Have you guys heard of apps?
They’re big! Really big. Ask AppLovin, a five-year-old startup that helps app developers find new customers: It just sold itself to China’s Orient Hontai Capital in a deal that values the company at $1.4 billion.
Most of you skip right over stories about ad technology, with good reason. But this one is worth paying attention to for a few reasons:
- The deal is an astonishing win for AppLovin CEO Adam Foroughi, who raised less than $5 million in outside backing for his company. And it’s a great win for the handful of investors who did back him, including Yahoo chairman Maynard Webb.
- The deal is the second giant Chinese ad-tech purchase in the last few months. In late August, a consortium of Chinese investors bought Media.net for $900 million. That deal was a jolt for the ad-tech industry, which has been a turnoff for investors in recent years. So imagine what this one will do. (Also imagine the smiles at LUMA, the boutique investment bank that has carved out an ad-tech niche and worked on both of these.)
- The deal points out that even though many users may have burnt out on apps — half of U.S. mobile users download zero apps a month — there’s still enormous interest in the app market. In fact, consumers’ resistance to new apps can be good news for startups like AppLovin, which promise app developers like Pandora and King — the company behind Candy Crush — they can get their apps in front of the right people, at the right time, and/or “re-engage” users who have already downloaded an app but haven’t used it in a while. It’s also good news for Facebook and Google, which are making a lot of money in the app ad business.
This article originally appeared on Recode.net.