Coming up in 2018, ProgrammableWeb will be releasing a comprehensive series on how API providers can best optimize engagement with developers. Sure, there’s a long list of widely accepted best practices that we’ll be sure to note. But, we’re also always on the lookout for unique and innovative practices that could merit inclusion as well. One such approach, being launched today by Intuit in partnership with Lighter Capital, is exactly the sort of thing we're talking about.
Today, Intuit, in partnership with Lighter Capital, announced the $15 million Lighter Capital Intuit Developer fund to stimulate the development of third party applications designed to work with Intuit’s QuickBooks platform and APIs. According to Intuit, there are more than 2.38 million subscribers to QuickBooks Online, many of whom rely on one or more of the 500-plus third party add-on applications found in Intuit’s application showcase to run their businesses.
As a side note, offering such an application showcase that helps users to find great third party apps while also driving interest and revenue for the developers of those apps is an API provider best practice that ProgrammableWeb strongly advocates. So, kudos go to Intuit on that front.
Stimulating growth in developer ecosystems with investments is an age-old practice that has been around as long as such ecosystems have existed. Stretching back four decades, practically every major platform company has done it at one time or another — often as a means of bootstrapping the ecosystem in its nascent days.
But what sets this program apart from those more traditional approaches is the involvement and direction of that investment by a third party investor well-after the ecosystem already has its footing (referring to the more than 500 third party apps that already exist). Intuit’s 3rd-party developer ecosystem was first established in 2001 and the Quick Books Online developer network has been in place since 2014.
Further setting the program apart is how Lighter Capital is only seeking a percentage of revenues over a fixed period of time instead of an ownership interest in the companies that are approved for the program. Intuit and Lighter anticipate engagements that last from 3-5 years and that produce an ROI for Lighter in the range of 1.35x to 2.2x (actual duration and ROI formula would be specific to each developer). The terms typically apply to a specific application and not necessarily to the developer’s entire portfolio.
“They don’t do venture in the traditional sense” Intuit’s director of developer platform Alex Barnett told ProgrammableWeb. “They make capital available around SaaS-based businesses and in return, they get paid as a percentage of the revenue going forward. They are not asking for equity."
According to Barnett, the capital is there to make money and resources for available for whatever it takes to drive the next wave of growth for developers that are invited to participate. “Developers in the Intuit network can qualify for $15,000 up to $2 million without giving up any equity" said Barnett.
Elaborating on Lighter Capital’s motivations to offer such a program, the firm's CEO BJ Lackland told ProgrammableWeb "As more SMBs turn to the cloud for core business functions and services, we believe we'll see increasing demand for developer apps to serve the QuickBooks Online community.” At the time this article was published, Lighter Capital was not an investor in Inuit itself.
Who qualifies? Barnett told ProgrammableWeb that In order to be considered for the fund, developers must be part of Intuit Developer Network. Then, there will be other evaluative criteria that Lighter Capital applies. For example, the company must be based in US, the solution must be SaaS based (using a subscription model) and not something that’s downloadable for on-premises use or made on a one-off basis. Additionally, the developer must already have at least $15K of monthly recurring revenue with gross margins of 50 percent or more.
Responding to the question of what would happen if the funded-application was acquired by another company mid-way through the duration of contract, Barnett said that the developer would have to buy Lighter out of the balance. Developers can apply for the funding on Lighter Capital's website.