ydangle apps seeks funding, revenues to follow traction

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Cape Town-based app development startup ydangle apps can report satisfying traction for its major products, but is looking for more funding and hoping for an uptake in revenues to move the business into the realms of sustainability.

ydangle apps was officially launched in 2012 by Eric Nienaber, Paddy Milner and Josh Fox, and develops mobile applications for iOS, Android and HTML5 as well as backend servers such as Google App Engine. The startup develops apps for third parties as well as its own products.

“The initial developments we focused on were around business applications to support meetings and facilitation activities and making iOS devices a real business tool,” Nienaber told Disrupt Africa.

“We currently have a portfolio of 20 our own apps with a new one close to launch. 13 of the apps are iOS, four on Android, one on MacOSX, one on Windows, one on Linux. We have 11 third party apps we have developed and support.”

Within this portfolio are some successes, notably Flick, which allows users to easily share documents, videos and images between iPads, iPhones, iPods and Macs. The app is ydangle’s most downloaded so far, with 400,000 in total. It was shortlisted for the Best App For Africa award in 2013, and has hit the number one spot in app stores in a number of countries.

This has driven ydangle on, and Nienaber said the company had noticed there was a need for privacy in electronic communications.

“We developed an app called Chatterly to address this. Several privacy features such as encryption, masking and QR code scanning for private conversations, as well as the ability to delete message from all devices, amongst others, are included,” he said.

“It currently runs on iOS and Android and a web version is in development. Whilst the reviews are good we have not seen the marketplace clambering for a private and secure messaging app, despite all the recent high profile revelations resulting from hacks etc. It needs significant funding and exposure to get some traction.”

And therein lies the issue for ydangle. Self-funded until now, the startup now needs an injection of cash to support the further development and marketing of Chatterly.

Though the company has revenues, Nienaber said they are not yet impressive enough to tempt major investors.

“Whilst we are keeping our heads above water and have been able to continue funding ourselves it has not yet been a very profitable venture,” he said.

“Our biggest challenge has been getting exposure for our products in a very competitive and crowded market place. The second challenge has been finding ways to monetise our own applications. This is one of the biggest challenges faced by app developers. The cracking of our apps and offering free to market by a number of web sites has been a great disappointment to us from loss of revenue side.”

He said, however, that the startups is optimistic about the future and has “some really exciting developments” in the pipeline.

Nienaber admits Chatterly is key to the company’s future, with funding needed to access larger PR firms and the like in the app business.

“Our estimate is that we are going to need around US$250,000 to get the ball rolling. Key to generating revenue from the app is the size of the user base,” he said.

But he believes there are a number of potential sources of revenue for the app, though not advertising as the app does not gather any information about users or their conversations.

“The key to generating revenue is getting a large enough user base. The initial thinking is to monetise through targeting corporate users. A corporate profile will allow companies to select the features they would like enabled or disabled in the app as well as add an additional layer of security,” Nienaber said.

“It will also allow them to customise the look of the app for their users. Companies would pay per user using their version of the app. They would still be able to engage with any other Chatterly user, but can be restricted to internal use if needed. A web version of the app is also nearing completion.”

ydangle has also included PayPal payments on Chatterly, with the app taking a percentage of transaction revenue. Nienaber said the company would be keen to add other payment options in the future.

The startup also plans to make current features – such as “presenter mode” – only available through in-app purchases down the line, while retail integration with stores presents another possible source.

“In today’s cyber world companies are going to increasingly require that their discussions and trade secrets are protected and using general messaging apps and email could prove very damaging and costly,” Nienaber said, explaining why he feels Chatterly will be a popular and commercial success in future.

He said ultimately monetisation of apps is driven by the extent of downloads and the ability to get market penetration.

“So to start with, you need a good product, but having a good product is not enough. What is key is exposure, hype and credible sources talking about your product. This is not that easy to achieve, particularly with the large number of developers competing for attention. That drives downloads which allows for monetisation in different ways and that to a large extent depends on the audience.”

For Nienaber, this is the case whether the app is paid or free with in-app purchases. “For any of these strategies to generate real revenue a large user base is required. The business model will depend on the nature of the app and who it is aimed at.”

He does expect life to get easier in the future, however, as local companies start to see the benefits of apps in their ability to support process redesign, reduce costs and improve the customer experience simultaneously.

“This is generating a lot of work for local developers. Our experience allows us to offer both process redesign business skills as well as the application development skills and we work closely with some graphic and UI/UX design companies. This has helped us to fund our own developments thus far, but it is a difficult trade-off.”

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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