How to raise capital for app development

Apps have become the most important multimedia tools in modern business. Every brand should develop one at some point, and some brands are exclusively app-based to boot. Whether you’re thinking of launching an app for your new business venture or if you’re a business leader who has been assigned a project to develop an app for an existing brand, it’s important to address the problem of funding early on.

Now, higher management might have allocated a certain amount of financial resources to this project so that managing and saving money is no issue, but what do you do when you find yourself in need of an app for a brand that is yet to see the light of day? Without a doubt, you will need to make a grand investment to realize your project, as there are many stakeholders and parts of the project you will need to fund. Here are the five tips that will help you secure funds for app development.

Consider crowdfunding

The good people on the World Wide Web like funding amazing ideas, so if you consider yours to be deserving of the “amazing” moniker, you might just try your luck on an online crowdfunding platform. This is a viable option for every business idea with a solid business plan and a vision that will inspire people to put their money into a project that will truly make a difference.

This is also the main issue with crowdfunding, so take note. If you want your project to gain traction and meet its financial quote, then you will need to come up with something truly engaging and meaningful. This can’t be just another game app or a music streaming platform; no, it needs to be something innovative that the commercial or residential realms can truly benefit from.

Find the right investors

If crowdfunding doesn’t seem to kick off, you can always try to find and connect with affluent investors who are looking for prospective new apps to launch into the online marketplace. The modern business world is teeming with affluent individuals looking for the next great investment to build up their portfolio, so if you have a good business plan and a detailed financial forecast, you might just stand a chance at closing a deal.

Keep in mind, though, investors will want something in return, usually in the form of shares in your new company. Sometimes, they might even overtake the majority of your company’s equity, and thus take all decision-making capabilities from you. This means that, if you’re not careful, you might lose control of your brand.

Stay in control with a loan

Business loans have always been and always will be the most reliable form of financing in the commercial sector, because of their clear-cut terms – you get a loan, and you pay it back over time with interest. Simple as that. But most importantly, business loans are a good option for app developers who want to retain full ownership over their new business. That said, understand that your personal finances will play a big role in your commercial loan capabilities.

If you don’t have an enviable credit score or have outstanding personal debt you need to pay off, then personal debt consolidation prior to taking out a business loan will be an essential step that will allow you to increase your borrowing capacity. After all, your lender will take a look at your personal finances and base their assessment on your credit history, so make sure that you tidy up your personal credit score before applying.

There’s always buddy funding

The app development industry might be a growing one, but it’s good to know that the industry is still a tight-knit group where people are constantly networking and collaborating on amazing projects. Particularly, the concept of buddy funding is becoming increasingly popular among app developers, as it aims to bring professionals together, secure financing, and share the fruits of their labor in an equal, transparent way.

Networking will be essential here, as you want to find the individuals who can deliver on the project’s requirements but also invest enough money to kick-start the development and marketing processes. Once the app is up and running, every financier of the project will enjoy a percentage of the revenue, while the ownership still remains in your hands.

Consider a dormant partner

Finally, you could always share ownership with a strategic business partner. You could be the mastermind behind the app while your business partner takes care of all your financing needs, including payroll for developers, marketing, branding, and more. It’s important to note that this partner will share equal ownership of your app, meaning that you will need to work together to bring the project to life. If you want them to fund a feature, you will have to pitch it first, and vice versa – if your partner wants to fund a new idea for the app, they will need your experience and expertise.

Final thoughts

The app world is booming across the world, as there is a lot to be gained from launching an app that will trend in the online stores and attract millions of potential customers. With these funding options in mind you will be able to raise the funds necessary to develop an app that will echo throughout the industry.

Want to learn how to create an app from scratch? Here’s a very detailed guide on that from Codester.