- Procreate CEO James Cuda said VC funding for apps has "dried up," making entering the market challenging.
- Cuda advises aspiring app founders to take "bold" risks and avoid following trends to succeed.
- Cuda named Uber as an app that made an impact by doing something different.
Thinking of making your own app? Procreate CEO James Cuda has some bad news: the "gold rush is kind of over."
The CEO of the popular digital art app for iPads and iPhones is referring to the days of VCs pouring money into new apps. In an interview with Business Insider, the CEO discussed how the current landscape has made it more difficult — though not impossible — for apps to enter the market and compete with the major players.
"I think 10 years ago, lots of VCs were just throwing money at the App Store and any developer was getting a lot of funding," Cuda said. "But that's really dried up now."
While the overall startup market has faced a lull, AI startups are receiving significant funding, with firms like Andreessen Horowitz making the sector one of its focuses.
35.5% of VC deals made in the third quarter were related to AI and machine learning, while 64.4% were non-AI or machine learning, according to PitchBook data shared with BI. That's about a 25% jump from the first quarter of 2019, when only 10% of VC deals were related to AI and machine learning.
Cuda said there's still room to create "incredible" apps, but it's not quite as simple. His advice to app founders competing in today's app landscape is to "take a bold risk."
"What I would suggest is doing something that has never been done before," Cuda said, adding that while it may be more of a risky path, the reward, if you're successful, is likely more worthwhile.
Cuda suggests founders avoid hopping on trends because they're "not going to break through" today's competition of well-established products on app stores.
Cuda appeared to follow his own advice even though his app has been a mainstay among iPad design apps. The CEO went viral for speaking out against a major trend, generative AI, in a video posted by the company in August. He told BI the company has kept its decision to leave AI out of its products.
"If you follow trends, you're already going to be competing against products that are, really dominating in those charts, have got lots of eyeballs, they've got lots of brand equity already accrued," Cuda said.
The app CEO named Uber as a prime example of a product that came out of left field with a concept that nobody had successfully tried before. At its inception, the company was called UberCab and founded as a black-car service. Cuda recalls thinking the concept of getting into a stranger's car that drops you off somewhere was "absurd." The ride-hailing app went public in 2019 and in October reported just over $11 billion in revenue in its third-quarter earnings.
"But look at what impact Uber was able to make by doing something completely different and utilizing all of the technology of the hardware that Apple provides and the app store itself," Cuda said.