An alumni of University of Macau and holder of a local ID, Tiago Costa Alves made use of his experiences in Asia to help Portuguese startup Aptoide become the first European startup to obtain investment from two of the largest regional venture capital firms. Now with around 3.7 billion downloads worldwide, Aptoide has become the largest app store after Google Play and Apple Store. Mr. Alves explains to Business Daily how a new startup can break monopolies and how Macau can better make use of its advantages to see similar success stories appear
What is your connection to Macau?
I studied at the University of Macau and I’m a MSAR resident, which was one of the reasons why Aptoide didn’t need to go through Macau to go to Shenzhen. The founders knew me and invited me to help them, to expand the business in Asia, since I know the language and I feel at ease in the region.
However in my case, coming through Macau makes total sense for any Portuguese startup or SME wanting to come to the region. There’s no visa required to come here.
The Portuguese business delegation that came here already helped open the door for entering the Chinese market. We went to Shenzhen and Zhuhai, where a special startup incubator is also being developed with startups from Shenzhen, Zhuhai and Macau.
The amount of contacts exchanged during the trip already helped open the door. Any entrepreneur who wants to come back and find a potential partner in Shenzhen already possesses many contacts, and vice-versa.
How would you describe Aptoide?
Almost all devices with Android’s operating system come with Google Play, however Google Play doesn’t allow the download of applications such as Facebook or WhatsApp without a Google Account or Gmail. One of the advantages of Aptoide is that you don’t need any account to download apps, you just install it in your phone and start downloading, it doesn’t even ask your name or e-mail address.
This is related to our expansion here because, if you think of a poor farmer in Cambodia who bought a smartphone for the first time, he won’t have an e-mail address but wants to speak to his family through Facebook or WhatsApp.
This is one example of a reason for why people install Aptoide.
How did the idea for Aptoide come about?
It all started when one of its founders, Paulo Trezentos, was doing a PhD in computer sciences in Portugal and wondered while preparing his thesis why in Google Play or the Apple App Store, the app distribution is decided by Google and Apple themselves. Why can’t there be an app distribution decided by the users? The best analogy I can make is with the Youtube model, but instead of videos it’s with apps. You can create your own channel on Aptoide with your favourite applications and then share the channel with family and friends. We started realising the market issues and addressed them.
Taking the example of the aforementioned poor Cambodian farmer: he probably will have an Android device that isn’t a Samsung, but some other brand. App developers can’t test the service to that specific device. There are 20,000 device brands worldwide that use Android and it’s impossible to test the app on all 20,000 devices.
So that farmer just used Facebook after an update, but for some reason it is not working on his phone. With Aptoide you have the roll-back option, where you can revert to the old version, another thing that doesn’t exist in Google Play.
So Aptoide wanted to break the monopoly of Google and Apple?
We don’t believe in monopolies. Nowadays if you want to buy music, books, watch a movie you can go to many places. Why, when you want an application, is there only one place available? This is not sustainable, it should be more diverse. At this moment the European Union is pressuring Google because of its search engine, because if you have a competing e-mail service, you will never appear before Gmail in the search engine. Two years ago we filed an anti-trust with the European Union and we hope there will be more pressure on them. If you think of what Microsoft did to Netscape, where Microsoft annihilated the service with Internet Explorer, that is what we feel towards Google Play. It’s very hard for us to compete with them due to their dominance of the market.
In 2014, Google also closed Google Ads for us. We were without those payments for two months and we had to create our own advertisement platform.
How did you get involved with Aptoide?
After studying at the University of Macau, I studied two years in Beijing, then went back to Portugal where I worked for communications company Portugal Telecom (PT). After I did an MBA in San Francisco, I continued to work for PT after coming back, and one of the projects I was involved in was with a mobile payment system called MEO Wallet. The company that supplied the platform was a company of Mr. Trezentos’.
In a period where I was planning to leave PT, he asked me to have lunch on New Year’s Day of 2014! He and Álvaro Pinto [one of the Aptoide co-founders] asked me to help them raise a round of investment in Asia, since I studied IT in Macau, knew Chinese and had an MBA in San Francisco. In 2015, Aptoide had broken even, so they believed it was time for the next phase. So I started using my vacation days from PT to travel to Asia with them, going to Hong Kong, Singapore, Indonesia, Malaysia looking for investors.
Why did Aptoide choose Asia as its investment source?
Almost every Portuguese startup goes to London or Silicon Valley to find investors due to the Western culture, but the Aptoide founder believed the market potential for users was in Southeast Asia, and for business partnerships was in Shenzhen.
Without knowing any investors in the region, I started reaching people through Linkedin. We had an advantage at that time: Aptoide had 10 million worldwide monthly users, without any kind of advertisement or marketing, which gave us a good starting point.
Bit by bit we managed to raise US$4 million (MOP32.1 million) in investment in one year with the help of two Asian investors, Chinese venture capital fund Gobi Partners and Singapore VC Golden Gate Ventures.
We managed to become the first and only European startup to get investment from these VCs, with the others all being Chinese or American.
It was very complicated since we would talk to the VC representatives who thought that what we were doing was impressive, but didn’t know anyone in Portugal to check on us.
The number of users we had helped, and I was told by the VCs the fact that the company had a VP for Asia Pacific who spoke Chinese and already lived in Asia was very important for them to green light the investment.
Portuguese venture capital Portugal Venture in 2015 also gave us a US$500,000 bridge loan to help open an office in Shenzhen and Singapore, which helped show we were serious.
In 2015, Aptoide opened an office in Shenzhen. What led to that decision?
At the time we had 10 million monthly users, now we have 20 million, still without any advertising, just word-of-mouth. When you look at our user base, 90 per cent downloaded it straight from the website after hearing about it, with the other 10 per cent being for white-label, meaning we go to Xiaomi or Vivo and tell them ‘all your devices sold outside China have Google Play, you don’t have your own store, so why not use our technology to create a Xiaomi or Vivo store?’
All these Chinese Original Equipment Manufacturers (OEMs) are in Shenzhen and in a 10 kilometre radius of our office there. OEMs for Android smartphones, tablets, Smart TV, Virtual Reality (VR), all in the same area.
What is the level of Aptoide’s presence in Asia?
Since we opened the office in Shenzhen, we have one million smartphones developed in China to be sold worldwide already coming with our service.
We’re in talks with Vivo to place the technology in a batch of 10 million devices.
This is important because when you try to download another app store from a device that has Google Play, a warning pops up saying this service is not from Google and it might have a virus or malware. Google removed us three years ago, one of the reasons we filed the complaint to the European Union. When Google came out with its platform, it said this is an open source platform that everyone can use, and then makes something like this. They don’t like competition.
If it is the Xiaomi manufacturer putting our service in the device, if you buy the device in France or Brazil there won’t be any issue.
In the MSAR we had 50,000 active users last year, the same number as in Singapore, a city with five million people.
Of the 20 million users we have, the majority of the users are in Brazil, then Mexico, United States, Italy and India.
Why? Because when we launched Aptoide in 2011, we launched it first in Portuguese, Spanish and English. People in Portugal and Spain started mentioning it to their friends and family in Brazil and Mexico, people in Mexico mentioned to people in the U.S.
It was totally organic growth.
What is the next step for Aptoide?
We’re preparing the second round of investment, something we started preparing right after the first round’s conclusion was announced. We’re already in informal talks with investors for the next phase, since we realised that we lost a lot of time in the first phase to inform investors of who we are, what’s our vision and getting their trust. So we update investors every six months about our status at the moment, so when the moment comes to pull the trigger and ask for investment, he/she is in or out.
What advantages do you see in Macau for startups?
It’s very hard for European startups to suddenly go to Asia. They don’t even know where to start. This is something in which Macau is greatly positioned, with its Western culture, good knowledge of Portuguese or English, and great motivation to serve as that bridge. The business delegation is good evidence of that, with its practical results. It was not easy to organise something like this in terms of logistics, visas and organisation, but it was possible with support of the Macau government.
You work in Singapore, a city that is known for its support of new businesses and startups. What measures used in the city do you believe could be applied to Macau?
I work in a co-working space in Singapore that belonged to the National University of Singapore (NUS), called NUS Plugin. Their concept is that you get there, you say you have this idea for a startup. If the idea is viable and interesting, they accept you and you can stay there for six months without paying anything for meeting rooms, Internet, desks, nothing. When the period finishes, they come meet you to ask how the project is going, and if there’s some issues you still need to resolve they can give you six more months. After a year you have to pay a symbolic amount, when I was there it was S150 (MOP875/US$108) every month for using a desk. After you reach a phase where the startup is larger and has more employees you can pass to one of their offices, with an office for six people being for around S1,000 or S1,500. If you grow more than that, then they tell you its time to rent your own space. This is what they do to help you in the beginning.
NUS also does some early investment in exchange for a small percentage of the startup.
NUS Plug-in is in a very famous space in Singapore, called the Blk71, where all startups were initiated. Now they have expanded to even more incubator centres. It’s a whole area just with centres.
Other policies to help include: if you buy hardware they subsidise you; if you want to get training in Android or Java Script they pay it. They also bring a considerable amount of investment capital. All venture capital firms in Southeast Asia want to have representatives in Singapore.
