Proven Ways To Fund Your App While It’s Still In The Concept Stage
You could have a game-changing concept for the next major app. However, your winning app will most likely never see the light of day without the proper ConsolidationNow funding.
Unlike a business startup, where the entrepreneur knows exactly what they want to do, what products or services they offer and how, what monetization model will be used, and so on, app developers have no clue about any of these things during the early stages of development.
User testing frequently provides curve balls that necessitate substantial modifications. Most programs go through so many changes and iterations that the end product looks nothing like the original concept. As a result, putting together a formal business strategy and seek banks for loans.
So, how do you go about it? To get you started, here are a few ideas.
Strategic Partners and Angel Investors
Many firms are enticed to seek seed funding from venture capitalists (VCs). However, venture capitalists account for only about 3% of seed funding. On the other hand, Angel investors or strategic investors are great contenders for funding your brand new app.
These aren’t always businesses or organizations. Individuals and successful entrepreneurs are frequently involved in the funding of new businesses. Jeff Bezos of Amazon and Marissa Mayer of Yahoo are just two examples of early-stage app angel investors. Depending on your app idea and stage of development, angel investors can offer anywhere from $25,000 to a few million dollars in cash. The angel investment market is currently valued at $20 billion each year.
While angel investors are easier to persuade than venture capitalists at the seed stage, you must still be prepared to tell a potential angel investor:
- Why do you deserve funding, that is, the founders’ technical and business capabilities
- The total amount of capital you will require
- How quickly will you burn through it (monthly burn rate)
- How will you promote the app.
- What is your marketing strategy?
Launch a crowdsourcing campaign
Crowdfunding is an appealing fundraising option for companies that lack the financial resources to get their ideas off the ground. Hundreds of app and business ideas go undetected and underfunded on crowdfunding sites, yet the correct pitch for your dream software might offer a jackpot. You are guaranteed adequate funds to get your dream off the ground in exchange for a service charge from the crowdfunding site and a transaction fee from the payment processor.
You can choose from a variety of crowdfunding models. Kickstarter, the most popular crowdfunding platform, is an all-or-nothing proposition. This implies that you’ll need to meet your financing goal to receive the funds once you’ve set your financing goal.
If you don’t meet your goal, the donations will be returned to the individual investors.
Indiegogo, on the other hand, offers both flexible and fixed financing choices, which means that if you don’t reach your goal, you can keep your money in exchange for a higher service fee.
App-specific crowdfunding services such as AppsFunder and AppSplit are also worth considering.
The Bootstrap framework
There is no more reliable source of funds than your savings. Isn’t it a little unfair to ask others to contribute to your brilliant concept if you can’t afford the cash to invest in it yourself? When your app is in its early stages, bank savings, personal loans, credit card loans, and friends and family are all completely acceptable sources of cash. You don’t have to go it alone all of the time, though.
Find the ideal co-founder to take on the burden of establishing a new app. A co-founder is much more than a confidante or a shoulder to cry on in difficult times. Choose a co-founder based on your requirements. Without paying for outside developers, a tech-savvy co-founder may help you design and construct a prototype of your app from the ground up. Bobby Murphy, Snapchat’s co-founder, was the driving force behind what was essentially Evan Spiegel and Reggie Brown’s Stanford classroom project. The app is currently valued at around $20 billion.
Alternatively, find a partner who can help you fund your app while working on it.
Take, for example, Uber. Garrett Camp, the engineer, and co-founder relied on Travis Kalanick for financial support.
Take part in funding competitions
There’s no way you haven’t watched the entrepreneurial TV series Shark Tank if you’re a would-be entrepreneur in today’s connected world. The hit show has given away over $44 million in investment throughout its five seasons, making it an entrepreneur’s dream come true.
I’m not proposing that you try to get your app funded by appearing on Shark Tank.
If you can, you should, but that isn’t the purpose.
There are numerous contests sponsored by colleges, technology businesses, angel investor networks, and other organizations that provide emerging entrepreneurs with the resources to realize their company plans. Choose from hundreds of contests throughout the world by visiting Biz Plan Competitions. You can even zoom in on a local contest to understand how to qualify and participate to receive the money your app deserves.
Raise Funds Through Your Own Website
Crowdfunding is a fantastic approach to obtaining rapid funds. It does, however, come with several drawbacks. There’s a lot of competition, and many people find it difficult to stand out in a sea of want-to-be entrepreneurs. Then there’s the slew of fees you’ll have to pay for the money you’ve requested.
Raising donations on your website is a clever solution to solve these issues. Yes, you can:
- Reward them with a gift, pre-orders of your software, or monetary compensation once your app is released in exchange for their contributions.
- Request a little donation for your app
- Provide a description of your suggested app to your readers