One major reason why some people cannot turn their great ideas into reality in the app industry is the lack of funds. Hiring a mobile app developer, testing iterations, and deploying a mobile app is very expensive and so many mobile app developers, especially start-ups, find it difficult to raise the required funds. As a result, many ideas that would have been turned into apps to better our lives never become reality.
Is it possible to raise funds for your mobile app development project like you can for most business ventures? Are there platforms that can provide funds for app developers?
If these are the exact same questions on your mind, you need to keep reading.
As a developer, keep in mind that apps under the following categories typically have access to more funds:
a. Apps for social networking or communities
b. Big budget games
c. Apps that are unique and original.
As to how to fund an app, here are some of the things you can do:
Bootstrapping
Bootstrapping means raising money through your present job, savings, investments or an alternate business. It is the most dependable source of funds for your app development project because you do not need to convince investors with proposals and presentations for them to fund you. Also, you do you need to relinquish any control of your business.
App Contests
Are you certain that you have a unique app that can change the world positively? If you are, participate in mobile app contests.
Many investors in the industry, including universities and technology companies, organize app contests where the winning idea gets funded. Though the contests are highly competitive and will require you to make a presentation of your idea before trained judges (who are mostly investors), it offers you the opportunity to ‘sell’ your idea to investors.
Friends and Family
One easy way to get funds for your idea is through friends and family. Before you approach investors or take a loan, meet your family members and your friends who believe in your idea. Orient them about your well thought-out business plan and offer them a stake in your profits, if possible. Funds from family and friends could act as equity when you want to take loans.
Loans
Taking out a loan is another option open to app developers for raising funds. With a great idea backed up by a promising business plan, banks can fund your idea.
Unfortunately, banks will not just give you money as easily as your friends and family would. You will have to prove to them that your product is unique and there is a ready market for it. Do not forget that you’ll have to repay those loans with interest.
See Also: 5 Ways Business Investment Loans Can Help Your Start-Up
Angel Investors
Angel investors are wealthy individuals and organizations who invest in ideas they believe in. They can easily give you seed funding to start your app development project. These individuals can fund your entire project if your app idea is achievable and your plan is detailed.
Before funding your idea, they may want to know the total amount of money you will need, your monthly expenses, your go-to market strategy, promotion plan, your technical and business capabilities among other things. Every year, angel investors invest $20 billion.
Venture Capital
Just like angel investors, venture capitalists can help you fund your app idea. It is strongly advised that you don’t approach venture capitalists at the early stages of your app development. As a matter of fact, you should wait until you require more than $1 million before seeking venture capital. Venture capitalists can offer you the capital you require in exchange for control of the business and ownership equity debt in the future.
Your Colleagues
Asking your colleagues (who may have experience in the industry) to fund your idea in return for a share of the project is a great way to get money for your mobile app. It is a win-win situation for all parties as your colleagues, being shareholders in your business will be compelled to assist you, especially in marketing the app.
Your colleagues can also act as co-founders for the app. This, of course, will make them more committed to the growth and development of the business.
Partnership
Another way to fund your mobile app project is via partnership. You would need to find people who are interested in your idea so much that they are willing to fund it. After drawing up a partnership agreement, your partner will provide the financial support required for the execution of the project.
Crowdfunding
Crowdfunding is a new and effective means of accessing funds for your business. It involves making a request to targeted members of the public to invest in your project. You will be required to pay a service fee to the platform and a transaction fee to the payment processor.
Even though crowd funding is a good source of funds for your app, the disadvantage is that your idea could be stolen, since it involves sharing it with the public.
Sponsors
There are a few organizations that can fund your mobile app project in exchange for ads. You’ll agree to advertise their brand on your app project and receive funds in return. Sponsors will not have control over your app and their activities will not disturb the user experience.
Find a Major Customer
Some customers will be willing to bankroll your mobile app to be able to buy your product before the rest of the world does. They control the development stage to ensure it meets their requirements and also offer dedicated support for your app.
Raise Funds on your Website
If you have a popular blog with a loyal following, this is another option for you. On your website, describe your proposed app to your readers, ask them to make donations towards the app and, perhaps, offer them a gift. It can include the pre-order of the app or some monetary reward when the app is developed and launched.
Grants
You can get grants for your app development from government, local authorities, business links and others. To access these funds, you must, however, meet the eligibility criteria.
Build a Prototype
Another important way to raise funds for your app is to build a prototype or a first version of the app. Using funds from savings and family and friends’ contribution to build and launch your app will show investors that you are serious about the business. It is always easier to get funds to expand your business than to get funds for your ‘startup’.
See Also: 7 Smart Reasons Why Small Businesses Should Develop Their Own Mobile Apps This 2017
Conclusion
There are so many ideas on how to fund an app. The challenge is in finding what will work for you and your idea.
While some are simple and without strict conditions, others have implications. The entire process can be time-consuming and energy-sapping, but the results will be worth it.