all of the multiples are higher than 1.00x, except for vintage 2012 which has a median multiple of 0.91x. Vintage 2001 funds produce the highest median multiple of 1.27x. The median multiples of funds which have an exposure to mobile applications and messaging are higher when compared to the median multiples for all venture capital funds; with the exception of 2002 vintage funds.
Across the same vintages, the median net IRR for venture capital funds with exposure to mobile applications and messaging are all in the black. The highest median returns are witnessed by vintage 2008 and 2009 funds, 10.4% and 17.2% respectively, which are comparatively higher than the median returns for all venture capital funds of the corresponding vintage years (7.6% and 12.0%). This reflects when mobile applications and messaging started to become popular with release of the original iPhone during 2007 and other competing smart phones entering into the market. The high net returns shows that fund managers who recognised this trend in smart phones have the potential to generate favourable returns.