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Fueled by Uber, the mobile on-demand space is soaring!

On-demand companies raised $4.12B in 79 deals in 2014, up from $672M in 54 deals in 2013

Financial trends and news by Steven Loeb
May 14, 2015
Short URL: http://vator.tv/n/3dcb

In the last few years, on-demand has gone through the roof. It's actually getting to the point where, frankly, maybe people could actually stand to wait a little bit longer for things. We don't want everyone to get spoiled, do we?

The most well-known company in this space is probably Uber, and its success, and ability to raise unbelievable amounts of money, has lifted the entire on-demand industry, according to the On-Demand Industry Trends Report from CB Insights and the On Demand Conference, released on Thursday. 

Investment activity in on-demand mobile services rose 514% year-to-year in 2014, to hit a total of $4.12 billion, up from just $672 million in 2013. And this year is going to be even better: with 39 deals, already half the number for all of 2014, and $3.8 billion raised, it is now being projected that venture investment to the on-demand sector is set to more than double in 2015.

In fact, the first quarter of this marked the highest quarterly funding total on record, as on demand companies raised $787 million across 22 deals. On-demand mobile companies raised over $500 million in three of the past four quarters each, without counting Uber, as the company tends to skew the results. 

Uber, of course, has been the driving force behind all of this growth in the on-demand space, with around $6 billion in funding. How much is it actually throwing off the results? Consider this: in all, $9.4 billion has been raised across 263 deals since 2010; when Uber is taken out of that equation, that number drops down to just $3.89 billion across 250 deals. 

Even more impressive is that Uber raised 39% more funding than all other on-demand services combined in 2014. All those other companues raised $1.7 billion together, while Uber raised a couple of $1.2 billion rounds on its own.

With or without Uber, there are signs that this market is starting to mature, as seed and angel funding round accounted for only 31% of deals in 2014, as compared with almost 70% of the deals in 2010. Series B deals, in particular are doing well, hitting a five-year high in 2014, with 21%, up from 16% in 2013 and only 5% in 2012.

Mid-stage deals, meaning Series B and Series C together, took a combined 29% of deals last year.

On-demand is not only seeing more deals, but they are larger than ever before. When looking at the deal size, those for on-demand mobile startups are larger than the deal size for the average mobile software company.

The average on-demand Series B for on-demand companies, which was  spiked by a series of deals worth $30 million or more, is $36.7 million. The average Series B deal size for all other companies is less than half of that, at $15.3 million.

The report also took a look at the most well-funded on-demand companies. Coming out on top is Uber, obviously, with an absiolutely incredible $5.51 billion raised. After that, it's not even close. No other company in this space has even raised $1 billion.

Uber's biggest rival, Lyft, comes in second with $862.5 million, followed by Airbnb with $794.8 million, Instacart with $275 million and, rounding out the top five, Eventbrite has raised $197.8 million in venture funding/..

With the rise of the amount of money going into these companies, so have the number of investors. In 2010 there were fewer than 20 VC investors who had done a deal in on-demand mobile services. At the end of April 2015, that figure hit 198.

SV Angel has been the most active VC in on-demand startups over the past five years, while Andreessen Horowitz is the second most active, investing in companies like Caviar, Lyft and Instacart. First Round Capital rounded out the top three.

The rise of mobile has made the rise of on-demand service possible in a way it never could have been before. People want what they want and they want it now.

(Image source: bouncingoffcloudsdotcom.files.wordpress.com)


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