(Photo by Flickr user @vivekthakyal, used under a Creative Commons license)
VenturePact is playing matchmaker.
The two-year-old Center City company, founded by recent Penn grads, relaunched as a marketplace for outsourced product development. Tech companies, from early-stage startups to larger companies (and those in between), can use VenturePact for free to find software firms that can build what they need.
Since VenturePact’s relaunch in late 2013, tech companies have paid more than $1 million to dev firms found through VenturePact, said cofounder Randy Rayess.
The company is tackling the same problem it was when it first launched in 2012: how hard it is to find good engineers. Instead of providing the outsourced product development themselves, VenturePact has built a marketplace for the service.
Cofounders Rayess and Pratham Mittal spent time in places like New York City, India, the Middle East and Europe to find and vet roughly 100 software firms that are featured “suppliers” on its platform. It was a time-consuming and exhausting process, Rayess said, but it’s one of their selling points: customers don’t have to worry about the quality of these remote firms because VenturePact has vetted them, the founders say. These shops include NYC Devshop, Bangalore-based Mavenhive Technologies and Canada-based FreeRunning Technologies.
VenturePact’s customers are mostly tech companies in Philadelphia, New York City and San Francisco. They include startups looking to build a minimum viable product, those looking to build a second or third version of their product or large companies aiming to build internal enterprise software. Customers include big names like ESPN and ecommerce company Bonobos, as well as DreamIt Health startup Seratis and New York City-based LawDingo.
Here’s how it works.
When tech companies use the VenturePact platform, they input details like their budget, their desired location (same time zone, etc.) and their developer specifics (“I want developers who know how to use the Stripe API,” for example). VenturePact returns three to five possible matches.
VenturePact takes a cut of each deal that gets signed through the platform, Rayess said. The cut is determined by a sliding scale of a few factors, including how well a firm has delivered on past VenturePact projects and how big the project is. It’s a way to incentivize the dev shops to do a solid job.
The business is bootstrapped, with much help from when the company had its services side. Cofounders Rayess and Mittal got the idea for a pivot when, during their product development days, they were too busy to take on a project and would refer tech companies to the remote dev firms they knew. The dev firms were so pleased with the leads that they offered the VenturePact team a cut of their earnings.
Who are their competitors? Sales teams at dev firms, for one. There’s also marketplaces for freelance developers, like Elance. VenturePact also considers large software consulting firms their competitors, Rayess said.
Rayess, of Old City, and Mittal, who’s living in India while his visa gets worked out, manage a staff of 12, including themselves. While they have an office in Center City, most team members don’t use it. Their marketing head is in New York and their nine-person product development team is, like what VenturePact is selling, remote and based in India.