Venture capital investment in mobile app companies is on course to match 2019 levels amid COVID-19-induced difficulties
Venture capital investment in mobile app companies is on course to match 2019 levels amid COVID-19-induced difficulties
Apple unveiled four shiny new 5G-enabled iPhones at its launch event on 13 October. The California-based tech giant’s 2020 models offer faster download and upload speeds through 5G compatibility and more powerful hardware. Tim Cook, Apple’s CEO, said that iPhone 12 "provides a new generation of performance." These upgrades will allow mobile app users and developers to expand further in the already flourishing world of mobile apps. We use data from Preqin Pro to look at the key role venture capital funding has played in mobile app development in recent years.
Since the launch of Apple’s App Store in 2008 the number of available mobile apps has skyrocketed. Venture capital flowed to developers as more and more companies looked to reach and serve consumers through their mobile phones. The App Store, which held 500 apps on launch, is now home to just under two million apps and visited by half a billion people each week across 175 countries.
Fueling this rapid growth, venture capital financing for mobile app developers has skyrocketed since 2013, reaching an apex of $108bn in 2018 through 4,735 deals, as seen in the chart above. Deal value has since dropped 21% to $85bn in 2019, level with 2017’s total. Despite the challenging deal-making landscape in 2020, investment in mobile app businesses may yet match that of 2019: 2020’s total ($62bn) currently sits at 72% of 2019’s level with much of the final quarter remaining.
A number of high-profile firms have received venture capital funding in 2020. London-based FX and financial platform Revolut has held two Series D rounds this year, one in February for $500mn and one in July raising $80mn. The California-based platform Robin Hood Financial, which allows users to invest in various securities without paying commission fees, has held four financing rounds in 2020 for a total of $1.26bn.
Many high-profile app developers have looked to the public market for their exit, and this has continued into 2020. Companies such as RobinHood, Airbnb, and TikTok are expected to list publicly, and JP Morgan has reported an uptick in the number of investors requesting access to these pre-IPO firms.
As the world becomes more mobile and devices more sophisticated, users will expect new and improved services and solutions to be available through apps. Venture capital fund managers face the challenge of finding companies that successfully harness the power of mobile apps.