Investment Justification Template: Fill & Download for Free

This is an interesting challenge and something I just experienced. I recently launched a business with two partners and quickly found out that I was putting in most of the capital and most of the hours to get it launched, but unfortunately we all had equal share in the company. The result was lots of tension and frustration, which was not good for the company.Startups aren't easy and they certainly can't survive without capital and man power, so look at equity allocation in those terms. Since he can't put in the time he was originally committed, then his equity should get adjusted accordingly - or capital put in to account for the loss and would allow him to keep his equity. Or, if you need the hours from him and you have to bring in a third partner, then that equity is re-allocated.What you need to do is have an equity allocation model that you evaluate at each milestone that is based on capital and effort put into the company during each milestone that can be justified.One example is when one of our partners could only put in a few hours a week and wasn't able to contribute to the capital needed for our second large milestone. It didn't seem fair to keep the equity because the other partners were putting in significant capital and hours to hit that milestone. So we did an internal 'capital raise' activity where our cap table was based not just on investment dollars but also hours worked.We just had an honest conversation and once it was all put down on paper, it was hard to argue the methodology.We now do the same thing at each big milestone, whether it's raising equity or taking a bank loan, at least until external capital is raised, but having this justification has made the working environment much better and everyone sticks to what was promised - even hours worked per week.I wrote a blog on this subject a couple weeks ago with a template on our valuation model, feel free to use it if it helps!http://www.wickedstart.com/blog/inthetrenches/2011/01/20/how-do-you-decide-what-percentage-to-allocate/

If we are being honest, many of the big funding wins and services you here of are built using ruby gems or other plugins assembled together.it is not only reasonable, it is smart - better not to spend time architecting unless you have a justification to invest. However, you will get laughed off if your “fake” app has no users or no interested customers. We are past the era of build it and they will come. The challenge to most online services is no longer tech execution but market indifference.

Short Answer: YesShort Logic: Not only based on the internet as a previous indicator of long term viability, the fact that this model is becoming widely used by top grossing games and indie devs alike more so than it was in years past is proof that the model works....BUT it is just that. A model. Not a silver bullet.Also note, as referenced in the question, that I do little to no cross promotion, so that point raised in the original question is moot.Long answer: Unfortunately the idea of app flipping has a warped idea that it is a turnkey way to print money. I take some responsibility for that - I focused on the marketing and the arbitrage more than the historical/capitalist justification for this model. The former just being more fun to write about :)For anyone who's new to this concept, it is the idea of creating app templates, changing graphics, and publishing to the app store in a way that will get downloads to generate revenue from advertisements.What app flipping/reskinning is, and always will be, is an indirect form of marketing. The only reason to flip apps is to produce targeted apps that gather downloads and revenue based on those downloads with drastically lower costs, risk, and time. You are consciously giving up time/money to produce other apps from scratch. This is nothing new. When any industry finds a model that works, people gravitate towards it. That's why we have franchises and not 1,000,000 indie run hamburger stands. That's why we have car companies that make the same model and not 500 SKUs of cars. Certain models are better than others as based on the market demand.Now this question specifically addresses the idea that this model is dead because I would imagine the following happens for many people:1. Read one of my blog posts (see here: How I Went From $1,000 to $200,000 With Apps)2. Think this is the golden ticket3. Buy source code4. Change a few graphics and update a few keywords5. Launch app6. Limited success and certainly not anywhere near what the blog post alluded toWithout getting into the deep implications of market competition, I think it's reasonable to say that there is no reason why the above would ever work in any business situation. You are doing nothing that is unique.But, the model is still rock solid. You just need to figure out how to make this output different than what everyone else is doing.For example: you buy a source code. Now you need to make it different than the 1,000 other people that purchased it. What do you do?1. Invest in amazing graphics that tailor to a highly lucrative keyword you found from lots of research2. Create new functions and/or features in the app3. Have 6 month update strategy4. Improve monetization platformEtc.One of my favorite and most relevant examples of app flipping is what Supercell did with Boom Beach. They used the core loops and gaming engine from Clash of Clans, but updated some of the game play and obviously the graphics. Release - top grossing game (with obvious marketing efforts to boot). Pocket Gems does the same thing. And TinyCo. And Glu Mobile.A bit of perspective - when you go to something like ThemeForest, you see thousands of beautiful website templates for less than $40. When you look at those templates, you see a FRAMEWORK, not a revenue model. That's how you should be looking at app source codes. In fact, my own blog was built on the Thesis Theme....but it did nothing until I added my own content, design, and SEO work before it reached it's first million visitors.That's what app flipping is all about and why it's never going away. It's simply a chance to get into the app business without sinking thousands of dollars into an idea and joining the 90% of startups that fail. I promote it because it works - I also strongly promote education, learning, and working your ass off to make money because that's what it takes.The difference between 2014 and 2012 is mostly where the effort is put in. I worked just as much back then as I do now and make just as much money as I did back then when it "worked." Why? Because back then there was less competition but there was also:- WAY less source code (and lower quality)- No turnkey re-skin resources- Very few trusted developers and designersNow you have a virtually unlimited supply of all that. Time now is spent on marketing, not on project management, which is unfortunate for many because you can't read a blueprint that shows you how to be creative. That also means that most people drop off and those who understand this make a LOT more money.The three P's of business are: People, Product, Process. Remember that - you can never fully outsource any part of that forever based on market forces. What works for a short amount of time will always need to be iterated, whether it be the source code you re-skin, the team you have, or your own personal strategic knowledge.In summary, this model is just that, a model. It's not a business solution. I get a lot of hate mail from people that think it's a scam and that it floods the app store with garbage, and that's ok, because for the people that do understand, it's changed their lives - probably a lot more so than the hundreds of people who still produce beautifully designed calculator apps that keep coming out. I don't allow just anyone to sell source code on my site because most source code is garbage and IS the kind of stuff that ruins the app store (and is a recipe for disaster).The only time a model will do the heavy lifting is in an early stage market. Now that we're in the next stage, there is a shift towards quality to "stay ahead" - better codes, better process, smarter research, better updates. I'm personally pumped about this because the people who don't want to do the work start looking for another business to be in :)