Following an earlier $12 million funding round, subscription management platform RevenueCat has made its first acquisition, which is unusual. Rather than buying companies to add tools to its platform, the company is acquiring Dipsea, an app that offers “spicy” audiobook subscriptions.
No, this isn’t a wholesale transformation of popular platforms used by over 30,000 app developers, including Notion, VSCO, Ladder, Photoroom, and Buffer.
Instead, the company says the novel idea here is to bring a subscription-based app in-house to serve as a testing ground for new features in RevenueCat. Additionally, it also serves as part of RevenueCat’s “Build in the Public” philosophy.
Dipsea’s app works with writers and narrators (and ElevenLab’s AI voice technology) to create a variety of romantic fictional stories that focus on the female gaze. Today, Dipsea’s business is pretty strong, with 93,847 paid members and nearly $6 million in ARR. Last month, for example, the app raised $505,920.
The app has been doing well, but as a venture-backed startup in today’s highly regulated environment, it has struggled to find an exit. As a long-time customer of RevenueCat, this was a rare opportunity.
“I have known Faye[Keegan, CEO and Co-Founder of Dipsy]since the beginning of RevenueCat,” says Jacob Eiting, Co-Founder and CEO. “As we have gotten to know each other over the years, we have always felt that it is difficult to find someone who understands RevenueCat’s customer problems as deeply as someone who has lived through them. .”
Image credit: RevenueCat
When the opportunity to acquire Dipsea’s operations presented itself, Eiting says he saw it as an opportunity to try running a live app using RevenueCat’s tools. What are the real challenges for subscription apps in the App Store today?
“The App Store has been completely turned upside down since we started,” he says. “All tactics have completely changed.”
While app developers today face typical user acquisition, conversion and retention challenges, the subscription economy itself has grown at least 10x since RevenueCat went live, Eiting said. I say. Competition is also fierce. For each popular app category, there are at least seven other strong competitors. Additionally, Apple’s launch of its user privacy initiative ATT (App Tracking Transparency) has impacted developers’ user acquisition efforts.
“It’s definitely gotten more difficult and more sophisticated,” Eiting said. “And RevenueCat is part of that, democratizing that, taking technology that different apps have invented on their own, and making it available to everyone out of the box.”
Image credit: RevenueCat
Still, running a subscription-based audiobook app would be new territory for RevenueCat.
To help with this, the acquisition brings in Keegan and her team of five, who will continue to update the app and integrate new tools that RevenueCat wants to test.
Having its own app allows RevenueCat to try new techniques before convincing paying customers it’s worth the risk. In addition to testing the tool, the app also serves as a demo for potential customers who want to get hands-on with RevenueCat’s dashboards before committing.
“Joining forces opens new possibilities for Dipsy,” Keegan said in a statement shared with TechCrunch. “We leverage our deep in-house subscription growth experience and work with them to continue to build great features that help developers earn more revenue while providing Dipsea users with the content they love. I couldn’t be more excited to join the team.”
Image credit: RevenueCat
Dipsea is backed by investors including Bedrock, Thrive Capital, Powerhouse Capital, Lemonade Capital, Riverside Ventures, Amboy Street Ventures, Jackalope Ventures, Bossanova Investimentos, Niche Capital, and other seed-stage VC firms and angel investors. Masu. According to PitchBook, it has raised $13.63 million so far. In acquiring Dipsea, RevenueCat acquired all of the investors listed on App’s cap table, while allowing App to continue operating its business and fulfilling its mission.
Terms of the transaction were not disclosed, but our understanding is that this is an all-cash acquisition and has been in the works since March. From a financial perspective, this probably wasn’t a big win for Dipsea investors, as it’s unlikely that RevenueCat used up all of its Series C on this app.
Over time, RevenueCat hopes to prove successful by growing Dipsea’s subscription business and use it as an example to existing customers.
“This means that when the demo environment is up and running, you can log in and see what it looks like so we can tell you the subscriber and revenue numbers,” said Rik, Vice President of Marketing at RevenueCat. Haandrikman said.
“So if we check in a year and see 50,000 subscribers, we’re going to be all excited, right?” he says with a laugh. “Something has gone horribly wrong.”
Keegan will begin his new role at RevenueCat in the coming weeks overseeing the Dipsea subsidiary, but the company said it will prepare a demo environment ahead of that.
