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Experimenting with Appbackr – Promising and Treacherous

wiseclerk 3 Comments

In August I discovered Appbackr. Appbackr is a marketplace where everyone can invest in IPhone apps and Android apps. Crowdfunding for app development? That sounded very interesting and innovative. I read the information supplied and the way it works is that investors prefund future sales of apps. The investor buys the copies at a lower wholesale prices and makes a profit later, when the copies actually sell in the app store. Clearly the risk is the uncertainty as to when the prepurchased copies will sell or if the sales volume will not be high enough at all and the copy will not get sold, which will result in a total loss of that investment.

Funding is done during an open bidding period. The developer lists his app on the marketplace and provides a description and information what the funding will be used for. Provided a minimum reserve is met, the funding will be successful, even if the maximum amount the developer seeks is not reached during bidding period.

Concept versus Live Apps

Appbackr differentiates between ‘Live Apps’ and ‘Concept Apps’.

A ‘Live App’ is already online in the Apple or Android Store and has started selling. For most Apple Apps Appbackr provides sales stats, which allow an educated guess how good the app is selling. The markup investors earn on Live Apps is 27% (once they are sold).

A ‘Concept App’ is an app that is under development or just an idea with a plan. The developer states a date, when he plans to launch in the store. For ‘Concept Apps’ the markup is 54%. The higher margin reflects the added risk for possible developing problems, which could in a worst case scenario lead to the app never making it into a store with zero copies sold.

A major difference between these two kind of apps is that the payout for ‘Live Apps’ is ‘sequential’ whereas the payout for ‘Concept Apps’ is ‘simultaneus’, meaning that those investors, who invested first during the bidding period ,get paid first for sales of Live Apps (you are informed how many copies need to sell before your copies will sell). For the ‘Concept Apps’, each backr will receive a fraction of each sale. That means you only get full payout for ‘Concept Apps’ after the last funded copy has been sold, too.

I had a good start – everything looked promising

After a lot of reading and browsing I did my first purchases/investments in early September. And it looked like I had a lucky start with good picks.


Screenshot of the Appbackr Dashboard for my Apps in status ‘Completed’. I unfolded the details for the AppZilla 2 app and the iScape App. It shows that ‘my’ 100 copies of iScape sold over the course of only 7 days. For the AppZilla 2 app it went even better. It took only 1 day for all ‘my’ 500 copies to sell. Note that Appbackr calculates annualized profit solely on the duration of the sales period. De facto I purchased the copies on Sep., 5th and was paid back $330.60 on Nov., 7th. My money was tied up for roughly two month which translates to a tremendous annualized profit of roughly 160%. Continue reading →

UK Borrowers Benefit From Lower Interest Rates at Ratesetter

wiseclerk

Borrowers needing a small loan can turn to p2p lending marketplace Ratesetter, which matches borrower requests with funding supplied by private lenders. Borrowers can choose a variable rate loan (rolling loan) or a 36 months fixed rate loan. Nominal rates for the 36 months loan have fallen considerably in the past six months from approx. 9% to now under 7% (that translates to a representative APR of slightly under 9%).

Ratesetter has facilitated over 10 million GBP in loans since its inception.

Last week Ratesetter completed raising  series C round of funding, raising 1.5 million GBP (approx. 2.35 million US$). The total amount raised so far is 3 million GBP.

RateSetter CEO Rhydian Lewis said: ‘…RateSetter is continually working to narrow the spread between what Savers can earn on their money and what creditworthy Borrowers can pay. This investment will ensure that customers will continue to get great value and a great service‘.

Civilised Money Raises 100K Through P2P Equity

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UK startup Civilised Money has raised 100,000 GBP from 121 individual investors using the p2p equity platform Crowdcube. The investors will own 10% of the funding after the legal process of the funding is completed. The funding was completed in just 9 days, showing the potential p2p equity has in the UK.

Civilised Money plans to offer crowdfunding first and p2p lending in a second step. Katherine Byles of Civilised Money told P2P-Banking.com earlier this week that this is actually the second funding round for the company: ‘We have a first round of crowdfunded investment from ‘The Pillars’ 20 key supporters.‘.

Asked whether the technology is self-developed or licensed, she told P2P-Banking.com: ‘The technology is licensed. We have a one-off revenue share based licence for one of the most powerful and flexible P2P platforms available.  Through the core technology platform we will be able to roll-out a number of products, enabling us to cut the cost of using these – once funds are on the platform moving them between the different products is a simple and fast process.‘

Asked about the USP as compared with Zopa, RateSetter or Fundingcircle Byles said: ‘Civilisedmoney will offer all the people-to-people financial services products in one integrated service.  It has launched with crowdfunding. People-to-people loans are coming next. It is developing new products too. Civilisedmoney is becoming a one-stop-shop for all your people-to-people financial products that create a viable alternative to banks. …‘

The company has ambitious goals as a quote from information provided in the pitch shows: ‘While its service is not yet available in the U.S., CivilisedMoney’s plans are to expand from the U.K. to greater Europe, and then eventually to Africa and the U.S. (CivilisedMoney’s services offered will depend on region, since, for example, crowdfunding equity stakes for startups isn’t yet legal in the U.S.)‘.

U-Haul Does P2CLending – Issues Own Notes

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A new twist to peer-to-company lending. So far p2p lending marketplaces facilitated lending from the crowd to other companies now U-Haul has its own p2p marketplace called U-Haul Investors Club. There anybody can purchase collateralized debt security notes issued by Amerco (the parent company of U-Haul). The minimum deposit required to start investing is 100 US$.

The loans are backed by collateral. Typical interest rates range from 3 to 7%. In the time since the opening of the U-Haul Investors Club in February 2011 approx. 7 million US$ in equipment financing was raised.

(via SocialLending.net – read more in Peter’s article here).

Crowdfunding via Starbucks

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Starting next weeks Americans can help to jump-start the economy sipping coffee at Starbucks. By donating 5 US$ they help to fund community loans to community businesses—including small businesses, microenterprises, nonprofit organizations, commercial real estate, and affordable housing— all across the country committed to creating and sustaining jobs. Donors who contribute $5 or more will receive a red, white, and blue wristband with the message “Indivisible.”

The initiative is called Create Jobs for USA. Loans will be given out by the Opportunity Finance Network (OFN), which represents a nationwide network of 180 Community Development Financial Institutions (CDFIs) set up to provide financing to community businesses in underserved markets where accessing credit through traditional lending institutions is challenging or not available. The Create Jobs for USA Fund at OFN will be seeded with a $5 million contribution from the Starbucks Foundation.

The donations to “Create Jobs for USA” will not be loaned to the CDFIs. They will be turned into equity that can be leveraged. If that equity can be leveraged 7 to 1, that would result in 350 million US$ loan funding, if Starbucks customers donate 50 million US$.