Tuesday, June 14, 2011

This post is purely to applaud the work of the team at appbackr for bringing a transparent mechanism for the crowd-funding of app development to the market.  The mechanism provided is a margin that investors can reap by pre-purchasing advanced copies of an app soon to be released, then selling at the retail price through the leading app stores when the app reaches the market.

It has long been the status quo that developers would need to self-fund the development of their apps, acting as both bank and developer and assuming all risk for the success of their projects.  Investors have had little opportunity to take part in the potential upside of successful apps without a portfolio approach of investing into a specific design studio.

The impacts to the app market are significant for investors and developers.

For investors, now we have a way of diversifying our investments in app development.  We can take smaller stakes in a broader array of projects that interest us much like a mutual fund strategy of pooled investment in specific sectors.  Considering the high risks involved in this speculative market, this will encourage new capital to come into small scale projects that otherwise would be reserved for the Angel investor tier.   

For developers, removing the yoke of financial risk from the equation will encourage more creative leaps of invention.  We will see more developers distributing more apps.  A secondary benefit is the filter function that VC/Angels provide.  If a developer can't make a compelling case for investment in a newly proposed app, it's likely that the broader consumer market would not purchase the app either.  So by the "reserve goal" mechanism, a developer can test the potential market for a new app without committing resources unless the target funding amount is reached.

If you are an investor willing to put risk-capital behind the innovations of our independent creative developers in the mobile space, I invite you to join me in backing this revolutionary new approach to promoting innovation.

Follow my investments at ncubeeight on Appbackr.

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