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Summary:

If last year saw the venture capital community chasing startups building around the Facebook platform, this year the new new thing are iPhone application makers. In addition to the $100 million iFund floated by Kleiner Perkins Caufield & Byers, other VCs are getting in on the […]

If last year saw the venture capital community chasing startups building around the Facebook platform, this year the new new thing are iPhone application makers. In addition to the $100 million iFund floated by Kleiner Perkins Caufield & Byers, other VCs are getting in on the action.

We recently covered Pelagao, which raised $15 Million from iFund, Reliance Communications and T-Mobile’s Venture Fund. Union Square Ventures and First Round Capital recently invested an undisclosed amount in New York City-based Pinch Media. Add a relatively unknown company, Tapulous, to this growing list that is beginning to get a lot of attention.

My sources are telling me that this company has closed funding from investors like Salesforce.com Co-founder Marc Benioff and Jeff Clavier. The company is said to have been valued at around $8 million. Apparently, it was tentatively called GoGoApps, but changed its name recently. What makes this company so special?

First it was started by Mike Lee, a well-regarded Mac programmer who worked on the popular software Delicious Library as part of a company called Delicious Monster. The company’s other co-founder is Bart Decrem, who also founded Flock, a company that makes a browser for optimized social apps. He left the browser maker in September 2006 but has recently re-emerged.

Decrem told Michael Arrington that he was in the process of raising money and his company was making social apps for the iPhone, and they will be launching it over the next couple of weeks. In a story last week, Ars Technica’s Jacqui Cheng pointed out that the company had hired some serious programming talent to work on a “whole family of apps,” including “Twinkle (a Twitter client) and Collage (a realtime collaborative art/photo sharing app).” In the Ars story Lee said, “The focus is on small, beautiful apps, with a focus on bringing people together.” From why I have learned, they have built over 30 apps.

Tapulous isn’t the only one looking for funding. There are quite a few early-stage iPhone app makers that are knocking on the VC doors. One VC joked about seeing half a dozen Loopt-like startups out there. There are several shiny objects on the market with no users, making it hard to fund these companies. Some investors are taking a watch-and-see approach to the sector, mostly because investing in iPhone/iTouch apps will be about market share momentum.

That is a good approach to take. As Simon Brocklehurst pointed out in his analysis earlier this year, the success of investments in device-specific app makers is predicated on the platforms being hugely successful, and selling in large numbers — like 100 million iPhones over the next five years. That still shouldn’t prevent a frenzy resembling the Facebook madness we saw last year.

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  1. 100 million iPhones last year is a great reason for all these ap developers to get behind the platform.

    I just wonder, though, are we stifling creativity and technological advancements of other phones, such as the new Samsung Instinct or the soon to exist Android OS because we are hoisting iPhone so high?

  2. “100 million iPhones last year”

    Um BloggerBen…

    They have sold about 6 million iPhones, not 100 million iPhones.

  3. 100 Million potential customer base vs. nearly 1 Billion potential customers in 62 out of the 70 countries the iPhone will be available in by years end.

  4. I had two thoughts in my head as I wrote that last comment. I confusingly mixed in the fact about Apple’s App Store being available in 62 out of the 72 countries in which the iPhone will be sold with the total potential customer base of the Carriers partnered with Apple.

    So like the guy above was trying to say… if they were excited by the 100 million US customer limited market served by a single carrier, then they should be even more excited to fund and invest in start-ups that can reach a 1 Billion customer global market base.

  5. While the iPhone has the AT&T anchor around it’s neck, it shouldn’t be overhyped as ‘the’ mobile platform. Until its available on other services, we have to consider the deeply ingrained Blackberry and other key platforms on which so much of the market depends.

  6. …..”Some investors are taking a watch-and-see approach to the sector”..

    If VC’s are telling you this you’re being taken down a dark alley. Most VC’s that have any interest in the mobile space will be investing in the earliest stages of these companies. Don’t think for a minute that VC’s will stand on the sidelines with Kleiner Perkins having earmarked $100M for this platform. Also, the entry of RIMM into the competition will only help increase the reach of dollars for innovative start ups.

  7. @ Mark T,

    Some investors is what i focused on. There are also term-sheet chasers and they will do any and everything.

  8. Pinch Media is definitely a company to watch. These guys are moving real fast into this space.

  9. » iPhone apps are the new Facebook Apps I’m Building Something Here: Experiments in Entrepreneurship and Value Creation in the Social Web Wednesday, June 11, 2008

    [...] news on Monday, apparently there’s a new gold rush: iPhone applications. So much so that VCs are beginning to salivate over the seemingly tiny market. With 6 million handsets out there – and a fraction of the overall [...]

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