CB Insights: On-Demand Mobility Services Funding Trends and Investment Landscape in the U.S.
In recent times, the “on-demand economy” has become a market darling. Examples include ride-hailing app Uber, home services application Handy, and house-call physician service Medicast, which are permeating every corner of daily life and gradually becoming integral to people’s routines. Commonly defined, the “on-demand economy” refers to economic activities in which technology companies create platforms that provide goods and services instantly online, while fulfilling consumer demands offline.
Recently, CB Insights released a report in conjunction with the On-Demand Conference held in May. The report provides an in-depth analysis of investment and financing activities among on-demand mobility service startups, covering overall funding amounts, transaction volume trends, and the most active venture capital firms.
Since 2010, total funding for on-demand mobile services has reached $9.4 billion.
In 2014, investment activity in the on-demand mobility services sector surged by 514% year-over-year, with total funding reaching $4.12 billion. In just the first four months of 2015, this sector raised $3.78 billion; for instance, Uber secured $24 million in March, while Lyft raised a total of over $350 million across financing rounds in March and May. Based on the financing transactions completed so far in 2015, the volume has already reached half of that recorded for the entire year of 2014.
Uber, as a leader in this economic model: How much capital has flowed in?
Since 2010, more than 250 startups in the on-demand mobile services sector (excluding Uber) have secured up to $3.89 billion in funding. Compared with the same period last year, financing for on-demand companies surged by 316% in 2014. At the current pace, 2015 could see funding more than double that of 2014, setting a new record.
Uber’s success not only had a major impact on boosting the on-demand economy, but also exerted a tremendous influence on overall funding levels. In 2014, Uber’s fundraising volume was 39% higher than the combined total raised by all other on-demand mobility services throughout the entire year.
On-demand mobile health services saw their lowest angel-round transaction volume in five years in 2014
In 2010, seven out of every ten investment and financing deals in the on-demand mobile services sector were angel rounds. By 2014, this figure accounted for only 31% of all investment and financing deals for the year. As on-demand companies continued to attract capital, the volume of Series B financing transactions reached a five-year high in 2014. Combined, Series B and C rounds accounted for 29% of the total investment and financing transaction volume for the year.
On-demand trading volume is impacting the previously typical mobile trading model.
As shown in the chart, on-demand mobile services appear more attractive than mobile software, a trend that is particularly evident in Series A and B financing rounds. In 2015, the average transaction size for Series B rounds in on-demand mobile services exceeded $30 million, whereas in the mobile software sector, it stood at only $15.3 million.
Since 2010, the number of investors focusing on the on-demand economy has grown 14-fold.
In 2010, fewer than 20 investors were focused on on-demand mobility services; however, by the end of April 2015, this number had surged to 198. The above business social network graph highlights the rapid growth in the number of investors.
Top 3 Most Active Investment Firms: SV Angel, Andreessen Horowitz, First Round Capital
Over the past five years, SV Angel has been the most active VC in on-demand mobility services. Andreessen Horowitz ranks as the second most active investment firm, with portfolio companies including Caviar, Lyft, and Instacart, while First Round Capital comes in third.
Compiled by: Mo Renying | Edited by: Luo Xiaosou