Following the Mobile CRM Money Trail
Venture capital and angel investors are getting increasingly excited about mobile CRM technologies. Mobile advertising is a hot area. Mobile analytics is another. Facebook's $1 billion acquisition of Instagram was a real eye-opener, prompting some CRM companies to integrate the social photo-sharing app into their products.
11/09/12 5:00 AM PT
Mobile CRM and its related technologies have intrigued developers and users alike for years. However, it wasn't until Facebook announced it would acquire Instagram for an eye-popping US$1 billion that the money began to pour into this space.
"That was the transaction that crystallized for us and a lot of folks that mobile is a hot growth area deserving of investment," Anand Sanwal, CEO and cofounder of CB Insights, told CRM Buyer.
Since the Instagram deal, venture capital and other forms of startup funding have been focusing heavily on mobile technologies.
Mobile VC investments were up 75 percent in the third quarter of 2012 versus Q3 2011, and 45 percent since the previous quarter, according to CB Insights' latest report on venture capital trends. Deal volume is also growing; it hit a five-quarter high of 116 deals in Q3.
For end users, the implications are clear: A slew of experimental features and platforms are receiving funding right now, and they could well become mainstream CRM offerings in a few years.
There is certainly a perception that the need is there, Sanwal said.
"There is the view that some of the legacy CRM providers have built good online apps but are a little behind the curve when it comes to mobile," he observed. "There is definitely early funding and other investment happening in mobile CRM solutions that look to address that gap, especially as folks on the road for sales are using mobile phones more and more."
Online Ad Space
Online mobile ads are also attracting investment right now.
StrikeAd, founded in 2010 by Alex Rahaman, has received venture capital financing on both sides of the Atlantic: $3 million in Series A funding from European venture capital firm DFJ Esprit; and funding from three West Coast investors -- venture capital firms SoftTech VC and Siemer Ventures, and angel investor Gil Elbaz, cofounder of Applied Semantics.
"We received good bit of interest," Rahaman told CRM Buyer. "Now is exactly the right time for mobile ad companies to tap these markets."
While end users -- that is, companies that use these technologies, or would like to use these technologies -- are no doubt pleased about the investment, they also likely want to know how quickly that money will reach them in terms of a viable product.
There is no rule of thumb for making that calculation, Michael Harrington, a partner at Fox Rothschild, told CRM Buyer.
"In general, a VC-backed company counts on having a five-to-seven-year lifecycle from the first funding to exiting this market," he noted. However, that is a timing that is based more on the nature of venture capital funds than a tech market cycle.
While that is largely still true, there are also signs of vendors adopting some of these technologies even before that cycle is up. The Instagram deal, for example, has inspired a few CRM vendors to incorporate an integration with Instagram into their offerings.
Nudge, a real estate vertical, is one example. It recently upgraded its digital marketing app to support an Instagram integration.
Another example is VenueSeen, a social media management platform with a new feature for running Instagram campaigns.
Where the Money Is Going
With that caveat in mind, it is very interesting to see which mobile technologies venture capital and angel investors are targeting.
Online mobile advertising, as StrikeAd illustrates, is a hot area. Mobile analytics is another. Flurry, which is active in this area, recently secured another $25 million and now reportedly has an eye on an initial public offering in 2013.