ContractIQ is a Chennai based startup that helps people and businesses hire agencies and developers for building their project. Founded by Ashwin Ramasamy, ContractIQ has evolved to become a marketplace for app development and has gathered some powerful insights over the last few years about the mobile app development economy. "We grew our pipeline by 500% in about 5 months and figured out a trend where several Indian small business want to build apps," says Ashwin. To be able to serve them profitably, the company has now launched a new business that qualifies and sells these leads for a monthly subscription.
In emerging markets like India, where many businesses are getting online for the first time, many of them are looking for ways of being mobile responsive and several offline-businesses are exploring apps as a way to reach out to the online audience. ContractIQ shares some interesting data:
- The average Indian small business with less than INR 1 Cr of revenue, prefers to spend not more than 5L INR on their mobile and web presence.
- Most of them are having their first brush with customer facing technology and are nervous about the choices they are making. Failure rates are over 70% (Of every 100 Indian small businesses we speak to, 70 have tried outsourcing and failed before)
Started roughly 3.5 years back, ContractIQ has grown into a global marketplace that helps a couple of hundred businesses every month in finding product development agencies for web and mobile. Over the last 6 months, the inbound interest from businesses looking to build apps has grown massively. But the concierge style match-making that ContractIQ is known for, has a flip side to it - the take rate (or) the market place commission means that the cost for the small business increases at least by 10%. "Often it's the app development vendor that takes a hit on profitability, to serve this customer that's quite price sensitive. Given the deal sizes, that's a lot to pay in an absolute sense, for transactions of low value," says Ashwin.
Recognizing this dynamic, ContractIQ has introduced an India-focused subscription business, wherein a validated network of app development companies that are focused on the Indian market are offered qualified Indian leads for app development, for a flat fee.The app development companies are introduced to prospects every month for a fee of INR 25,000 per month.
"We're reducing the cost of acquisition for these Indian app development companies by a factor of 5x, when compared to the marketplace model and are sending them qualified leads, allowing them to build a predictable pipeline every month. The goal is to build a credible pool of supply and introduce them to domestic customers, who've not quite sophisticated when it comes to vendor evaluation," says Ashwin. So far, ContractIQ has identified over 25 such companies across India who'd participate in the subscription model. The goal is to use India as a template and expand it to markets like Africa where the small business spend patterns are comparable.
This is an interesting move by ContractIQ and acts as a layer in between the agencies and business owners. Most of the technology startups like Apptuse or Zepo or Nowfloats in India are in the business of getting more players online by providing tools and assistance to business owners to build their own apps. Even Zomato entered the space by Whitelableing its solution for restaurants. While ContractIQ is trying to improve the success rates for businesses outsourcing their development work. It sits nicely at the intersection development agencies and technology companies trying to eliminate the need of a development agency.