Exclusive: Startup Appiness Interactive turns accelerator with cash-and-equity model

In the startup world of limited funds and fierce competition for customers, there aren't that many examples of startups giving other startups a leg-up. Bangalore-based digital media startup Appiness Interactive Pvt Ltd is one of those rare ones which is doing it, and already has startups queuing up. The startup, which has till now avoided raising funds from venture capitalists, has launched a non-residential accelerator programme christened Appy Hours that offers idea and product development services to tech startups in a cash-and-equity deal. The closest example would perhaps be Adam Lisagor's Sandwich Video in the US. Lisagor makes product demo videos for Silicon Valley startups in exchange for equity, and is tech startups' favourite pitchman, and has even rolled out an early-stage venture fund.

Launched in January this year, Appy Hours already has five startups on board, of which, three have raised seed funding. It plans to help roll out at least 20 startups this year.

Appy Hours identifies startups in the domain of web, mobile and wearables, offering them services on mobile/web App UX, design, development and marketing until they raise institutional funding. It prefers startups in the 'social good' space, in addition to education and agro tech.

"We take a small equity, usually in the lower single digits to cover our most basic costs, and to have our skin in the game," said Visakh Viswambharan, founder and CEO of Appiness Interactive. "For example, if the overall cost of product development is around Rs 20 lakh, a startup could pay us a fraction of the amount, say Rs 5 lakh, and offer us a stake for the rest."

He said the company works more like an accelerator-cum-co-founder with tech/UX/marketing expertise to help a startup build and launch its product as quick as possible. "The idea is to help them build and get some traction before they go for external funding," he said.

Typically, accelerators are run by established companies or angel investor groups to provide guidance and initial funding to early-stage startups.

Appy Hours also provides strategic services on go-to-market in addition to scaling up, marketing and analytics support after the launch. "In the current scenario where there are many ideas and a lot of 'startupreneurs', it's very important to have a working prototype with some good traction for any investor to listen to an entrepreneur. We help the startups to roll out a world class MLP (Minimum Loveable Product) before they meet any external investor," said Viswambharan.

Appiness was founded by Viswambharan in April 2012. His friend Sunil P Thomas later joined the company as co-founder. They recently promoted one of their early team members, Rigin Velayudhan, as another co-founder. A bootstrapped startup, Appiness today operates with a team of 70 people.

Viwambharan holds an MBA in advertising and has worked with SiliconIndia, Macmillan India, Sherston and Taptune in the past. An investment banker-turned entrepreneur, Thomas worked with NJ India and Harmoney Wealth Advisory Services before joining Viswambharan. Velayudhan previously worked with SiliconIndia.

Here are the five startups which are being incubated in the first batch of Appy Hours:

Trizzio: It's a multi-category, multi-user quiz app that offers prizes to users. The Bangalore-based startup, founded by ISB and IIM graduates, has already raised seed funding from friends and family, and has four marketers with a paid advertising model on its beta product.

ScholFin: Nasik-based edu-tech startup ScholFin is a scholarship search engine. Founded by NIT graduates, the firm has raised multiple rounds of angel investments in addition to winning Google Startup Weekend and IIT-Bombay Innovative Entrepreneurship awards. The platform already has a number of scholarship providers on board, including the J.N. Tata Foundation.

YoRide: Taxi app YoRide offers point-to-point taxis, hourly taxi packages and airport taxis. Users can compare and book a taxi from other ride hailing services such as Ola and Uber besides booking a shared taxi from YoRide Network taxis. The Bangalore-based startup, founded by an IIM graduate, has raised seed funding from friends and family.

Fleet Market: New York-based Fleet Market connects taxi drivers to owners in the taxi market.

Happystry: Bangalore-based Happystry, founded by IIM graduates, is a social app in the making.