Seven Ways Mobile Apps Get Funding

You know that your idea for an app is brilliant. With some money invested in you and your idea, you are confident that your app will be the next huge download. There are ways to obtain money to support the development of your app. Investors are also seeking the next incredible idea in which to invest. 

Seven ways mobile apps get funding are – families, friends, and relatives, partners or coworkers, angel investors, crowdfunding or sourcing, contests, grants, and loans. 

Developing an app and starting a business are exciting ventures. Obtaining funding and finding assistance will let you focus your energies on the creation of your app. Continue reading for ideas from which you can select to obtain funding for your mobile app. 

  1. Families, Friends, and Relatives
Seven Ways Mobile Apps Get Funding

Money discussions with family and friends can be awkward and uncomfortable. Often, money – too much or too little – changes the dynamics in relationships. 

However, you know your family and friends; they trust you and you trust them. You have probably shared your ideas for your mobile app with the people closest to you. They share your enthusiasm and e

excitement for your great idea. Through the initial steps of developing your concept, family members and friends have probably offered you honest and thoughtful feedback. 

So, regardless of the complexity money adds to relationships, your friends and family are already part of this journey with you. Perhaps it is in everyone’s best interest to present the opportunity to invest in you, your app, and your vision. Let each person in your family decide. If someone says no, try not to be offended. It does not mean that they do not support you; it might only mean that they do not have money available to lend. Remember, though you believe you have a fabulous idea, investing in a new venture carries risk with it. 

You want to make sure you give your family the choice to invest or not. When your app and business are successful and your original investors are making an incredible return on their money, you do not want family members upset that you never included them. 

Additionally, you have a great audience with whom you can practice your sales pitch for non-family investors. Set up a time when you will take anyone interested through the details of your mobile app idea. You should put together a visual presentation for your audience. Provide a demonstration of your app. Include information about your business plans. 

Your potential investors should have an idea on how much you intend to return to them on their investments along with an estimated timeline. Or you can offer a stake or part ownership of your company to your financiers. 

Since this first presentation was to people with whom you should be very comfortable, ask for feedback on the materials that you shared. Edit and revise your presentation before you request financial support from any other groups. 

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  1. Partnerships or Coworkers

Another idea to consider as you seek funding for your app is to form a partnership with someone and/or include your coworkers. If your coworkers have a similar background to you which gave you the expertise to develop an app, one or some of them might be a great partner. 

With this small team of co-founders or co-creators, you can each invest in the business. If each of you are not providing the same amount of money, you need to determine how you are going to share profits in the future. 

In addition to financial support, if each of you can contribute to the creation of the app and development of the business, you will now have a team with whom you can share ideas.  

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  1. Angel Investors

Another way to fund your mobile app is through angel investors. These investors sometimes work alone; in other instances, they will work with a partner or small group of other investors. Before you contact angel investors, make certain that your presentation is finely honed. You can work by yourself with angel investors or with your partners. 

People who are called angel investors will provide money to infuse in your startup company. Frequently, angel investors are wealthy and have set aside money that they use to fund ventures that they believe in. They are seeking a return on their investment. Many angel investors will also provide their expertise in the development of the mobile app and the business venture. Often, these individuals will have research and social networks that will benefit your app as well. 

  1. Crowdfunding or Crowdsourcing
Seven Ways Mobile Apps Get Funding

Crowdfunding, as the name suggests, includes quite a few people. The risk in the investment is divided over all the participants. Often, each participant has invested a small amount of money. The goal is to increase the size of the crowd that wants to invest in you and your business. 

Online there are websites and apps that are dedicated to crowdfunding. Some are to raise money for people in need; others focus just on assisting entrepreneurs in raising capital for their business. For you to have a successful campaign, raising sufficient money, you do need an investment of time to ‘sell’ yourself and a new mobile app to your potential investors.

Before you commit to a crowdfunding website, find out how the investors benefit from sending money to you. Sometimes you provide a bonus, such as a gift or the product you are selling, to your crowd. Also, if the crowdfunding does not reach the monetary goal that you set, you will not receive any of the funding.   

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  1. Contests

Another option for you to obtain funding for your business venture is to enter contests. There are contests that are specific to mobile apps. In these contests, you will compete against other mobile app designers throughout the world. The willing investors or group supporting the competition will decide whose app they want to invest in. 

To prepare for the contest, your presentation needs to be fantastic since you need to sell your app, yourself, and your business. 

  1. Grants

Grants are another avenue to explore. The huge plus to a business grant is that the money does not need to be repaid, nor do you have to share the ownership of your company with anyone in return for the money. However, the process to apply for a grant can be complicated and time consuming. 

Local, state, and the federal government all provide grants for small businesses. Grants have specific areas in which they are focusing. Often the grants are seeking to develop a business in underdeveloped or unrepresented areas. Sometimes grants are available to encourage addressing the needs of a community. Other grants look to add diversity to businesses. 

Money awarded can only be spent on certain parts of your business. That will have been detailed as part of the grant application. Most grants will have deadlines for the applications and when the decision will be made. 

  1. Loans

Applying for a loan or using a credit card are two other ways to fund your mobile app. If you apply to a bank for a loan, you may have to make a presentation about your business. It depends on the type of loan and amount of money you are requesting. Before beginning the loan application process, speak to someone at the bank about your needs. They will be able to steer you in the right direction. 

Your credit card, especially if you have one for a zero percent interest rate, can be a quick and easy way to get your business started. Just be careful with the higher rates a credit card can charge. 

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Frequently Asked Questions

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  • What is pre-seed funding?

Pre-seed funding is the first step in the process of financing. At this point in obtaining funding, your idea for an app is just that – an idea. An individual, partners, or a company are seeking monetary support and investment so the developer can create a prototype and perform testing. 

  • What is seed funding?

Seed funding occurs after the successful testing of the idea and of the app itself. The second stage of acquiring financial support, seed funding is money needed to improve any issues uncovered during testing. Monies from investors are needed for any additional market tests and research. 

  • What is Series A funding?

Series A funding means that your app and company are ready to develop beyond the hypothetical stage. Your app is a proven product. Series A funding is seeking assistance with the next step of forming a company, developing a business plan, and preparing for sales of your app. 

  • What is Series B funding?

Series B funding is for apps that are finding success with their users. Your app and company now need money to enhance the features or functionality of your app. With this stage, you are seeking to broaden your market. 

  • What is Series C funding?

Series C and beyond funding is for companies that have achieved success. At this level, your goal might be to grow the markets that you service, add other products, and/or purchase other companies to complement your existing business.  

To learn more on how to plan your own app development business click here!

Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.