Black Friday is best known as the day that consumers are bombarded with deals to kick off the holiday sales rush. Now Sourcebits, a mobile app development company, is hoping to use some of that mojo to drum up sales in its B2B business, too. From tomorrow, the Sequoia and IDG-backed startup will offer companies a 50-50 deal on new apps: Sourcebits asks for 50% of the cost of the app design and development, and then the clients only pay the other 50% when (and if) they next raise a round of funding.
San Francisco-based Sourcebits, which brings developers together from the U.S., Europe and India to work on its projects, has developed apps for large companies like GE, SAP, Intel, MIT, P&G, Hershey’s, and Coca-Cola. But it also works with startups that may not have the manpower internally to develop mobile apps in-house.
The 50-50 Partner Program, as it is called, is squarely aimed at the latter group. In its time, Sourcebits has developed apps for Posterous, Knocking, Peel, TwitPic and CloudOn among other startups. Rohit Singal, the CEO and founder of Sourcebits, tells me that the idea — which he says he thought of himself, and may be the first example of this kind — is to make sure that it keeps smaller, more dynamic companies in its business funnel.
“I have been thinking about it for some time,” he tells TechCrunch. “Most startups do not come to a company like Sourcebits primarily because they find us too expensive, and to an extent that is true. However, that limits us to work with only large corporations where most of the time, we do not get to work on truly innovative projects.
“With this model, we are hoping we get to work with really exciting startups and in some way help the startup ecosystem. Besides obviously getting a chance to become partner in startup that makes it big.”
In a world where mobile app numbers continue to climb, so do the options for how to create them. A deal like this works also as a way for Sourcebits to set itself apart from others offering competing services.
The Partner Program is a double bet for the company:
One the one hand, it believes that its apps are good enough that they will help companies get to the point of being successful enough to raise capital from VCs. The company has to date developed 500 apps for iOS, Android, BlackBerry, Symbian, and Windows Phone, and it says that over 20 of those have reached the top ten in their categories in global app stores. “We have easily crossed over 50 apps among those 500 mobile projects that have reached Top 50 in their individual categories,” Singal adds.
“If [angel-funded startups] invest too little and build a mediocre app, they hurt their chances with customers and investors,” Singal said in a statement announcing the deal. “But great design and development is not cheap, and it can be difficult for a startup to fund the project they really need.”
On the other hand, this is a bet that the funding climate for startups remains as strong as ever, so that all good ideas will continue to find the backing to go to the next level.
In any case, if the startup in question doesn’t manage to get that term sheet signed, that’s Sourcebits’ concern.
“There is no penalty if a company is not able to raise its next round of funding,” Singal says. “This is the risk we are taking up with this model.”
More details here.