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Venture capital investment in mobile marketing and advertising skyrocketed in 2011: report

Venture capital investments in mobile marketing and advertising grew from $128 million in 2010 to $592 million in 2011, according to a new report from research investment bank Rutberg & Co. Investment levels in  mobile commerce and payments companies was also up significantly, growing from $276 million to $558 million during the same period.

Overall, venture capitalists invested $6.3 billion in mobile in 2011, up from $4.5 billion in 2010. The Venture Capital in Mobile 2011 Review report found that investment in mobile by venture capitalists as a percentage of overall technology venture capital grew from 30.4 percent in 2010 to 42.4 percent in 2011.

?The numbers are tremendous,? said Rajeev Chand, managing director and head of research at Rutberg & Co., San Francisco. ?Mobile is quickly becoming ubiquitous.

?Also, entrepreneurs in mobile are attacking every sector and business?if there?s a billion dollar market or a multi-hundred million dollar business, you can be sure that there are entrepreneurs who are trying to rethink the way that market or business works through mobile,? he said.

High profile successes
Last year?s investment level is almost equal to venture capital investments in mobile in 2006, which was the highest year this decade with $6.4 billion in investments.

Investment growth in mobile marketing and advertising companies was driven by a variety of factors including the high profile successes of companies such as AdMob and Quattro, continued strategic and financial growth in companies such as Millennial Media and InMobi, the substantial growth of ad spend in mobile and continued opportunities for innovation, as mobile advertising is still in early stages of development.

Mobile commerce and payments companies attracted significant investment levels because of the growing opportunity many see here.

?Mobile commerce and payments represents one of the largest opportunities for investors and entrepreneurs,? Mr. Chand said. ?Mobile is re-shaping the way consumers shop and transact, and there are interesting opportunities for disruption across the value chain.

?We anticipate continued growth in mobile commerce and payments investments in 2012,? he said.
Investment in mobile health also grew significantly last year, up from $209 million in 2010 to $356 million last year.

By mobile sector, $1.8 billion went to application related investments, $2.6 billion to infrastructure, $1 billion to devices and $500 million to carriers and $400 million to semiconductors.

Strategic investments
The top five companies to receive the largest influx of venture capital in 2011 were Lightsquared, which raised $265 million, InMobi, with $200 million, Plastic Logic with $200 million, Jawbone with $159 million and Tower Cloud with $155 million.

The most active venture capital investors in 2011 were Sequoia Capital, Intel Capital, SV Angel, Google Ventures and Kleiner Perkins.

One in five deals involved strategic investors, with the most active strategic investors including Intel Capital, Google Ventures, Qualcomm Ventures and T-Venture.

?One of the biggest surprises in the results was the continued role of strategic investors,? Mr. Chand said. ?One in five deals in mobile continued to involve strategic investors.

?Corporations view mobile as a new opportunity, where they can learn from and establish positions through mobile startups,? he said. ?We expect the role of strategics to continue in mobile venture capital.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York