Monday, September 8, 2008

White Label Gift Apps Creator, LOLapps, gets 4.5 Million in Funding

Venturebeat reported yesterday that LOLapps recently raised $3.5 million dollars, part of a $4.5 million Series A from Polaris Venture Partners.

$4.5 Million is the highest amount of funding I've seen for a Facebook apps company that isn't focused on games (not counting Slide and Rockyou who are not purely Facebook apps companies).

From what I can gather (they're in Stealth), LOLapps has two main apps, Gift Creator and Quiz Creator. Together, they have about 25,000 daily active users, which barely places them in the top two hundred apps in terms of traffic.

However, these numbers are not representative of LOLapps' true reach. Their audience is much wider.

Here's why: their apps allow Facebook users to create their own gifts and quiz apps. On those gift and quiz apps, LOLapps runs ads from which they derive revenue. Users create the content, LOLapps gets the cash. Pretty brilliant.

One of these user-generated apps, Shots, Shooters, and Exotic Drinks has ~8000 DAU. There's at least twenty more listed in their gift app directory. Same with quizzes. Who knows how wide their reach extends.

Another company, Sharendipity is trying something similar with games, though fun games are MUCH harder to create then gift and quiz apps.

With a 4.5 million round, LOLapps is entering the big leagues as far as app companies are concerned. They must have big plans. After all, why else you raise money if you're already profitable if you didn't? Well, unless of course, your traffic was in inevitable decline...

Whatever, they're doing, I'm sure they're monetizing it with virtual goods. :)