How many users should I have for my mobile app before I raise money from investors?

Since many venture capital firms use Zuput for Venture portfolio management, and due diligence research prior to investing we get a lot of questions from entrepreneurs on aggregate data that helps them target investors better.

Our platform features over 1.5 Million startups from over 350 categories, so we have extensive proprietary data that can help guide decisions for entrepreneurs.

There are over 23,000 mobile app companies worldwide in our database. Of these over 22,000 are privately held, so for the purposes of this post I eliminated large app companies such as Google and Facebook.

Of the over 22K, 1893 (8.57%) have raised some form of money from investors, whether angel, venture or some form of institutional capital. Compared to SaaS ventures (10.14%) that raised capital this is lower, but compared to eCommerce startups (4.31%) this is significantly lower.

We correlated data from other sources such as App Annie and app stores, we can roughly review the # of downloads for these apps, which is a proxy for # of users but not an accurate one.

The data below shows the distribution of these companies post funding.

Since we get data from companies typically 3-6 months after they actually raise the capital, the graph above is a great proxy for when they raised funding. Most companies raised money when they were between 250K to 1 Million downloads. Over 80% of companies that raised with more than 5 Million downloads were in China, and over 80% of companies with fewer than 50K downloads who raised capital were from the US.

I’d love your comments on if you have been able to raise money for your mobile app. Please comment below and dont forget to share this post if you like it on Twitter.

How many years does it take to get startups profitable?

The Zuput system features deep research in over 1.5 Million startups in over 350 categories (eCommerce, SaaS, FinTech, AdTech, etc.) from over 173 locations (Cities, countries, regions). Some of the data we collect is public and over 200K startups submit proprietary data each day. We obtain web analytics and email open rate data to revenues and net burn monthly.

Since many angel investors use our platform to manage fund operations, we get questions about aggregate data frequently. One such question is “How many years does the average startup take to get profitable”?

Since there is no “average startup”, we will take a look at the top 5 categories of companies we have on our research platform – eCommerce, SaaS, Mobile applications, Games and Consumer Internet.

As you can see from above from our system, eCommerce startups have taken an average of 1.9 years to get profitable, while Consumer Internet companies took the most time, over 4 years.

While these are averages, and span countries, locations and both funded and not funded startups, another questions is the number of companies this represents. The chart below has the total number of companies in each category for who we have data.

To learn more, create a new account on Zuput and start researching startups today.

What is Microbiome? Which are the most innovative startups in the Microbiome space?

The word microbiome is defined as the collection of microbes or microorganisms that inhabit an environment, creating a sort of “mini-ecosystem”. Our human microbiome is made up of communities of symbiotic, commensal and pathogenic bacteria (along with fungi and viruses) all of which call our bodies home.

These communities exist in unique, complementary blends, and inhabit everything from our skin and genitals, to our mouths and eyes, and of course our intestines. The clusters of bacteria from different regions of the body are variously known as microbiota, including, for example, your skin microbiota, oral microbiota, vaginal mirobiota and gut microbiota, also known as “gut flora”.

There are 6 categories of companies within the Microbiome space. Oral health, Skin health, Intestinal health, Genomics, Personalized Drug treatments and Clinical health.

The Zuput platform for startup research has over 120 companies, VC funds, investors and innovative new companies in Microbiome.

The top startups are: Ubiome, Invitae, Microbiome Therapeutics, Second Genome and the key investor is Seraph Group.

In the last 5 years, roughly $210  Million has been invested in the Microbiome space over 79 companies in the space, with China and the United States leading the investments.

How much Venture Capital money has gone into BitCoin and AltCoins since 2012

The Zuput platform features over 600 companies in Bitcoin and Altcoin alone that have secured Venture Capital investments over the last 5 years.

The total amount of money invested is over $1.4 Billion since 2012, with the largest investments going to Coinbase, Chain and BitPay here in the United States. The US represents 284 companies and China has 217 companies with Venture funding in Bitcoin and crypto currency alone.

The largest investor in the space was Digital currency group with 76 investments (see below) in the space.

The other VC’s with significant investments are Panterra, Blockchain Capital and A16Z.

 

Why are there an increasing number of Angel investments and investors?

Startups such as Uber, Airbnb, Xiaomi and TransferWise are among over 150 privately held startups with over $1 Billion in valuation. These are the Fortune 1000 companies of the next decade. Unlike traditional companies however, these companies are going public later as the median time to IPO has increased from 4 years in 2000 to over 11 years in 2015. These startups are raising a lot more money privately and going public at much higher valuations, making it less likely for post IPO investors to get large returns in the public markets.

The top 20 most valued startups raised money in the public markets each year until 2011, but they have all raised private capital since then. This has resulted in less than 2% annual growth in the number of companies going public since 2001.

More investors seeking to fund startups earlier and participate in their growth since their inception. The rise in the number of accelerators such as YCombinator and online funding platforms such as AngelList has also contributed to support for startups at the earliest stages and made it easier for entrepreneurs to raise initial capital.

This has coincided with a rise in angel investing as well with over 200 (48% increase over the previous 12 years) new venture groups formed since 2012 and 100K (30% increase from 2008) new angel investors putting their money in startups.

Investing in public and private markets require diversity to manage risk, a strong deaflow and pipeline of available investments and securities to exchange capital for equity. There are many differences between private and public market investing including, lack of easy liquidity for investments, tools to manage portfolio and time horizon for investment return.

Angel Investment: State of the union 2016-2017

Of the 300K angel investors in the US, 24K were active (invested in at least 1 deal) in 2016. Angels invested a total of $21.1B in 71K companies in the US alone. While worldwide numbers are hard to come by, based on historical trends, the US represents between 45% to 50% of all angel deals. Business services (12.5%) and Internet (11.1%) made up the 2 most frequently invested companies by angels, followed by Retail (10.7%).

Women make up about 7% of angel investors and 12% of all founders who received angel investment. The average angel round was about $510K at a valuation of $2.2M. Individual angels reported investing $27K in median in 2016 in 2 (1.7 average) deals. Angels with over 10 invested companies and investing for the last 5 years had partial annualized cash-on-cash returns of 19% with some outliers at 40% annual returns, and fewer than 11% making less than 15% in annual returns.

There are roughly 700 angel groups in the US, with an average of 42 investors in each group. Over 60% of angel deals are equity and 24% are convertible debt with an average of 23% equity owned by angels after their investment round.

How do angel investors keep their portfolio organized?

When it comes to returns, many angel investors have experienced 20%-25% pre-tax and 15%-18% net of fees and taxes annually with their startup portfolio. While these returns are not common for all investors, the top 10% certainly experience better returns. The most important differentiation noticed from the Angel investment Halo report is the number of startups an angel invests in.

As the number of investments increases so does the probability of better returns. It is typical for most prolific investors to have better and risk adjusted returns than those who only invest in 2-10 companies, as the graph above shows.

The key issue is to then have a large portfolio, keep investing steadily over time and be patient. To manage a large number of startups in your portfolio (Forbes suggests 30-50 startups), the best angel investors use Zuput to manage their startup portfolio. While many of them previously used Excel spreadsheets and email, the combination of portfolio tracking, automated analytics and compliance reporting are key features they chose Zuput.