Digital deals to keep an eye on

The digital market is changing dramatically with investors placing significant bets across all key categories from e-commerce to social media or the internet of things. Drawing on deal data from analysts StrategyEye, Tom O’Meara reviews five key trends in the past 12 months which he expects will continue to be a major focus throughout 2014


1. E-COMMERCE IN EMERGING MARKETS

E-commerce continues to attract the lion’s share of venture capital investment globally, but it’s in emerging markets that the most intriguing investments are being made. Slowing growth in saturated Western markets, combined with the promise of a product-hungry online population in those territories that are often using mobile phones as their primary way to access the internet, equals big opportunity.

Significant investments: Snapdeal (US$133m), Flipkart ($160m), Lamoda ($130m), Lazada ($250m), Zalora ($100m).

2. A MULTITUDE OF MARKETPLACES

Collaborative consumption, the sharing economy and a desire for specialists that focus on a particular vertical or topic means online marketplaces continue to emerge in all shapes and sizes. Travel, food delivery and service-based marketplaces tend to attract the most attention, but there are various niches out there. As with pure-play e-commerce, marketplaces that focus on emerging regions are starting to become more significant.

Significant investments: AirBnb ($450m), HotelTonight ($45m), Uber ($258m), Lfyt ($250m).

3. NICHE SOCIAL NETWORKS AND SOCIAL MARKETING

Leaving aside the bumper investment rounds in high-profile players such as Pinterest ($225m), there are two clear investment trends in social media. Niche networks, often centred on a particular vertical, continue to attract cash, as do specialised social marketing startups designed to aid brands market themselves socially, as more and more advertising spending doesn’t just migrate online, but is also put into social media.

Significant investments: HootSuite ($165m), Snapchat ($50m), Hearsay Social ($30m), Whisper ($30m), Sulia ($6m).

4. CLOUD CONTINUES TO ATTRACT CASH

The huge investments in two leading players in this space – Dropbox ($350m) and Box ($100m) – may dominate coverage, but investors know there remains plenty more mileage in online storage and other cloud-based services. It’s a hugely competitive space, but there are various niche services that will continue to receive investment. Expect more cloud investments this year.

Significant investments: TOA Technologies ($66m), Metacloud ($10m), Apprity ($8m).

5. MORE HYPE THAN MONEY IN WEARABLE TECH

Despite the enormous amount of hype surrounding the sector, wearable technology is not receiving as much investment as you might think. The investment in Oculus VR ($75m) was notable, as was its subsequent acquisition by Facebook, but generally investments tend to be smaller bets across a variety of players. Apple’s iWatch may kickstart the sector, but expect gaming and the continuing investment surge in digital health to have as much of an impact in the long term.

Significant investment: WiThings ($30m).