App Design For An Equity Stake

App Design For An Equity Stake

Duffy's Ignite program helps app entrepreneurs design their product for a slice of the pie.

Martin Davis envisions a “less cheesy” version of Shark Tank unfolding soon within the downtown Minneapolis walls of Duffy, the legendary design and branding firm. Duffy’s CEO uses the Shark Tank analogy to describe a new incubator program called Duffy Ignite. Entrepreneurs will pitch Duffy to secure the company’s services in exchange for equity stakes in their startups.

The firm is targeting entrepreneurs who have developed apps for Android and iPhone and want help launching their enterprises. Davis anticipates that one startup will be chosen per quarter and get about 500 to 1,500 hours of Duffy services.

“They will get the design, technical and user-experience capabilities of Duffy,” he says, “to produce a minimal viable product that they can use to seek out venture capital or seed money.”

“I would like the next Uber to come out of Minneapolis,” Davis says, adding that some of the Duffy work will occur in a design-a-thon format. “Everybody circles desks and ‘codes’ over each other’s shoulders.”

What Duffy is offering startups has “real market value” and increases the likelihood that the app innovators will succeed, says Matt Nowakowski, dean of the St. Mary’s University Graduate School of Business and Technology in Minneapolis. “App entrepreneurs have very specific technical knowledge but not as much financial acumen to get the backing to make their ideas come to life.”

Nowakowski wonders if the entrepreneurs will feel constrained by Duffy’s involvement: “Will they unnecessarily give up future profits?” Davis says Duffy anticipates receiving 5 to 20 percent equity stakes, which Nowakowski says is “pretty fair” based on the level of services Duffy is providing.

Duffy, which employs about 35 people in Minneapolis, recently expanded its ownership structure and business capabilities, which now include digital marketing, strategy and user-experience design. It opened a Chicago office in June and employs 10 people there. “We have reinvented Duffy five or six times,” says Joe Duffy, chairman and chief creative officer. “The marketplace changes and popular culture changes.” New employees are working on the digital side of design,”Duffy says, to complement the skills of traditionalists long on staff.

—Liz Fedor