Frequently Asked Questions

  • A commitment to use the Developers for on-going development, as a minimum proportion of gross profit.
  • When development expenditure falls below the agreed proportion of gross profit, any deferred development costs make up the difference.

For example, if the agreed proportion of gross profit for a particular month is £1,000, that can either pay for £1,000 of development work, pay off £1,000 of the deferred portion of an invoice, or a split between the two.  It means that deferred fees are only paid off gradually without ever raising the project's costs above the agreed proportion of gross profit.

  • In general, the Partnership Development is limited to our in-house resources (we cannot fund contract developers at this rate).
  • A software architect who will understand your concept, agree with you the best commercial way to exploit it in a web application, and then design it for you and manage the project team.
  • A development team consisting of specialist programmers and tester(s), and involvement from a database administrator, a system administrator, tester(s) and a web/graphic designer.  (We can also provide content and multi-media authoring, marketing, training and administration services if required.)
  • Access to a daily report from every resource on the project, saying what has been achieved and how long it took.
  • Involvement in the professional development environment, including access to the code versioning and deployment systems, bug-tracking system,
  • A highly competitive development rate for substantial projects (3,000 hours and above)
  • Benefit from programming on our previous projects which can be quickly implemented in your web application.
  • A temporary rate during initial development (for a typical project skills mix, around 40% cheaper than our discounted long-term rate).
  • Development costs above a fixed, monthly rate can be deferred until the project is making money (typically around 50% can be deferred).
  • Managed server hosting of the live website for the first year.
  • Development includes all programming work, database administration, graphic design, project management, software design, testing and project management.  It includes any staff or customer support work you ask us to do, and any marketing and administration work you ask us to carry out on behalf of your project.
  • Development excludes server hosting and maintenance packages, web domains, intellectual property you ask us to license on your behalf.

Note: it isn't mandatory to host your web application with the developers, although you may find that very beneficial.  The developers offer your first year's managed hosting including backups and all administration on our own servers, free of charge.

  • After the initial development period ends, the Enterprise will make available to the developers a development budget of at least the agreed proportion of gross profit.  Requested development work always has a priority over payment of the deferred part of the development fees.
  • In any month where requested development work is less than the agreed proportion of gross profit, deferred fees will make up the difference.  For example:
    • If there were
      • £10,000 of deferred fees
      • £3,000 of gross profit for the month
      • An agreed minimum of 30% gross profit for on-going development
    • That would give £900 development budget for the month.
    • If £500 of development work was requested
      • £400 would be payable from deferred fees
      • £9,600 of deferred fees would be carried forward.
  • There is no time limit for starting or completing repayment, and no interest is payable.  If gross profit were always zero (that would be very unfortunate, but for the sake of example) the deferred fees would never become due.
  • In our experience, there's no end to development of a custom web application unless the business stops operating.  That's why our first advice is that you should consider carefully whether you really need a custom web app.  These are the reasons:
    • Websites are subject to fashion and changing technologies: the style of appearance will need to be refreshed occasionally to remain current, and functionality will need to change according to current trends (such as supporting mobile devices and changes in social media).
    • The marketplace itself does not stand still: if you have stolen a lead on your competitors, you will need to maintain constant innovation to keep it: adding new features for your customers, new efficiencies for order fulfilment, new efficiencies in accounts admin and improvements marketing intelligence to increase conversion rates, etc.  The maxim "innovate or perish" is very applicable to web apps.
    • Every two years or so, a server operating system must be upgraded, because support ends on the previous release, which means it's very difficult and costly to keep secure.  The new server operating system may have a new version of the database, programming languages and other software used by your web app.  Your software will need to be tested and perhaps modified to keep working.
    • All complex software requires maintenance: even software made by the very best developers requires a level of on-going bug-fixes and low level improvements to meet changes in statutary requirements.
  • So while the form of the web application will probably change over time, the internet will not be un-invented.  But if you have a web application requirement which is an exception to the assumption of constant development, the developers would be interested to hear about it.
  • An Equity arrangement gets you an amount of money to spend on your business project (such as developing your web application), in return for which you pay indefinitely with a share of your business.
    • It doesn't get you any special price on development of a custom web application
    • You still have the on-going maintenance and development costs for keeping your web application up-to-date
    • But the work of the equity provider finishes with (how do they say...) the investment of part of the children's inheritence!
  • The Partnership Developers do not take any share of your business.  So the differences are:
    • Your capital requirement will be reduced because the development costs are reduced.
    • Your capital requirement during development and in fact until your business becomes profitable are further reduced without any balance sheet liability: the deferred part of the development cost carries no interest, is not paid unless and until your business can afford it from the agreed development budget - even if that means it is never repaid.
    • On-going payments to the developers are for chargeable work invoiced (at a continuing discounted rate), not share dividends which are paid for no work.

In other words, Venture Capitalists take a percentage of your income forever, in return for a one-off investment.  As Partners, we take a percentage of your income forever, in return for discounting your original costs, postponing payment on much of the remainder, and using all the value of your continual payment to do all the continual development which you'd have to finance separately if funded by venture capital... and not at a premium rate but at a substantial discount.  The better option is, as they say, a no-brainer!

What is your project and what is your business?  The level depends on the size of the web application development and the estimated scale of work required on an on-going basis.  It will vary from project-to-project, but reading the case study will provide some guidance.

In this case, any outstanding part of the deferred development costs will be paid to the developers as part of the sale revenue.  The requirement to invest the agreed proportion of gross profit will normally be binding on the new owners, but if that is undesirable it can be bought off for one year's agreed proportion of the gross profit, as reasonably forecasted.

  • No, if you need a regular website, you need to find yourself a web designer. 
  • Nearly every project can be fulfilled by a web designer, including ones running complex, ready-built web applications.
  • You'll only commission your own, custom software if your business model gives no other choice: you'll probably be solving a kind of business problem which has never been tackled before, or solving it in a completely new way.
  • (Our main business, Kyosei Systems, offers Web Design services.)
  • Almost certainly not.  That would not be a development partnership: the developers would own the development and license its use.
  • The return would be based on a full commercial rate with interest; and the standard of evidence demanded to backup the sales forecasts would probably impose an unachievably high barrier for a start-up enterprise (... which is, of course, the reason for a partnership development).

In principle, yes.  IT projects will be managed in English, and the Developers have particular understanding of the legal, tax environment, web design and marketing for the UK, Japan, China and Spain.

But we think the right project and the right people are more important than the country.  We hope you do too.  The Partnership Agreement will provide for a secure operational relationship, according to the countries and currencies involved.