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APP INVESTMENT: HOW DO I GET MY APP FUNDED?
So, you have that great app idea and don’t know what to do next? Well, lucky for you, you are in the right place. In this blog series, we’ll go through each step of the app funding process. Starting from what type of app investment best suits you and your business, and ending with what to do with the investment in order to get the best ROI.
In this blog, we’ll go through 5 of the top funding routes you should look into and discuss which one suits your situation best.
App Investment: Bootstrap / Self-fund
This is the most ideal and best approach to raising money (if you want to retain complete control and ownership of your new app). Self-funding allows you to invest, well, in you.
Many successful businesses have opted for this route and even though it might seem like a really risky move, it can have incredibly high payoffs. If you are keen to take this route, the most important thing that you should keep in mind is marketing. This is an area that a lot of start-ups struggle with when raising funds. They focus on the development of the app and getting it to market, however, they forget the journey ahead. Getting an app from the app store and into the hands of users is a completely different story and one that requires a lot of thought and effort.
The areas that you should really consider for your marketing budget are things like Facebook Ads, Google AdWords, etc. These can be very costly, but with the right strategy and team, can have the best ROI.
If you are looking for more information or inspiration when it comes to Bootstrapping or self-funding your app, take a look at this Youtube video done by Stanford University.
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App Investment: Personal or Business Bank Loan
In the same way that you could get a loan for a car, you can also get a loan for developing your app idea or website app. You’ll have to go through the same steps such as filling in all the right forms, answering questions from the bank to demonstrate that you will make a profit, etc. The benefit of using this method to fund your app idea is that it can be a lot quicker than other routes. Additionally, it means that as long as you pay the loan back, the ownership of the business and the app will be yours (and yours only!).
The negative about this route is that there’s a lot of financial risks. Not only are you putting money into an app that isn’t guaranteed to work, but also, it isn’t your money.
App Investment: Friends & Family
Another route, going back to the Bootstrap theme is to simply pitch to your friends and family. A lot of start-ups turn to their loved ones for help to raise money and it’s been proven to be a very successful strategy for small businesses. The biggest advice that we can give if you do choose this route, is to keep it as professional as possible. At the end of the day, you are dealing with money (in some cases a lot of it), therefore you should try and keep personal and business relationships separated. Throughout this process, try to treat your loved ones as you would a normal business investor.
Present to them using an investor deck and make sure to do each step of the process as legitimate as possible. The plus side of going down this route is that the investors (friends & family) will know you well and there will be less pressure when presenting the opportunity. However, the negatives are that it has the possibility to ruin relationships if the app idea never sees a ROI.
This route can be right for you and your start-up if the app is targeting specific industries. You can pitch your idea to highflyers in certain industries and if you find the right person, they might be willing to fund the entire process for a stake in your business. This can be a major negative or positive depending on how you look at it. On one hand, you have someone with years of experience to bounce ideas off and to guide you through the process. On the other hand, you have someone who is likely to want to give their input on how your business is run. It purely depends on what you are looking for – either full control or guidance.
Venture Capital (VC Firms)
VC is normally for the big players in the start-up world or when brands want to scale up a lot. However, this route takes a lot of time and has multiple different rounds. You will need a killer pitch deck and you should be ready to change and mould your route. Most VC firms want to take the quickest route to monetisation (which can sometimes jeopardise the brand’s values). However, if you get a VC backing you, you are talking big money, and a higher chance of success. It is a great start and if you can get a VC at an early stage, this is great news for you. Additionally, remember that if you don’t start with a VC (and opt for any of the previous routes) it doesn’t mean that you can’t go down this route later on.
None of these routes are better than the rest, it all depends on what best fits your situation, your brand and what you are able to get. However, we highly recommend that you look into all 5 options and in our next blog post we will go into the different stages of funding your app and how much money you will need.
If you are still stuck on what route to take and want some advice, do not hesitate to get in touch with us. Our team of specialists have decades of experience working with start-ups both pre-funding and post funding so can assist with the process.