Quixey, one of the several start-ups trying to crack mobile app search, is proving just how hard it is to turn that vision into a business.
Less than a year and a half after raising $60 million (at a valuation of about $600 million) from investors including Alibaba and SoftBank, Quixey is turning to the debt market for another $30 million, according to a regulatory filing on Thursday. It's the first major move under new CEO Mark Lazar, who replaced founder Tomer Kagan in April.
Struggling start-ups often raise debt to avoid having to sell equity at a price below the previous round, a move that's become more prevalent since the venture capital market started slowing late last year. The company said the money was provided by existing investors and, according to the filing, provides the "right to acquire other securities upon conversion of the debt."
Quixey, of course, put a positive spin on the financing. The company has been focusing on what it calls "deep mobile search," helping consumers find information inside of apps, where traditional web search doesn't work.
"Our innovative technology enables users to find actions inside apps and take them directly to the answer they are looking for," said Kagan, who is still with the company, in an e-mailed statement. "This financing will help us accelerate our go-to-market strategy."
When asked if the company turned to debt markets to avoid a fundraising down round, founder Kagan said: "It's very common for companies to raise a mix of both equity and debt as they continue to expand their financing."
Other start-ups trying to solve the problem of mobile search and discovery include Branch Metrics and Deeplink.me. URX was another player in the space, but the company failed to get much traction and was partially acquired by Pinterest in May.
Quixey has now raised $173.8 million. In February, Recode reported, citing sources familiar with the matter, that the company had missed holiday revenue targets, leading to the departure of its chief operating officer and chief technology officer.
There's plenty of money to be made in mobile advertising. EMarketer estimated last year that digital ad spending on mobile would top $100 billion in 2016 and climb to almost $134 billion in 2017. The challenge for start-ups like Quixey is to work with the most popular apps and then prove that the technology can help keep and retain users, resulting in more revenue.
A video from Quixey shows how consumers can use the company's search tool to find a sports team's schedule on Bleacher Report, follow a specific account on Twitter or go directly to the orders page on Amazon.com 's app.
Quixey describes it as "the best solution for the new world — convenient access to private information without compromising user privacy,"