Patricia Nakache


Patricia Nakache is a general partner at Trinity Ventures.

More posts from Patricia Nakache

Editor’s note: Patricia Nakache is a partner at Trinity Ventures. She has active investments in companies including mcommerce players, EAT Club, and ThredUP. Phil Carter is an associate at Trinity Ventures, where he focuses on mobile-enabled marketplaces and services and has supported recent investments in RelayRides and ZIRX. 

Last year represented a tipping point in mobile commerce investment, so as we begin a new year, we wanted to take stock by updating our m-commerce market map and offering our predictions for 2015.


A recent report by Digi-Capital estimates that VCs invested $4.2 billion in m-commerce from Q3 2013 to Q3 2014, far surpassing the $1.2 billion invested in 2013 and the $829 million invested in the previous two years combined. While much of this capital was poured into a few multibillion dollar juggernauts like Uber and Pinterest, it has also continued to fuel an explosion of m-commerce startups, including several in new subcategories.

In marketplaces, startups like EatWith and Feastly are betting they can replicate the success of P2P models like Airbnb and RelayRides to disrupt the $600 billion U.S. restaurant industry with in-home dining experiences. Meanwhile, On-Demand Services are emerging in several new subcategories, particularly in dense urban areas with high-frequency use cases. ZIRX and Luxe make commercial parking easier with on-demand valet services that let drivers drop cars off wherever they want, with optional add-on services like gas refills and car washes included.

And B2B models like Keychain LogisticsCargomatic, and Deliv are revolutionizing logistics at every part of the supply chain. Finally, in app-based services, there’s been a proliferation of new businesses focused on mobile health and wellness from Rise and Kurbo Health in nutrition to LanternTalkspace, and 7 Cups of Tea in mental health, among many others.

These startups are leveraging smartphones to intercept users in the course of their daily routines and help them to lead healthier, happier lives. We also added education and productivity, two established app-based service categories that did not appear in the first version of the market map.

Given that mobile devices only account for 1 percent of the $3.25T U.S. retail spending market, m-commerce is clearly still in its infancy, and we expect continued rapid growth in 2015.

A year of reckoning for on-demand services

If there was one m-commerce theme that summed up 2014, it was the explosion in on-demand services. In the last 12 months, many articles have been written about the “Uberification” of our economy, with Steve Schlafman’s deck published in April providing a helpful summary.

This trend has been led by Uber itself, whose value skyrocketed from a few billion dollars at the beginning of 2014 to $17 billion in June and $41 billion in its most recent $1.2 billion round. Yet there have been plenty of on-demand services that have failed to replicate Uber’s success, including many of Uber’s competitors in the ridesharing space that have struggled to demonstrate either exponential growth or positive contribution margins.

At issue for some on-demand services is not only intense competition in certain subcategories, but that their value proposition is not dramatically better than that of incumbents.

For example, in the home cleaning and laundry service categories, the benefits provided by a mobile application are less dramatic relative to ridesharing because these services are typically not delivered on a truly on-demand basis.

In subcategories where the market size is too small, the capital required to scale is too large, or the improvement relative to incumbent models is too marginal, we expect there to be a significant shakeout in 2015 as VC investment in on-demand services slows down and startups with no discernable path to profitability sell or go out of business.

The rise of visual commerce

The web is an increasingly visual experience, and it’s no secret that companies have capitalized on this trend by using photo rich content to attract large user bases. Pinterest is perhaps the poster child of this movement, having amassed 60-70 million users that are now being monetized through the use of promoted pins. Similarly, e-commerce companies such as Zulily have learned that high-quality photos consistently boost conversion rates.

On mobile, photos are even more important given small screen sizes, and contextual commerce companies large and small are increasingly using photos not just to acquire users but to monetize them.

According to a Pew Research Center survey conducted last year, 18 percent of smartphone users were using Instagram and 9 percent were using Snapchat as of October 2013. And just as Pinterest did on the web, these apps are creating new forms of visual advertising to capitalize on their user traffic.

Instagram launched video ads in October, letting brands directly target users in their feeds rather than relying on traffic to their corporate accounts, and expectations are that the service will introduce commercial transaction capabilities. Similarly, Snapchat released its first “snapvertisements,” which are interspersed in a user’s story feed and disappear forever after a single viewing just like ordinary messages.

We expect the trend toward visual commerce to expand as Facebook and Twitter build infrastructure to support transactions and other m-commerce startups increasingly rely on photos and videos to attract and monetize users.

The proliferation of “specialty” app-based services

In the same way that offline commerce has seen the rise of specialty retail, the App-Based Services category is also experiencing a proliferation of startups targeting niche markets, with the potential to expand into larger platforms.

Given the constraints imposed by mobile, it has become increasingly clear that App-Based Service startups are better off doing a great job meeting one need rather than trying to do a good job meeting many needs. We see this pattern in mobile health, where Glow and Ovuline have amassed highly engaged female user bases with initial products focused entirely on personalized fertility tracking and pregnancy support, and in personal finance, where apps like ActiveHours and MileIQ have achieved impressive app store rankings despite targeting narrow initial use cases in payday loans and business mileage tax deductions, respectively.

Going into 2015, we expect the trend toward specialization to expand into many other app-based service subcategories.

Annual m-commerce investment activity has risen more than 10x over the last few years. Every quarter, entirely new subcategories of mobile-enabled services are emerging, and we expect the momentum to continue in 2015 as VCs invest behind trends such as visual commerce and specialized app-based services. At the same time, in crowded categories like on-demand services, we predict that competition and heavy capital requirements will force consolidation over time, with players that have established positive contribution margins and favorable customer acquisition economics emerging as winners.

More TechCrunch

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

1 day ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

1 day ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo

Sony Music Group has sent letters to more than 700 tech companies and music streaming services to warn them not to use its music to train AI without explicit permission.…

Sony Music warns tech companies over ‘unauthorized’ use of its content to train AI

Winston Chi, Butter’s founder and CEO, told TechCrunch that “most parties, including our investors and us, are making money” from the exit.

GrubMarket buys Butter to give its food distribution tech an AI boost

The investor lawsuit is related to Bolt securing a $30 million personal loan to Ryan Breslow, which was later defaulted on.

Bolt founder Ryan Breslow wants to settle an investor lawsuit by returning $37 million worth of shares