Appia secures a $5 million loan primarily for marketing
Appia, the Durham-based technology company that builds and runs mobile app stores, announced Wednesday that it has secured $5 million in debt financing from a Maine-based venture capital firm.
The company plans to use the financing from Portland, Maine-based North Atlantic Capital, as well as an expansion of an existing financing arrangement with Silicon Valley Bank, primarily for sales and marketing efforts, according to a news release. Jud Bowman, Appia’s founder and CEO, said the company is looking to speed up its revenue growth.
The company saw revenues grow about three-and-a-half times last year compared to the prior year, Bowman said, and “spent zero” on marketing. He said the company is expecting similar growth this year.
“We just had a record Q1; Q2 is already trending higher,” Bowman said Tuesday. “We’re raising this round of capital and putting fuel on the fire,” he added.
The company, founded in 2008, powers online app stores for wireless service providers such as Mexico City-based América Móvil and Vodafone India. The company curates apps in its stores, works with app developers and develops technology to install apps, Bowman said.
The company makes most of its money through a sponsored app service in which payment is a factor in the placement of developers’ apps within the mobile store. Bowman said the company was founded in June 2008 and launched the advertising service in 2011.
Bowman said the original thought was that the company would make money from app sales. But he said that while Appia had “huge” traffic and saw many downloads, the company wasn’t making as much money as had hoped.
“What happened is, the world changed, people stopped buying apps,” he said. “People got to this place where they expected apps to be free,” he also said.
He said the vast majority of Appia’s revenue is from sponsored apps, which he described as helping app developers get their free apps discovered.
“The way (we’re) making money is helping app developers with free apps get discovered with this ad format with sponsored apps,” he said.
Bowman said that in order to secure loans such as the one announced Wednesday, companies have to have “significant revenue traction.” He said the fact that the company is in a position to raise the debt is a sign that he and other majority shareholders don’t want to dilute their holdings by selling additional ownership stakes in the company, and also that its revenues are starting to be “pretty material.”
The company is based in Durham at the American Tobacco Campus downtown. It employs 55 people full-time, Bowman said, and is looking to hire for eight to 10 open positions.