iPhone startups and where the VC investment is going

A few days ago, the ChubbyBrain research team posted  results from an interesting study about VC/angel investments and iPhone startups.  The study looked at venture capital (and angel) investments into 17 iPhone startups and noted that the combined investment for these companies was $102.49 million. It has some interesting charts such as one that tracks investments and iPhones sold over time (number of iPhones sold seemed to follow the same trend as investments, – with a 4-6 month lag -)

One interesting data point to me was the pie chart showing where the investment was going. Here is the  comment I added to the ChubbyBrain site the day after they published their study.

It is interesting that companies in the social networking space are attracting more money than companies in the “games and entertainment” space and companies in every other space.

In the app store, it seems like social-networking apps are just around 5% of the top-paid apps and the top-free apps, while games and entertainment account for the overwhelming majority of top-paid and top-free apps. Of course, social-networking apps need high adoption rates to be useful to their users and getting to high adoption may require higher investments.

Incidentally, the iPhone is complementary, but not core to the business of the top iPhone social-networking apps (AIM, skype, facebook etc.)

[Btw as an fyi – Cascade Software Corporation is a bootstrapped startup company and we have never looked for VC/angel investment. Nevertheless, it was interesting to read the ChubbyBrain report]

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