Today, we take a brief look at joint ventures and what role they can play in the mobile market. This is an advanced topic for serious developers. Those with the interest will need to undertake their own business and legal research specific to the markets they wish to enter along with proper due diligence evaluations. The main intention here is how joint ventures could be applied without getting into the technicalities – which we can explore later.
A Joint Venture (JV) is an agreement between two or more parties to form a new business entity for a specific project. There are several types of JV’s, but typically the participating parties share in the control this business, its revenues and expenses.
Essentially, a Joint Venture is considered when a particular business is unable to perform a project on its own, but has a relationship with another business with which it could. There is a massive amount of this within the mobile app development market as it relates to localization and being able to effectively market in different countries with different languages and payment systems.
With payment systems like MPesa, for example, in order to receive mobile phone payments from end users in Kenya, you need to have a physical presence in Kenya or perhaps another area serviced by MPesa. That’s probably beyond the capabilities of most small and even medium-sized businesses. A joint venture, however, could help bridge the gap. This is not advice so much as it is to lay the idea out there for you to examine further.
Arrangements like this require a strong level of trust between both companies along with due diligence by both sides to make sure each party is doing what they should be doing. This is not something to jump into without serious consideration, a strong relationship, good communication, a plan, delineation of duties and responsibilities, and a legal expert in the local market.
From observation, likely the most critical component in any just venture is defining and committing to a solid protocol for handling any disputes. They will arise. Some people will just quit if they don’t get their way and aside from being unprofessional, it’s bad for mutual long-term profits. So, if you do move in this direction – there will be the excitement of starting something new, something meaningful, being “international”. After that fades, be completely committed to resolving problems.
So – you might be able to develop awesome apps in English, and while you think the app will perform well in Russia or Indonesia, you simply don’t have the means to market it there. Others can. Again, while it might be nice to have 100% of the profits, 100% of little or nothing is not very much. With cooperative efforts, more people get a slice of the pie, but there are more people making pie.
Pie, Pie, Pie!
We’ll come back and revisit JV’s and perhaps even SPV’s in the near future.