Tech Industry

On-demand apps are riding a huge wave of investments

Uber's been the big kahuna, but funding for on-demand apps is booming overall -- and the deal-making looks likely to intensify this year.

The on-demand app market is raking in billions in funding. CB Insights

If you follow the money, it'll lead you to the world of on-demand apps. Dozens of new companies seem to be popping up everyday that let people order whatever they like -- a haircut, groceries, a taxi -- with a tap of a smartphone button. And investors are joining in.

Venture funding for the on-demand industry jumped to 79 deals in 2014, totaling $4.12 billion, according to a new report by data analyst firm CB Insights. That's up significantly from 13 investments in 2010, worth a combined $57 million at the time. Overall, the industry has taken in $9.4 billion since 2010, with deals growing more than 513 percent in just the last year alone.

And what of this year? The firm said the deals struck in 2015 are on their way to double last year's totals; 39 deals and $3.78 billion have already been invested in sharing-economy apps so far this year.

"When we look at industries like digital health and bitcoin, those are growing," said CB Insights analyst Matthew Wong. "But on-demand is on a different normal than what these industries are."

The venture world already knows what many of us are just starting to notice -- that on-demand apps are exploding in usage. Using this widening array of services, people can instantly find someone to watch the kids, as with UrbanSitter, or get a hairstylist sent to their home with GlamSquad. There are even services like Luxe that will park your car or UnwindMe, which will get you a massage. This sector has grown from being nearly nonexistent five years ago to now covering hundreds of startups.

On-demand ride-hailing services, like Uber and Lyft, are taking the biggest piece of the market. Uber is now the second-highest-valued venture-backed company in the world, with a total of $5.9 billion in funding and a valuation of $41.2 billion. In fact, Uber raised 39 percent more funding than all other on-demand services combined in 2014. Although Uber is carrying the heavy load of investments, Wong said funding growth for other on-demand companies is still significant.

"Year over year, the growth is well over 200 percent," Wong said. "When you add Uber as a juggernaut on top of that, it just explodes."

Some of the other companies that are reeling in funding include food delivery services Sprig and DoorDash; Shyp, which lets people ship packages; and hotel deal service HotelTonight.

Analysts believe that as more people around the world use smartphones and tap into these types of apps, the industry will just continue to grow. "That's something that could catalyze more activity and use," Wong said.