A platform creating so-called ‘Kickstarter for Apps’ on the Blockchain, U.S.-inspired Apptrade, has received a $100,000 boost from the world’s first blockchain-powered conglomerate midway through its two-month crowdsale. Investment terms of their crowdfund campaign have also improved the sponsorship terms to get the project over line and reach its target.
Timing is everything. And, while the move might also reflect investors in the crypto and blockchain space are becoming a bit more discerning about what they actually support, if Snap Inc. – essentially an app – managed to have an IPO value topping $3o billion (bn) on day one of its flotation, just imagine the amount that an app market ITO (initial token offering) could have with a potential blockbuster such as this listed in one of the future portfolios of apps.
All apps on Apptrade’s marketplace, which are compared by the founder behind the concept as akin to other marketplaces like the New York Stock Exchange, NASDAQ or the Nikkei and not other apps, would be showing as the app before they could become the next Snapchat, if you like. It’s surely a thought, no?.
Powered by the digital token APPX, Apptrade creates portfolios or groups of apps, whereby if one of those apps becomes the next Instagram or Angry Birds, then the value of the portfolio rises. Well, that’s the theory at least.
Apptrade, whose crowdfund that runs for 61 days is now capped at $5 million (m) and presented its concept to the CoinAgenda bitcoin and cryptocurrency conference in Las Vegas last October, will let users select apps to be listed.
Specifically, each portfolio will vote in new apps to their respective group. New apps will be listed in a waiting area until selected by a portfolio. App publishers will be able to decide to launch their own portfolio if they think they can attract funding and other apps to their group.
It is envisaged that the Apptrade site, which is expected to go live early in 2018 after testing, will bring together app publishers to new financial supporters. Apptrade will be more like a crowdfunding marketplace of app portfolios instead of behaving like venture fund that is a centralized gatekeeper. The difference is that the profits are the perks and each campaign are backed by a portfolios of apps.
The Apptrade crowdsale, which commenced late this February, is currently being run on the Danish digital currency exchange OpenLedger. For every 1 bitcoin (BTC) a sponsor will receive 2,009 APPX tokens and in stage 2 receive a 25% discount. Tokens can be bought in fiat currencies – Euro, US dollar and Japanese Yen – as well as other crypto currencies including Ethereum (ETH), Waves, DASH and BitShares.
Ronny Boesing, CEO of OpenLedger at the decentralized crypto exchange with both fiat and crypto gateways, explained that Apptrade’s ITO changed its valuation in the middle of its crowdsale in response to community feedback over its preliminary offering.
The U.S.-educated Dane said: “The Apptrade platform is much too important to not succeed, and it was clear that we needed to adjust the valuation to make it more appealing to anyone deciding to participate. In addition, we wanted to show our belief in this project, and felt that there was no better way to show this than putting our money where our mouth is.”
As such OpenLedger will be adding a total of $100,000 (209,464 APPX tokens in return) to Apptrade’s crowdsale over the next seven days. The minimum fundraising goal is set at $1m with a cap of $5m and there are a total of approximately 8.25m APPX tokens on offer to investors.
OpenLedger’s Apptrade ApS will back these tokens with 20% – representing an increase of 10% – of future revenue from the Apptrade platform, which is expected to go live as a beta version between July 20 and early August later this year before being tested and becoing a fully functional site by next January.
Any unsold tokens will be distributed proportionally to all participants. For all early bird participants – as well new participants to date – they will receive the extra tokens according to the published Stage 1 structure detailed on Apptrade’s ITO page, plus benefit from the additional tokens to be divided.
Daniel Pineda, founder of Apptrade based in Santa Monica, California, commenting said: “It might seem odd to change valuation in the middle of the crowdsale, and we might even be the first to ever do so. However, we feel that is the right thing to do to ensure a satisfactory outcome.”
He added: “We firmly believe that our platform with its legal framework based on Danish jurisdiction, and built on the ecosystem of OpenLedger with its high-tech BitShares financial trading platform is one of the best things to ever happen in Blockchain development and will be one of the key future success stories.”
Apptrade’s final valuation – slated between $5m and $25m) – will be based on the amount raised, whether that is $1m as its threshold or money back guarantee. Should the minimum threshold not be reached, funds used to sponsor the project will be returned in full, or indeed the maximum of $5m. Ultimately, the valuation of the Apptrade platform will be determined on what is raised.
Boesing elaborating said: “This approach and change of valuation resulted from requests from within the cryptocurrency community, and we hope to accommodate many more participants. But one thing is clear to all of the early bird investors – this is your lucky day!”
From a sponsor’s perspective, it is understood that any previous talks about offering up to 100m tokens per year and a total of 1bn tokens, has been dropped completely. Instead a total of 8.25m APPX tokens is what will be available – and no more.
Previously all participants were to receive a 10% ‘wholesale’ revenue from all future results on the Apptrade platform. This has now been increased to 20%. Add to that any unsold tokens will be dropped for all participants proportionally, and its valuation is set at a $25m ceiling instead of a previous figure of around $600m.
All these factors should help improve the future value of the APPX master token as well as the present stage 2 price with a 25% discount should allow all to feel the potential benefits. The price per token has not been changed but the potential outcome would seem to have been positively shewed.
Now this is in an industry that equates to upwards of $30bn (revenue/earnings only) and a growing app market. Just take the Apple Inc.’s App Store that this Janaury was reported to have generated revenues that reached an eye-popping amount of around $28.5bn in 2016 (2015: c.$20bn).
A temporary token APPX.WARRANT will be distributed to all participants in Apptrade from the first day that the minimum threshold has been reached. Then it will be possible to buy, sell and trade this token on OpenLedger’s decentralized exchange.
As to comments passed on the previously set terms under Apptrade’s ITO and why the crowdsale was revised, one community member at BitShares wrote: “With a potential of 1 billion tokens, and a valuation of $600m with a 10% revenue I find it hard to see when I will ever reach breakeven or even start making money, where is the ‘What’s in it for me?’” So it would seem notice has been taken.
Of course potential investors may wish to know more about the brains and concept behind Apptrade, which defines ‘apps’ as intangible goods that span mobile apps, music, ebooks, 3-D asset libraries, blogs, photos and other digital-based properties, as well as the major obstacles and issues that led to it being developed.
On this note Pineda told Forbes “I found a niche market where developers are buying and selling apps in a B2B setting. Where one developer would buy app from another, similar to how real-estate investors bought and sold real estate.”
He added: “Only instead of fix and flipping houses…its apps and other private digital properties. Big publishers would shop these markets looking for ready-made apps that they can leverage.”
Explaining his journey and thinking in terms of coming to that view, app broker Pineda, who went to school for video game design and partly paid for that working at a class action law firm, explained: “I stumbled upon this market place out of a frustration of having a previously failed app launched years ago. It was an obsession to answer the question of ‘What makes an app go viral?’” It was at the law firm that he was exposed to the protocol of law and accountability, which has no doubt come in handy.
His work experience of app brokering and app publishing started years after working as a UX freelancer having collected valuable media and branding skills. While his friends worked for studios, Pineda took what he described as the “unprofitable route of indie app publishing.”
After sharing the same experiences with some of his colleagues, they learned that mobile app marketing and fundraising can be “brutally Darwinian” according to the Californian-based fintech pioneer.
“Rarely would you see a developer with tens of thousands of monthly average users (MAUs) trade traffic with smaller apps,” he added. And, when reaching out to investors, it can often be at times a challenge to encourage investors to take a risk with non-proven intellectual property. Why blame them?”
But what his peers did not understand is that it goes both ways. “Investors have so many eggs in too many baskets out there and the odds still stand at 1/10 business success ratio, as it goes. Apps were no different in probability,” he asserted.
Pineda said that what was missing from the wholesale digital goods markets was a way to “incubate apps during their listing.” Reflecting he revealed that it was back in 2006 – before apps – that he had a brush with researching real-estate investment trusts (REITs).
“REITs were an asset class that grouped capital into larger real-estate projects that either participants could not undertake individually,” he noted. “What stood out was the idea of diversifying the capital into various real projects and real-estate investment strategies. Investors big and small would share in the dividends from this fund.”
He added: “What struck me was that before REITs, only commercial banks and state parties were able to invest in such projects. Nothing like this existed for digital properties (IP). We heard of some indie app publishers that were selling to hedge funds, yet no marketplace existed for larger private deals. Bingo!”
A search for a better way to market Pineda’s apps then turned into a method for funding a growing inventory of apps designs. As he put it: “The theory shifted to answer how do we have a group budget for marketing, development through bundling cash flow? What medium would we use to show accountability within a group?”
That journey took him and fellow associates from grouping promissory notes to possibly forming series LLCs. Until early 2015, after sticking with the search for a solution and going full time on refining our model of collaborative funding, efforts paid off.
He said further: “Timing had Blockchain technology brewing in the background. A proven system for the transfer of value. And, a level beneath the money aspect was what gave this tech its true meaning. It was the ability to bring together strangers to reach a consensus on a shared platform that piqued my interest. The very philosophy of a participatory model was crystallized in an actual technology.”
By this time it was 2016 and the blockchain and related technology was already blossoming into other expressions and new decentralized applications. Now enter the smart contract and bitshares.
“That was the final answer for an app portfolio profit sharing,” he said. “A system for controlling these mini funds. Each portfolio would be its own decentralized application.” This was where sponsors support a group of digital goods by purchasing a token. And, a decentralized exchange was he described as “the grand medium” that would once again pivot the trajectory of their commercial pursuits.
Pineda argued that: “If the Internet shaped the 21st century, Blockchain could make it possible to peg an economy to assets backed by digital goods and individual digital brands. As more people become their own digital empires, there is no need to lose control of ownership and direction like before when only the big publishing houses media outlets, and music labels were the gatekeepers to finance and distribution.”
Concluding he said: “The vision for Apptrade is for more digital publishers to keep control of their projects, have access to resources. If the universe allows, that they coordinated promotional efforts with other digital makers.”
Note: A strategic overview on Apptrade covering the company’s structure, the app portfolio marketplace, the start-up’s portfolio expansion and plans, its APPX master token and revenue distribution can be viewed via this link.