Mobile: The Holy Grail of angel investors

BY aarrieta
Forbes Abril Tapa

I share my article from Forbes Argentina

One of the latest concepts that Steve Jobs left us as a legacy is the notion that we live in an era of what he called “post PC devices”, nowadays more commonly called Mobile.

The world has become much more mobile, since most people have a smartphone or tablet connected to the Internet which have the processing power previously reserved only for desktop computers. This shift in paradigms lets lots of opportunities arise to create new companies that explore new services making the best of the ubiquitousness that technology provides.

Only a few of these companies will become the corporations of the coming years as did Google, Facebook and Twitter globally, or Mercado Libre, Despegar and Globant in the local market.

A larger number of companies that will not become corporations will be early acquired by other corporations for hundreds of millions, such as Instagram, Mailbox, Yammer, Gwalla, Tweetdeck, Summly, Autonomy, Pop Cap, Gdgt or such Bixti, Three Melons , I.ndigo, ITBrain, Bolsa de Mulher, MeuCarango, Zipcode, CortaContas, CellBroker, etc. in our region.

What keeps every angel investor awake at night is to be able to find and help those companies so that they can become the next Mercado Libre in the Mobile world. This is because:

  • These days more smartphones are sold than computers
  • In the next two years the traffic of hits on websites and the advertising aimed at mobile phones will exceed traffic from personal computers.  Therefore, companies which nowadays base their income on online advertising such as Google and Facebook will need to improve their almost nonexistent presence on mobile in this regard.
  • In 2014 there will be more people using phones for what people used to use computers than people using computers.
  • E-commerce from mobile phones grows faster than e-commerce from PCs.
  • These days it is 5 times cheaper to advertise on mobile devices than in sites accessed from PCs, and this cost will level off soon.
  • The adoption speed of technological products is much stiffer every year.
  • Companies like Twitter, in just seven years, achieved more than 500 million tweets per day and more than one billion users.
  • Nowadays we use the phone for instructions on how to get to a certain place, see who to meet, where to eat, what deals are close to us.
  • Corporations find it more efficient to buy the startups that have proved they can achieve market traction than to invest in research and development.

The challenge of each new rising startup is re-imagining every application as a new way of doing things, not from a PC but from a smartphone, using geolocation, social relevance (tastes expressed in Facebook), the instant feedback that Twitter can provide, the viral word of mouth itself a hyper network or the ability to have a camera for pictures and videos and also the possibility of almost immediately sharing it with people who are interested.

This is the challenge of a new generation of companies that can conquer a new market for which large companies are not prepared because they are not willing to assume the risks of the number of failures needed to be successful, do not have the necessary DNA , and found that it is more efficient to purchase ready-made products than to develop internally.

This new generation of digital natives, born with a computer in their hands and who have a relationship with technology which is completely different from that of previous generations is capable of producing companies like Facebook, and, more importantly, CEOs like Mark Zuckerberg.

The opportunity for angel investors is to be a part of these companies from inception with a lump sum which is relevant for an individual but that will be insignificant for the company in subsequent years and help the company with business contacts and advice, which will perhaps be more useful that the funds invested.

These funds buy the rights so that by the time the sale or IPO of the company is carried out many will become millionaires or if very lucky, billionaires.

The risks are high but the opportunity is even bigger.

Be Sociable, Share!