In the first nine months of last year, venture capital firms invested $383.6 million in the mobile industry. But in the same period this year, funding dropped by 57 percent to $163.2 million, according to the National Venture Capital Association (NVCA) and Thomson Reuters. Moreover, mobile funding has slowed every quarter this year, from $81.8 million in the first quarter to $55.6 million in the second and $25.7 million in the second.
Sure, that's real money, but it pales beside the billions pumped into Web startups during the bubble and into the software sector today: Venture capitalists invested $2 billion in software companies during the third quarter of this year, up from $1.6 billion in the previous quarter and the highest quarterly total since late 2001, according to the NVCA.
Is hiring for mobile out of hand?
We've all heard or seen the examples of extravagant spending during the Internet bubble: the industrial-chic offices equipped with foosball tables and catered gourmet lunches. Those perks may have been excessive, but the real destroyer of the balance sheet was the payroll. The Silicon Valley startup class of 2000 started with 27,000 new jobs. A year later, that number had soared by nearly 28 percent to 34,500.
Despite the wild expenditures, more than 90 percent of the startups made it past their freshman year, largely because venture-funded companies nearly always have enough money to get through that period, the BLS study found. But by 2002, survival rates dropped to about 50 percent and kept on declining.
If you're wondering if a particular company making you an offer is likely to be stable, wait until it has at least two or three years under its belt.
Those numbers track with anecdotal evidence I've gathered in discussions with young companies recently. Hiring is clearly very strong, but although salaries are rising, they aren't reaching the heights of 2001, and companies aren't breaking the bank with flashy but unnecessary expenditures.
My bottom line: There is some danger that the mobile sector will suffer a crash if venture funding continues to drop. That's exactly what happened during the Internet boom and bust. But if mobile companies control spending and investors refrain from pushing valuations to ridiculous heights, mobile can avoid the fate of the dot-coms.
This article, "Beware the mobile tech jobs bubble," was originally published by InfoWorld.com. Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.