Before starting your app business, you need to analyze as in how to make money from an app idea.
Airbnb, Snapchat, Instagram, Whattsapp are all successful startups that were ceded from great ideas. So, if you have a business idea and you intend to get it developed in the form of a business app, you are on the right track my friend. A mobile app ensures a business reaches a global audience and ample scope of development. So most of the people out there wish to develop an app and become an entrepreneur.
But, the biggest issue for an entrepreneur, in order to transform their idea into reality is the money that app development and deployment requires.
Very frankly speaking, if you think that since you have a good business idea; people would be sitting outside with a bearer cheque or cash in hand to give you as your mobile app fund, you are highly mistaken. As any other other roadmap to success; you would have to work darn hard to get it right for this aspect too.
In order to fund ideas, you would have to look out at the appropriate places, in the appropriate manner to get things going. Let us look out for the strategies that might work in this aspect:
The first set of clear, no-questions asked funding should come from you, yourself. You are the one with the idea and you should also be the one with the initial startup money. It is the safest bet in terms of all fund ideas.
Even money taken from family or invested in funds, Fixed deposits, etc. are all self-funds. They help you develop app ideas without having to go to somebody else for help or look for investors for apps.
In fact, as a rule of thumb for futuristic entrepreneurs who believe in the future of their business and app, it is always better to continue investing yourself as far as you can. Essentially, it will help you to stay in complete control of the business and your app ideas to raise money. The major reasons behind this mindset are:
1. If you put in initial seed money, you can go to investors at a later stage. The later you raise money, the more your business should be worth and the value you gain is much higher.
2. You are able to retain more control of the business, as the share of business that you would require to give an investor would be low with higher value.
3. Fundraising is very time consuming and will divert your attention from making your business work. So, self funding at an initial idea stage can ensure your app will start on its way to development and growth.
The most important aspect of this fundraising idea for you should be to maximize its utilization for your business. Make each dollar count. Unless and until, you come from a very rich family, who can easily afford to invest thousands of dollars, this money needs to be made the most of as it comes with no or very low rate of interest and a trust that your loved ones invest in you.
Another extension of this fund app idea could be to look for a like minded partner for your app business, who would not only bring in some monetary share; but technical expertise (a must-have for all mobile app developments) as well. For instance, in the Uber development story, Travis Kalanick paid the bills while Garrett Camp developed it as co-founders.
If you have no clue as to where you could find a co-founder, you could check out CoFoundersLab, FoundersNation, Angel.co, amongst other platforms that bring together like minded entrepreneurs looking for resources to connect and thrive.
Another important aspect of bootstrapping your mobile app, is to maximize your own strength as an employee and business resource. This means not hiring employees until absolutely necessary and adorning as many hats as possible in order to keep a check on your startup costs. Do you know that most of the startups in fact, have no employees?
It shall also help decrease overall office requirement and maintenance costs to develop your fund app idea.
Another common way nowadays to fund an app is to look for resources through crowdfunding ideas and platforms. Kickstarter, Indiegogo, crowd supply, crowdfunder, etc. are all examples of crowdfunding for apps platforms.
Technically stating, crowdfunding is raising funds in small amounts from a large number of people for a particular purpose. Also, though mostly used by businesses and entrepreneurs; crowdfunding can be used for raising funds for social causes, events, etc. as well.
Crowdfunding makes use of social media and its billions of subscribers as well as crowdfunding websites to bring investors and entrepreneurs together.
Many crowdfunding projects are in fact rewards-based for the investors as well. They may receive a free sample on the launch of a new product or receive a gift for their investment. For Instance, a natural handmade soap startup may offer to send in free samples to its investors. One of the biggest success stories of Crowdfunding has been Oculus VR. It is a US based startup that develops virtual reality and augmented reality based objects. The company, with a target of $250,000 on Kickstarter, ended up with a fund of $2.4 million US dollars, which was later bought by Facebook for 2.4 billion, just 2 years later in 2014.
The industry has been growing by leaps and bounds.
Also, when you opt to crowdfund your app instead of looking for direct investors for ideas, you also test your idea for its market validation and viability as per others. If you can somehow get a large number of people to pledge money towards your mobile app development, it shall also mean that some merit to the value that you think your idea can create. It shall also help you develop some serious and loyal backers who would be your early adopters and repeat customers.
This is one of the hardest ways for funding apps. World reports state that, ‘less than 1% of startups get funded at all and less than 0.05% of startups get at least one round of VC investment’. So, whether you can or cannot make it will depend a lot on your strength to impress the investors, your idea and its further developments.
But, where and how to find investors for mobile app? For beginners, look around yourself, your family, friends, people you might have ever talked to; or your colleagues, ex-colleagues, ex -lecturers, teachers, etc. who might have a link to some real investors. What you are looking for here is a third-party connect to these investors who could give you an introduction within their circles.
You could also keep an eye for startup competitions, wherein the winners get the award money as idea capital. If you think you have a great concept,and you can prove its viability in today’s market scenario as well as a convincing pitch; a contest might help you easily reach your investor’s mind and heart who is also ready to fund an app.
The most common way is to look out for Venture Capitalists firms and Angel investors, both online and offline and then try connecting with them through mails, emails, phone calls, etc. The difference between the two is that the former is a firm whose investors have pooled in money and it hopes to earn back money and give it to its investors; whereas the latter are individuals which invest their own private money for funding apps. But, whoever you choose, you need to impress them enough to part with their money and give it to you, in order to help you develop your business. Something, like a real life shark tank. Funding apps is a gruesome process:
Funding app at the idea stage is generally called the pre-seed and Seed funding rounds.
In order to fund an app, you could also develop a fundraiser campaign and let people visit it and donate for the same, just like non-profits. To do this, you could easily draft a donation page for your app idea and post it on your website itself.
If you wish to go to a third party platform for donations, you could checkout sites like GoGetFunding, etc.. As great fundraising ideas, they allow businesses to draw their campaigns and then share it online for maximum effectiveness. These platforms allow you to attach your business’s explainative videos and images and help to accept funds for business ideas in various forms like credit and debit cards, paypal, etc.
Businesses have been taking loans for development since ages and so can you. Instead of opting to develop an investor-funded or venture capitalist app, by sharing a part of your company with them; you could opt to take loans, credit or some other form of funding on a particular rate of interest from banks and other sources. But, in order to secure a short-term business loan you will have to develop and present a solid business plan including projected revenue, timelines, market research, etc. Your initial credit score shall also play a role herein. But remember that though all might seem to look in your favor, it is always difficult to get a loan for a startup with no supporting track record.
Always remember that it will only be you, your family and friends that might choose to support you and thus, your mobile app idea. Rest all mobile app investors are in there to make money and are on a lookout for high returns on their investments. You thus, need to show your app idea’s effectiveness to get them interested. Also remember, that when you look out for ways as to ‘how to find investors for an app idea’; be ready for numerous rejections with just-unjust reasons. In such a scenario, don’t get disheartened and keep looking for ways to get going. The success sky is yours to take.
Tricks and procedure to strategize and develop a smart app business.