ngmoco M&A Fail
And perhaps most interesting, Ngmoco is growing, but has spent a lot of money for that growth. In 2008, its revenues were only $484,000, and it lost $2.46 million. 2009 went better on the revenue side, jumping up to $3.16 million, but the company’s losses came out to a whopping $10.89 million. Pretty amazing that financials like that led to a sale of $403 million — both Ngmoco and DeNA must expect a lot from this partnership in the future.
via tuaw.com
This feels like a bubble to me. How can anyone value a company so highly whose costs scaled like this? It doesn’t take a brain surgeon (or financial analyst) to see that Ngmoco, while they make a great product, there’s not a viable business strategy. You’re supposed to lose LESS of your money as you grow, not more.
The barriers to entry for an iPhone app should be low - where all these costs coming from? See also: the fact that it cost Instagram $500k in venture money to build.
