OpenCandy Builds Online Marketplace For Free Software Downloads

1/14/10Follow @bvbigelow

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their startup, combining it with a positive sense that the software products they’re offering, once you taste them, are like candy.

“Almost all the products getting recommended are free downloads,” says Thompson, explaining that if users like the free version, they’re usually willing to pay to upgrade to a more sophisticated version. OpenCandy’s software partners are both advertisers and publishers. Thompson says its top partners offer products that rank among the most popular downloads at download.com, CNET’s website that provides free software and reviews.

“We’ve created a network where a lot of publishers can interact with dozens and dozens of advertisers,” Thompson says. “What we end up doing is automating the process.” He describes OpenCandy as a marketplace that helps match publishers with advertisers. Like any market-maker, though, one of OpenCandy’s biggest challenges is matching the supply and demand. “We have to work to bring in publishers that have inventory and advertisers who can fulfill that inventory,” he says. “We have to keep those two in balance.”

As an example, Snagit pays Nitro a fee to “advertise” its product during the principal download, and OpenCandy takes a cut for electronically brokering the deal. But Thompson says OpenCandy only gets paid when a user actually downloads the advertised product, with its fees ranging from 50 cents to several dollars per installation. “We’ve powered tens of millions of downloads through installers,” Thompson says, “and our accept rate is in double digits, which is pretty phenomenal.”

Thompson says OpenCandy’s founders bootstrapped their startup until October 2008, when they raised $3.5 million in a Series A round that included Bessemer Venture Partners, O’Reilly AlphaTech Ventures, and some prominent individual investors: DivX founder Jordan Greenhall, LinkedIn founder Reid Hoffman, and Excite founder Joe Kraus.

The company has grown to about 20 employees, and Thompson says he expects to hire another person per month over the next year. “We’re doing really well in terms of growth,” Thompson says. As long as that growth continues, he adds, “We’ll definitely consider raising more money.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • is it safe?

    I keep finding beware indicators associated with open candy.

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