The consumer oriented businesses are ruling the roost in venture capital (VC) funding circles, with all the top five companies in the VC funding list being consumer focused. However, their profit making ability remains a question, according to GlobalData a leading data and analytics company.
China and the US have emerged as the leading global hotspots for VC activity. China, however, outpaced the US with three companies in the top five list. Interestingly, a majority of them are barely making profits.
Ride hailing apps, Uber and Didi Chuxing, have been the most valued businesses with a combined reported valuation of over $100bn. The ride hailing business model, which came into play in 2009 with the founding of Uber, is yet to show reasonable profitability.
GlobalData’s Deals analyst Naveen Kalluri said, “The drop in the valuation of Uber’s recent funding is an indication that these businesses are yet to find the right and sustainable model.”
The youngest of the top five, messaging app Snap, concluded an IPO in the second half of 2017. According to its Q3 2017 report, its losses increased eight times and the total costs went up by five times. Snap’s revenue, however, increased only by 1.25 times for the nine months period ended Sep 2017.
Ant Financial, with the most traditional business model among the top five, is the only company reportedly showing significant profits.
Analysts available for comment. Please contact the GlobalData Press Office at firstname.lastname@example.org.