Former Ad Tech Exec Raises $55 Million to Invest in Mobile Startups
A longtime mobile ad exec, Nihal Mehta has gone from driving advertisers' dollars toward mobile to grooming the next generation of mobile businesses.
Mr. Mehta stepped down as CEO of mobile ad-tech firm LocalResponse (now Qualia) in 2013 to focus full-time on investing in mobile startups through the investment firm he co-founded in 2009, Eniac Ventures. Now the firm has raised around of money to pour back into the mobile tech landscape.
Eniac Ventures has raised $55 million to invest in 35 early-stage mobile startups. Mr. Mehta said the firm is specifically looking at companies that have yet to raise a funding round, are still developing their product and likely haven't generated any revenue.
The investment firm is particularly eyeing mobile startups in seven areas: connected devices, app development tools, personal utility, messaging and communications, enterprise, marketplaces and commerce.
Mobile ad-tech will also be a focus that spans several of the categories, Mr. Mehta said. He pointed to the rise of free ad-supported mobile apps like Snapchat and Instagram that don't run standard display ads.
"The next big wave of mobile ad tech companies will be bigger than we've ever seen because they're going to be forced to deal with a supply of new inventory. It doesn't live anymore in banner ads; it lives in messaging, communications, interstitials, natively," said Mr. Mehta, who sold the mobile-marketing firm he founded called ipsh! to Omnicom in 2005.
Mr. Mehta co-founded Eniac Ventures in 2009 with three fellow University of Pennsylvania graduates. In addition to its stakes in Airbnb, Circa and SoundCloud, Eniac Ventures has invested in a number of ad tech companies, including Mr. Mehta's former company Qualia, Adtrib, mParticle and Localytics.
Eniac has already made eight investments with the new fund -- in password replacement tool LaunchKey, on-demand parking service Luxe Valet and social commerce company Strut -- and plans to sign at least 15 more by the end of the year.
On average Eniac Ventures will initially invest $500,000 in each of the 35 startups. That's more than the $250,000 per startup that it averaged with its most recent fund of $12.9 million, but only adds up to $17.5 million. Mr. Mehta said Eniac Ventures is setting aside two-thirds of the $55 million fund as follow-up money to reinvest in the companies as they grow and go on to raise more funding rounds.
The follow-up money is important because "in today's market you can get money from anybody," Mr. Mehta said, but the best entrepreneurs are looking to get money from investors who can reinvest. "Funds that can't follow can create a negative signal to the marketplace. And oftentimes entrepreneurs want to know they're getting in bed with somebody who can support them all the way," he said.
A few companies Eniac Ventures has invested in have been acquired. Mobile ad-targeting specialist Metaresolver sold to mobile ad-tech company Millennial Media in 2013. Twitter acquired mobile retargeting firm TapCommerce last year. And ad-tech firm Beanstock Media bought mobile publishing technology company Onswipe.