5 Tips for Investing in the App Market

CHICAGO (TheStreet) -- As of May, Apple iPhone users were downloading more than 800 apps per second at a rate of 2 billion apps per month, ranging from addictive games to sophisticated tools for everything from video editing and road navigation to fitness trackers and finance management. But apps, whether for the Apple or Android platforms, are more than $1.99 accessories for your smartphone; behind each one is a company whose business model could be a productive complement to an investment portfolio.

Before investing in company making the latest (or next) app, consider these five tips:

Keep an eye on privately held companies.

Many software companies remain privately held, so despite the desire to invest in them, the opportunity isn't there yet. Many will ultimately go public (a notable example: Facebook), so keep an eye on IPOs and acquisitions.

One example of a promising, privately held app company is Waze. Its road navigation application has proven successful worldwide, and Waze was recently acquired by Google for $966 million. This app and its company's business strategy showed promise before its acquisition, and you should look for similar companies with strong investable qualities.

Look for new and innovative publicly held companies.

On the public side, one app that stands out as a potential moneymaker is GlassesOff. Launched in December, GlassesOff is a neuroscience technology and products company that has developed a smartphone app aimed at eliminating the need for reading glasses. 

It uses patent-protected neuroscience exercises to improve image processing function in the brain's visual cortex. The user participates in "intensive visual stimulation tasks" for approximately three 12-minute sessions each week for three months. Once the program is complete, ideal users can expect improved image-processing capabilities that allow them to read up close without reading glasses. 

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