Nevolution Launching New App Store for Businesses

Valley tech startup Nevolution is hoping an infusion of capital, a new office and its first business-to-business offering can help the firm do battle with the fittest. Founded in 2009, the Woodland Hills-based PC app store developer to date has raised $950,000 through a combination of debt and equity, with about $700,000 of those funds raised through equity, CEO Matthew Smith said. While the company is not yet profitable, it is currently raising another round of capital from private investors. The goal is to bring in about $500,000 in a round that ends this month, Smith said. Next month, Nevolution plans to move to a larger office in Calabasas, a strategic move to escape the gross receipts tax, and one that Smith says will allow it to pass more money to its partners, making Nevolution “a more hospitable company to do business with” in a digital industry hampered by tight margins. “It saves us especially because all the contracts we are working on most of the partners want us to be the merchant on record,” he said. “We are saving upwards of one percent of our gross sales.” The company is gearing up for a big new product launch. In three to six months, the company plans to debut a branded app store for companies, such as computer manufacturers, retailers and game developers, who want their own logo on an online store but do not want the headache that comes with developing or running one. In the third quarter, a version for smartphones and tablets is planned to debut. Smith said the firm is in talks with about 10 potential partners for its branded store, including a PC gaming company and an international PC laptop manufacturer, although he declined to name any. But the road to a business to business platform was a winding one. Last summer, the company launched its own PC app store for consumers. But without a plethora of users, it was difficult to attract content developers, the company said. Without the apps, users were hard to come by. “It was a bit of a chicken and the egg scenario,” Smith said. “What we realized was our technology, our platform, was really valuable to companies that already had the user base.” Apps are big business. The app Internet market was $2.2 billion in 2010 and is expected to grow at a compound annual growth rate of 85 percent through 2015, according to Forrester Research. In order to compete, “PC vendors such as HP and Dell must reform the PC experience to focus on app stores, which will be on every connected device in the future and serve as the keys to the Internet,” according to a Forrester news release. Smith said Nevolution’s new branding component is billed to such companies and is a key competitive advantage that the company has against larger PC app stores that retain their branding on the software. In its consumer offering, Smith said the company currently has about 3,000 users and more than 200 publishers that offer PC video games, antivirus programs, educational software and more. “If you go to Best Buy or Fry’s (Electronics) and walk down the software aisle, we want to recreate that experience digitally,” Smith said. The company’s smartphone and tablet app store for businesses will latch onto a growing market, one some analysts could one day replace the personal computer. One-third of the U.S. adult population is projected to own a tablet by 2016 according to Forrester. However, according to Forrester, Apple has 73 percent of the current market share, lessening the potential reach on the tablet for entrepreneurial companies such as Nevolution. But Smith said Apple’s market share will thaw as the tablet market evolves. Still, he said, the tech giant provides a road map — a similar experience on all devices. “We want to bring that same unified digital purchasing experience to everyone that is not on an Apple product,” he said.