Lately, in the entrepreneurial and tech-centric media, there’s been some discussion on whether the app boom days are over, especially in light of the ever-climbing CAC costs reported by tech startups. We asked investors based in the Middle East, from angels to VCs, to talk back and give us their views on whether startups in the app space still have a chance to make it (and get looked at seriously for capital).
THE Q What is your opinion on the idea that the app boom has already gone through a life and death cycle, and that it’s now an overly optimistic (and unlikely) area for entrepreneurs to succeed in?
"That’s complete madness talk. The new ecosystem that Apple created -and the likes of Android and others have followed- only shows that this area is still in its upward trend stage which is clear when you read about startups that are app-focused still being bought by companies from VCs to the blue chips for hundreds of millions of dollars. It’s true that maybe the billion dollar companies are rare, but that was the case during the first ‘app boom,’ if you will.
There weren’t many like Lyft, JetSmarter, Instagram, Snapchat, etc. and there still aren’t many. Has the hype slowed down for the app business? That’s a media question which I should be asking you- I can’t answer that. But business wise, absolutely not. Where else can you find a business that can, in an instant, be in the hands of a billion handsets from iPads to iPhones to Android devices, and if you want to include Windows and BlackBerry for charity, you’ll have a billion and five devices.
It’s an amazing business model that can and only will get stronger with time the more people start developing specific solutions. It’s true that since inception to maybe a couple of years back, apps were generally thought of as revolutionary and practically any business with an idea and an app would get some kind of funding in various stages to the extent it would have nothing much but VCs and other entities lining up to back them. Has that slowed down? I hope so. Is that an indication that the app business is at its death cycle? Hell no. It just means there is smarter money now. Anyone who would think the app business is at its death cycle is out of their minds.
When I assess app-based models for early-stage investment, I consider track record, customer base, their financials to see if the concept is actually working or not because numbers don’t lie, but I don’t consider consider the hype of the app ecosystem dying- that doesn’t sway my enthusiasm for the business model. I assess variables of the actual tech startup, not media buzz. What’s their core competency? Are they solving something? Revolutionizing something? Or are they just piggybacking an existing model? It’s a myriad of factors that can encourage me to invest."