When the U.S. House of Representatives voted in January to allow its members to carry iPads on the floor, Marci Harris, founder and CEO of PopVox in Washington, D.C., had just the app in mind for that.
She envisioned that House members—with her app and iPad in hand—would be able take the pulse of the public on bills under debate in real time.
However, to find the cash needed to realize her dream, Harris side-stepped angel investors and VCs for a different source of money.
She turned to appbackr, a Palo Alto, Calif.-based provider of “crowd funding” or “crowd sourced capital,” which has been around for a few years, but has been growing in popularity. Appbackr, which focuses on the $3 billion-plus app market, matches developers working on iPhone and iPad apps with investors, or what the site calls “backers.”
The company, which says a similar market for Android apps is coming soon, takes a cut of the wholesale transaction, as well as a slice of the retail sales.
Harris of PopVox says appbackr helped her find a developer, as well as setting a price for her app. As of mid-April, Harris had raised about three-fourths of the $40,000 required to build her app.
Launched in October by serial entrepreneurs Trevor Cornwell, Robert Clegg and Sam Zappas, appbackr has raised $725,000 in seed funding from Cambridge West Partners, Hall Financial Group, the Silicon Valley Association of Startup Entrepreneurs and the Zenith Group, plus another $50,000 for winning a PayPal developers challenge in 2010.
Tim Chang, a partner at Norwest Venture Partners in Palo Alto, Calif., says the appearance of “funding platforms” like appbackr is a logical extension of what’s happening as the bar has been lowered for financing a business or project, especially for startups in the mobile app development community, which most often are looking for less several thousand dollars worth of funding.
“The big home run projects that are very risky and take professional teams will still require venture capital,” Chang says. “And for smaller projects of a few hundred thousand, that’s perfect for super angels. But if you just want to build a lightweight app for $5,000 bucks maybe you use a site like appbackr.”
VCJ subscribers can read more about appbackr and crowd funding by clicking here to see a news analysis story in the May 2011 issue. VCJ previously wrote about the rise in crowd funding in an article entitled “Meet Your New Competition,” published in the July 2010 issue.
Not a VCJ subscriber? Click here for a free trial.
And if you want to chime in on the merits of appbackr, crowd funding or any other hot VC-related issue, send an email to VCJ Editor-in-Charge Alastair Goldfisher at firstname.lastname@example.org.