Consumer Tech On The Rise

Details

By: Jamie Clarke 2011 saw Venture funding rise 22% in terms of dollars raised from 2010. This is compared to there only being a 4% increasing in deals funded. For consumer technology companies especially, the funding is present and available, and more startups are getting funded at higher rates.

For consumer technology plays, 2011 saw a 103% increase in the rates of funding. While this number fell below the increase in software and biotechnology companies, a 103% increase is nothing to shy away from and points to emerging trend. The dominance of the App marketplace, for tablets and smartphones alike, is becoming a new business phenomenon. As these App developers are forming successful companies and launching multiple products, their business models are becoming cemented and proving successful themselves. Companies like Rovio (The maker of Angry Birds) and Zynga lead the charge for successful consumer technology companies.

What these consumer technology companies need to be wary of however is when their funding is coming. 2011 saw a 48% decrease in Seed and Startup funding. Now this number is attributed to many things and not just that funding has decreased. The ability to start a company is cheaper than it has ever been, and is constantly becoming less costly, match that with the rise of incubators, accelerators and the venture creation model and Seed funding amounts only stand to decrease. 48% however is still a large drop, outside factors aside.

So while consumer tech is noticing an increase in funding, by large amounts, that funding is coming from Early Stage (+47%) and Later Stage (+37%) funding sources, while it would seem incubators and accelerators are taking care of the Seed area of funding.

For startups this is good news, for investors this means there is an opportunity. The Seed Stage is opening up for investors to be a part of, for them to be a solution to the use of incubators or accelerators. Consumer technology is on the rise, and existing companies are finding funding, but new companies entering the fold may be facing the limited options of incubators and accelerators unless Angels and Individuals step into the opportunity.