App Funding can be as tough as finding a money tree?
I have an idea for an app and need app funding, so where do I start?
A light bulb went off one day and you came up with a seemingly brilliant idea for an app. You've entrusted your idea with your closest friends and family, and they agree that it is a great idea. You've sourced different app development companies for quotes and you nearly had a stroke when you realized the cost of building your idea. You've decided to move forward and look for funding for the estimate, and have run into a mile high brick wall to overcome...funding...ugh!
Let's back up a few steps and review the process for giving your idea wings and getting your project off the ground. First and foremost, if you have a quote from a development company that is significantly lower than the others...RUN!!! This development company either produces a poor product, or worse, will hold your project hostage at some point throughout the process to demand more funds for completion.
Here are the items you will need to accompany the development costs of the app you are building to make it successful:
- A Business Plan
- Marketing Roll Out
- Web Presence
- A Detailed Return on Investment for Investors
- App Funding Sources
App Funding: Your Business Plan
This all starts with a brief summary of your business. A great lesson in writing a business plan is to describe your business in a paragraph. This is the basic synopsis of what you want to do. The business plan will further define your business model and workflow. Business plans can become tedious and monotonous to create, but are extremely important in the process of app funding. Inherently, not all ideas are created by people who understand how to run a business, so the person with the checkbook is going to want to ensure they aren't investing in a potential Ponzi scheme. The second reason a business plan is important is that not every idea is a viable one. While some ideas are a great idea, the guts of the idea may be lacking. A great example of this was My Space. Below is a great resource for creating your business plan.
App Funding: Marketing Roll Out
What is your plan for publishing your app and gaining users once you've gone through the app funding phase? There are numerous ways to reach your potential user, and there are multiple companies that will work hard to convince you their way is the right and best way. Be sure you are meeting your users in the middle. Define your market vertical and further define how your app users will find you. One way we reach our clients with our marketing automation is to define the user through a defined "Buyer Persona". Additionally, we research what that user is searching for online and most importantly, the difficulty of reaching that user with their search terms to gain traffic rank to your website for information. These are just a few reasons that marketing automation should be a huge part of your start up costs.
App Funding: Web Presence
How do people find your app or determine they need your app, or most importantly get details regarding app functionality? You can put your app on the app store and hope that people find your app and use your app, but let's be realistic, they need to know the why and the story behind your app. Successful apps have a web presence that defines their application, tells the story, and restates terms and conditions to protect your company from the legal leeches. You will want to ensure you have a responsive website that is sexy and informative to lure potential clients AND investors.
App Funding: Detailed Return on Investment for Investors
This is one of the most important areas your potential investors will need to see and research. You will need to create a detailed plan to recoup investment costs and show investors you have a solid plan to make money. Investors don't want to invest in bad companies, and will need to put in place processes and procedures to protect their investments. There are a plethora of ways to generate revenue for applications, whether it be directly from purchasing the app or from ad space within your application, and this will need to be defined prior to the development of the app to ensure it is built correctly to accommodate the ads. This needs to be determined before you reach out for app funding.
App Funding: App Funding Sources
The most modern source of funding for apps is through crowd funding. Rather than reaching out endlessly to Venture Capital companies who may not currently be funding anything in your particular market vertical, crowd funding attracts investors that are specifically interested in a product like yours. Crowd Funding can be a scary space, as it quickly sorts out those that enter the space unprepared. You only get one chance to make a first impression, so dot your i's and cross your t's before making the leap. If your app has already been built, you will want to create a short walk through video for functionality to provide, whereas if you haven't built the app, a storyboard of workflow and functionality is key.
Be ready to share your business plan and everything you have with your potential investors. They will most likely (extremely likely) require an interest in your company in exchange for their investment. If you are looking to get money without security, you should stop reading any further. The most important part of this process is realizing that the potential investor has a very key skill set that you will need for your business. The value of the investor and ensuring you are getting the right investor is huge.
Lastly, it is important to realize that 100% of nothing is less lucrative than 60-70% of a successful multi-million dollar company. Don't cut off your nose to spite your face with your investor, as it will likely kill your deal with them. They have zero tolerance for greedy newbies, and will have a specific business model that has been proven to create a successful revenue model, so please, please, please...Listen to them!
My recommendation from the link below would be to use Angel List for App Funding, but feel free to research them all to determine the right fit.
