Mobile App Funding often the make or break for a startup app idea. Many startups fail due to a lack of idea clarity and materialization, even if they have a great business idea.
If you already have an mobile app idea in your mind, you are very likely to be eager to get started with it. Aye, you must get it rolling as time to market is very important once you have validated your business concept. A recent report by Technavio found that the mobile app market is expected to grow by $497.09 billion with a CAGR of 21% during the post Covid world 2020-2024. The report suggests that there is a positive impact of Covid-19 on the mobile app market.
Info-graphics Source: Business wire
To transform your app idea from paper to an actual mobile app, the best option is likely to be to hire a mobile app development company, unless your best friend is an amazing coder. Be it in-house development or outsourcing, mobile app development is a proposition that requires significant investment. While depending on the app specifics and the feature sets, the cost of mobile app development varies. Generally, the mobile app development cost ranges between $15,000 to $80,000. It can go beyond the higher value depending on the app complexity and features.
Not just the app development cost, there will be many other overheads such as user acquisition and marketing, hiring, and other operational expenses. All of it means that if you do not have a significant amount of funds to self-finance your project, you will instead need to raise capital to build and operate your mobile app. So, how do you go about getting mobile app funding? What are the steps to seek funding for an app?
A general answer to these questions is that you gain mobile app funding the same as you would get funds for any other business or startup. You can raise capital from your business contacts or investors. People need to believe that your app idea can generate ROI (return on investment) and is worth investing in. Some mobile apps raise millions of dollars of capital even before pre-development, whilst others struggle to get investment even once the application is live. However, apps getting million-dollar capital investments usually pitch with a clickable prototype of the app. These prototypes clarify the app idea to the investors by illustrating the app functionalities. Click here to know how to build interactive mobile design prototypes. How to Find Initial Funding For Your App Startup?
Most of the times when people think about raising mobile app funding for their startup, they immediately jump to venture capitalists. It is obvious as “Venture Capital Investments” is a very popular term. Venture capitalists make some of the biggest investments and are seen as the “big fish” in the startup funding world. So, venture capitalists is the obvious option but what are the other options you can look at?
Bootstrapping means funding your idea with your own money. You know best how much money you can afford to spend, don’t you? This is also one of the safest options, since you won’t owe anyone anything in case your app idea doesn’t work out. If you’ve got savings that can cover app development without putting too much strain on your life, bootstrapping is the best option.
In case your own money isn’t enough, you can turn to your personal network of family and friends.
Usually, family is among the most reliable sources of funding, second only to bootstrapping and followed by friends. People in our personal network tend to believe in our potential and support us when we decide to venture in a new direction with possible risks. This isn’t to say that you don’t need a solid plan and a proper sales pitch to persuade them to lend you money, of course. But persuading people who know you tends to be easier than selling your idea to a complete stranger.
More often than not, funding your app idea through a personal network is possible with smaller and cheaper projects.
Another good option is to use bootstrapping and your personal network to create a minimum viable product (MVP). With an MVP, your chances of getting funded by bigger investors rise significantly.
You have a prototype
There are few things that can better convey your dedication to your project and your idea’s potential than a working prototype or a minimum viable product. Better yet if the product is beyond the MVP stage and is already getting some revenue.
Even if you don’t have a prototype, you need to explain to your potential investors what stage your product is at and what you’re planning to do first if/when you get funding.
Overall, the more information you can provide about yourself, your team, and your idea, the better. Keep it professional and to the point, of course. Don’t linger on unnecessary details and focus on what’s important for investors — the potential for revenue. It’s easier to let go of money when you’re convinced you’ll get it back with interest.
Tech startups come and go, and many promising projects are forgotten after a couple of months due to lack of funding. Competition for investors’ attention is harsh. But when you go into battle prepared, your chances of winning skyrocket. If you have questions about how to raise funds for mobile apps that weren’t covered in this article, contact us for a consultation.