Analog Camera Apps Aren’t the Surefire Bets Investors Think They Are
Lapse is the latest analog camera app to see a great deal in funding, but it’s rarely a bet worth placing.
Lapse raised $30 million in its latest round of funding, which was co-led by venture capital group Greylock. Greylock was also an early investor in Instagram, which started out focused on replicating vintage and instant camera styles.
But for every Instagram, there’s a Lapse.
As explained in PetaPixel‘s report earlier today, Greylock invested in the app because of its “friends not followers” approach, which emphasizes waiting for images to develop without the chance to retake and edit the pictures. It’s not the first app with this approach. Dispo, notably, raised a great deal of money, quickly climbing to a $200 million valuation. However, the app faced controversy due to founder David Dobrik, who eventually exited the company.
Today, Dispo is largely forgotten amid the sea of other camera apps.
Before going further, it’s important to go back and define what exactly it means to have a company reach a $200 valuation. In simple terms, it’s based on the amount of funding it gets, not revenue or even how much it could theoretically sell for. This is, in turn, fueled by venture capital firms like Greylock.
“Viewers of Shark Tank — the reality show on which entrepreneurs pitch to regal investors dressed in midlife-crisis clothes — could be forgiven for coming away with the impression, shared by many startup founders, that getting funded is itself proof of value,” as The New Yorker puts it.
“The public markets often disagree. In recent years, it has become common for venture-backed companies like Facebook and Uber to wilt in share value subsequent to their public offerings—which happens to be the period when many venture capitalists distribute their stake back to investors.”
Crucially, 80 percent of venture capital bets don’t pay off, the publication adds. But the Facebooks, Apples, Intels, and the like, make up for those losses.
Looking at it this way, Lapse’s recent funding doesn’t so much predict future success as it predicts yet another bad bet by a venture capital firm. In addition to Dispo, Later Cam gained traction before falling by the wayside. Even more worrying, Lapse’s initial growth was tied to its practice of forcing users to invite others to gain access to the app. This is no longer a requirement, but it does make it less clear how much of that surge in popularity was organic, something co-founder Dan Silverton disputes.
Lapse, just like the apps with similar premises that came before it, will likely prove to be a flash in the pan, no matter what impressive-sounding valuation it reaches.
Image credits: Elements of header photo licensed via Depositphotos
