AppDirect invests in ‘connectivity’ with acquisition of AppCarousel – The Globe and Mail

  • Fast-growing online app marketplace makes fourth acquisition in six years, boosting its presence in the ‘Internet of Things’ space

    AppDirect, the San Francisco-based online app marketplace founded by two young Canadian entrepreneurs, is making its fourth acquisition in six years as it moves to boost its presence in the growing “Internet of Things” space.

    The tech startup that provides generic app store services to companies such as Samsung and Deutsche Telekom said on Thursday that it has bought AppCarousel, a company whose specialties include app-management platforms for connected cars and fleets, smart homes, WiFi-connected cameras, smart refrigerators and toasters.

    “It’s all about connectivity across devices,” AppDirect president and co-chief executive officer Daniel Saks said in an interview.

    “Devices are everywhere and software is the key,” said Mr. Saks, 30, a St. Catharines, Ont., native who founded AppDirect in 2009 with Nicolas Desmarais, son of Power Corp. of Canada co-CEO Paul Desmarais Jr.

    “AppDirect’s mission has always been to help people find, buy and use the software they need, and as of today that includes software on virtually any connected device.”

    Essentially, AppDirect acts as a middleman for companies by providing them with the software and platforms to sell cloud-based apps to their enterprise customers. For example, a small-business owner might go to an office supplies website and download a third-party product, such as security software, in a system using a platform provided by AppDirect.

    The value of the deal to buy San Francisco-based AppCarousel – which also has an office in Calgary – was not disclosed.

    AppDirect’s head count now stands at about 400, including roughly 100 employees in a Montreal office, Mr. Saks said. “We’re very strongly committed to the Canadian market,” he said.

    Revenue at the beginning of 2015 stood at about $18-million (U.S.), double the year-earlier figure, but the privately held company declines to say if it is turning a profit.

    Certainly, there are some heavy-hitting financiers who believe AppDirect has a bright future. Earlier this year, billionaire investor Peter Thiel’s late-stage venture capital firm – Mithril Capital Management – invested $50-million in the company, the second time it has funded the tech startup. Mr. Thiel, a co-founder of PayPal, was among the first investors in Facebook Inc.

    But there is a strong Montreal connection, as well. AppDirect’s initial funding came from Montreal early-stage venture capital firm iNovia Capital and its first angel investor was Eric Boyko, CEO of Montreal-based music streaming company Stingray Digital Group. INovia Capital was among three other investment firms participating in the financing round led by Mithril Capital in February.

    So far, AppDirect has raised about $110-million in funding.

    Mr. Saks, who holds a master’s degree in accounting and finance from the Harvard Extension School, says he was looking to start a business when he visited his friend Mr. Desmarais – also 30 – in San Francisco, where the latter was an associate consultant at Bain & Co. They decided that the cloud – the delivery of hosted services over the Internet – was the place to be. AppDirect is what they came up with.

    Mr. Desmarais – who is chairman and co-CEO of AppDirect – left his job at Bain to work full-time with Mr. Saks.

    Source: AppDirect invests in ‘connectivity’ with acquisition of AppCarousel – The Globe and Mail