Recently, the Cash4app mobile developer Development Fund was launched in Russia, providing money for the promotion of ready-made projects. App2Top.ru I talked to the head of the foundation about his work.
Hi! First, tell us a little about yourself and your team.
Good afternoon! My name is Dmitry Kustov, I am the project manager of the Cash4app Mobile Developer Development Fund. Our team consists of seven employees and investors. I myself come from the banking sector and the mobile market is quite new for me, but the guys understand it very well, they have a lot of experience in the mobile application industry.
Why did you decide to launch the fund, since you were mainly focused on advertising before?
We have a project aimed at advertising, more precisely, allowing us to increase the revenue of the application through contests, but that’s another story.
The idea of launching the fund came to our mind quite a long time ago. Many familiar developers periodically had problems with cash flow due to a temporary gap in the receipt of money to the company’s account. As you know, developers receive revenue from the sale of applications and advertising with a delay of 1 to 6 months, depending on the stores and advertising networks they use.
Most often, the solution is to delay salaries, reduce marketing budgets or intercept money from friends. And developers of mobile applications and games always need money: whether it is the cost of promotion, support or the creation of new projects. Many people try to take money from the bank, but, as a rule, credit institutions do not give developers loans due to the lack of collateral.
After several successful examples of financing development teams, we came to the conclusion that such a financial product would be in demand on the market, and we began to create a fund.
The main task that we set for ourselves is to help indie developers and small studios in promoting their projects. As practice shows, without timely funding for marketing, the application will not reveal its revenue potential and may not recoup development costs at all.
Please tell us about how your foundation works?
After submitting an application on the website, we contact the team and request data to analyze the developer and his mobile application. Moreover, we have no restrictions on the organizational and legal form, we work with firms, sole proprietors and individuals.
Based on the results of the analysis, a decision is made on the financing of the project.
We conclude a weekly lending agreement and get access to statistics from the stores. Next, once a week, the developer will receive the income earned by him minus 5%.
After the month closes, an extract of the funds paid and the terms of the refund are formed, i.e. when the stores and advertising agencies transfer the earned funds to the developer’s account, he must return them to the fund within three working days.
We provide income-based financing from the main app stores and the largest advertising networks.
As I understand it, you do not work through banks. How do you control refunds and receipts to developers?
Of course, we are not a bank, and yet banks participate in our process, if only because the funds are transferred to the settlement account.
All financial relations between the foundation and the developer are regulated by the contract. We receive data on the client’s income through access to the account of the App Annie statistics service: based on them, we form a weekly calculation of payments. All payments are recorded by our system, which automatically monitors, determines the return dates and monitors them.
Did I understand correctly that the developer should not only, understandably, return the amounts that Cash4app provided, but also pay 5% on top of the entire amount earned? Let’s imagine that we spent $1 million on promotion. We earned 1.1 million on this, gave 1 million, and also gave 50 thousand for services. Is that right?
More precisely, we withhold 5% of the paid income.
Well, for example, you earned $1,000 in a week. Accordingly, the fund will transfer you $ 1,000 – 5% = $ 950, which you can spend anywhere.
When you, as a developer, receive the accumulated income from the app store, you transfer it to the fund’s account in full. As a result, the developer always has funds in his account and promptly influences the development of his projects.
Are there any successful cases already? Can you tell us about them?
An interesting example is the game “Bum – a success story!“. Last fall, we agreed with the developers of this application to finance them based on revenue from the App Store. This allowed them to constantly turn money around in a cycle:
- fund payout – promotion – new clients – income increase – fund payout – promotion in other countries – new clients – income increase, etc.
We can’t disclose exact figures, but when we calculated together how much income was generated due to the ability to support applications in the top, it became clear that this tool works very effectively.
Let’s just say that for 5% of the remuneration to the fund, developers received an increase in income by hundreds of percent, this is the effect of financial leverage.
In addition, the effect of a snowball has affected, when conditionally every thousand dollars invested in marketing brings two thousand dollars of income, which are immediately re-invested, and we already get four thousand and so on.
Let’s see how it was:
Initially, the guys decided to bring the application to the top of Russia. They started advertising on October 22, but by October 26 their own funds ran out, they contacted us and on October 28 they already received all the accumulated income for the first 5 days. This allowed us to straighten out the falling positions and confidently stay in the top in the future due to weekly payments.
Accordingly, we stay in the top grossing longer.
Due to the rapid income generation, the developers had a lot of free funds, which the guys decided to spend on promoting the paid version of the game, which was released on November 2:
In parallel, localizations were made into English, German, French and Italian. After Russia, they decided to advance in Germany and Italy (and both paid and free versions):
Italy (free version)
Italy (paid version)
Germany (free version)
Germany (paid version)
As a result, prompt revenue generation allows developers to promote in other countries and receive even more income.
Now the Android application is being promoted according to the same scheme, and just after the first revenues received in the first weeks from Russia, developers are successfully expanding into European countries:
Russia (April-May 2015)
Germany (April-May 2015)
Italy (April-May 2015)
Austria (April – May 2015)
Now the developers of “Bum” have plans to promote the app in the UK and the United States on iOS and Android.
However, as user reviews have shown, text localization alone was not enough for the project. For example, the British do not understand why a homeless person collects bottles, etc.
Now the guys are doing deep localization for these countries with redrawing the art and adjusting the gameplay.
Our company, in turn, has already approved the possibility of obtaining financing in excess of the accumulated income for the promotion of this project to the UK and US markets in the amount of $ 200 thousand.
It is important that the main feature of the work of the Cash4app fund is the possibility of additional project financing.
The best teams will receive funds from the fund that exceed their income. Let’s say our analysts noticed that if the application is given an additional push, it will be able to blow up the TOP and strengthen its position in it and earn much more. An additional agreement is concluded (the terms are negotiated individually). Next, together with our partners in promotion, we are launching an advertising company at the expense of the fund. As a result, the developer receives a multiple increase in users and profits.
Thanks for the interview!