Without sufficient funding, even the greatest app idea will likely fail to materialize. This can be a tricky path to navigate, as today’s market calls for a dire need to prove the relevancy of your concept before any interest is drawn from investors. It doesn’t help that app development is in itself a complex process.
There are several steps and stages of development, testing, and deployment that need to be approached carefully to avoid making crucial mistakes. This process can not only prove to be challenging, but also expensive. As a result, developers who can successfully obtain funding for their projects are at a major advantage.
But don’t let the current app development landscape discourage you. In fact, there are a number of reliable ways to fund your next project. In this post, we’ll take a look at some of the most popular methods, helping you decide how to finance your app and bring it to life sooner rather than later.
Before you start considering your financing options, take the time to draw up a business plan. This will provide you with the answers to all the questions any potential investors might ask you. The thoroughness of your answers is indicative of your competence and preparedness, which is why a comprehensive business plan is so important.
Here are some important topics that your business plan should cover:
- How will you monetize your app?
- How much do you expect to make?
- Both in terms of revenue and profit. What is the total expected cost for developing the app and related architecture?
- How long is the project expected to take?
- Is there a specific deadline?
- Who are your competitors?
- What makes your app better than theirs?
- How do you plan to market your app?
- What will that cost?
If you need help with drawing up your business plan, you can find many great step-by-step planning templates online. Another important task that you should cover before seeking financing is your website, which will serve as an easily accessible portfolio that potential investors can use to quickly learn about your app.
A well-designed website will explain your concept in a simple and effective way. Some useful elements to add to your website include the qualifications of your team, statistics about your target audience, an engaging demonstration of your app’s functionalities and comparisons to the competition.
Even if you do successfully obtain the necessary funding for your app, managing that money is not always easy. Getting it right will go a long way in helping you make the most of every dollar. For this reason, consider taking a finance course from an accredited institution, such as Suffolk University.
This will not only help you allocate your funds more effectively but also prove to investors that you know what you’re doing with their money. Now that we have the basics covered, let’s run through your financing options.
There are many benefits to using crowdfunding to finance your app. Primarily, you’ll retain full ownership of your idea and company. What’s more, you can leverage social media and viral marketing to generate buzz around your project. This has served as the foundation for countless crowdfunding successes.
By facilitating a wider range of payment options, you’ll be opening up the opportunity for more backers to fund your idea. This means that the average consumer can also invest in your product, as opposed to only large companies or full-time investors. There are a number of different crowdfunding platforms to consider using.
Some of the most popular include Kickstarter and Indiegogo. There are also app-specific platforms, such as AppBackr, AppsFunder, and AppStori. Attempting a crowdfunding campaign is virtually risk-free. Either you obtain the funding you need, or nothing happens and you’re free to try again.
App developers who are fortunate enough to be in a position where they can fund their own projects are far and few between, but if there’s a possibility that you can do it, the bootstrapping route is worth consideration. This will leave you with full control over your project and every decision throughout the process, from concept to release.
The reality is that it won’t be cheap, but you should use all the resources you have to take your app as far as possible. Develop a one-year plan and start putting aside a portion of your earnings each month into a start-up fund. Use the time you have to prepare and create whatever resources you need on launch day.
Obtaining investor funding is a popular option and often proves to be the easiest for many app developers. The biggest drawback is that you’ll usually have to give up a portion of company control to the investor. On the other hand, you can benefit from the business-savviness of an experienced investor, which could help you get off the ground faster.
This is the case when you use a website such as AngelList, Gust or Funders. These websites serve as a platform to connect investors and inventors online. Alternatively, you can ask friends and family, attend conferences and trade shows that are relevant to your app or use social media to send out some feelers and make a connection.
Remember, you need to have as much tangible material as possible proving that your app is worth investing in. Even a simplistic web version will go a long way in making your idea appear more feasible.
Contests and Awards
While this is certainly a right-place right-time scenario, there is a chance that you can fund your app through a contest. It would be better to not rely on this method, but rather, use it in conjunction with your crowdfunding campaign or bootstrapping efforts. There are a number of different competitions in the app development space.
For instance, Google’s Android Developer Contest awarded its winner approximately $2 million in the past. Apple’s Design Award, while lacking in terms of a monetary incentive, will provide you with plenty of valuable recognition. There’s also the Xammy Awards and the MobDemo Competition. The latter of the two gives winners a total of $50,000.
Don’t be discouraged if your first attempt isn’t as successful as you hoped. With enough persistence, it’s likely that things will soon fall in place.