New project hopes to connect mobile app developers with investors

Canadian software developers have access to a new mobile application project in the US promising to help software creators find financial backers. Described as a wholesale digital marketplace, a new project called appbackr links mobile application developers with funding partners. A developer signs onto appbackr for $25 US per month. There, they can post an idea for a new application. Members of the public can peruse the proposed applications, and if they see one they like, purchase wholesale “copies” for 35 cents per unit. For each purchase, appbackr sends 25 cents to the developer and keeps 10 cents. The developer can use the money to create the application. Once the app is uploaded to the Apple Inc. application store and sales start rolling in, funds funnel back to the developer, the investors, and appbackr. From an application retailing for $0.99, the developer gets 11 cents, the investor 53 cents, and appbackr gets about five cents. The rest covers Apple and Paypal fees. The appbackr idea “came about out of frustration and opportunity,” said Trevor Cornwell, the project’s founder and CEO. “I’ve been doing a lot of work with developers and also have concentrated a lot of my time raising money for ideas. The distance between coming up with ideas and raising money has always been long and slow. I’ve been looking for an idea that would speed up the process.” The company is running a closed beta software program for now, but on June 7, appbackr will release "invitation codes" for developers who want to submit proposals to the site. Cornwell said he’s seen “a number of .ca addresses” in the code request list. So far, appbackr has received 600 invitation code requests. The company plans to have 1,000 applications on the system by the end of the year. But some Canadian developers say the appbackr project won’t do it for them. “When we want to build apps, we can get the funding,” said Bill Wilson, head of MindSea Development Inc., an application development shop in Halifax, NS. “We haven’t had the need for any external investment,” added Adam McNamara, co-founder of Select Start Studios in Ottawa. “Unlike the venture-capital model, where calculated risk-reward assessments are made by experienced investors, this micro-VC, seed funding model may involve much less experienced investors,” he said. “Not being able to accurately assess risk versus reward of a given idea or team may lead to uninformed or even risky investments.” Still, Wilson said he sees merit in the project. “I know lots of other developers that are smaller, and have big ideas, but they have a day job and they can’t actually fund it,” Wilson said. “This is a great way for them to get started.” Rastin Mehr, head of Rastin Mehr Design Studio Inc., an application development firm in Vancouver, said appbackr speaks to his business. “We have been doing a similar concept developing open source software. few companies contribute financial resources, we build an app and give everyone a copy under the GPL while we maintain the copyright and continue to use, nurture, and profit from the application in different ventures.” He added that it’s a good way to see whether an idea “will fly.” “When people are willing to commit to an idea by paying money, that could be viewed as a good sign that there is a need for that application.” But developers said they’re concerned about application ownership with such a project. Does the developer own the intellectual property, the investors, or appbackr? “It belongs to the developer, period, full stop,” Cornwell said. But he added that the developer isn’t allowed to use the same intellectual property right to create a similar application under a different name on the Apple platform. McNamara said "theft" is also a concern. “Posting a concept for a truly revolutionary idea in a public forum runs the risk of having that concept copied and executed during your fundraising period,” he said. Cornwell said that is a relatively small risk. “Any idea you have, there are 50 people working on it already ... In concept, 1,000 things sound the same. When you see them live and working, you find that one application stands out.” Wilson noted that appbackr limits funding to $8,500 US, which may be too limited. “It would definitely be appealing to me if there was more money,” he said. “It would be much more appealing to larger established app companies that have ideas but spend all their time writing apps for other clients, as opposed to writing their own.” He added: “The contract work is good, sustainable business, but sometimes these guys have ambitions of their own, and want to put out the next great piece of software themselves.” Cornwell said the $8,500 US limit helps keep unscrupulous developers from trying to take more money than their apps are likely to garner on the Apple platform. The limit could change, he added. “Over time I would imagine that, as we become a reputation business, if you successfully sell three applications on the marketplace, we would certainly look at lifting that limit so it would be much greater.” Asked if appbackr would consider moving into other markets, such as Google Inc.’s Android Market or Research in Motion Ltd.’s BlackBerry App World, Cornwell said the firm might do so once it reaches a milestone: 20,000 applications on the appbackr system. news@thewirereport.ca

New project hopes to connect mobile app developers with investors

Broadcast | May 21, 2010

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