So you’ve decided to make your own app — but you need some way of funding it’s development.
There are several costs to making an app, even if you’ve decided to program it yourself:
- There’s the $100 cost of an Apple Developer Account
- The cost of the graphics (icons, screens, buttons)
- (Possibly) the cost of the programming work
- The cost of any additional sound effects or content rights
- Cost of setting up a website for your app and hosting it
- Small costs for marketing opportunities like Facebook Ads
The point is, you’ve got to spend money (intelligently) to make money. If you or a close friend/family member have the money to front and are willing to do so, that is awesome.
However, it is still best to go through ways to finance your app development, and assess the pros and cons of each.
1. Kickstarter
One of the most obvious ways to raise money, a kickstarter campaign is a very popular way to test a concept and generate an eMailing list before the app’s release. They seem easy in concept; create a video and an article, list some rewards, and start it. However, there are some secrets to success that separate the successful from the unsuccessful in kickstarter campaigns.
Kickstarter is not the only company that uses this model; check out some other websites as well, to see which is best for you:
We will refer to this funding model as the kickstarter from here on out.
A common acronym to describe the kinds of people who contribute to a kickstarter campaign is the three F’s — Family, Friends, and Fools.
Family & Friends:
- The other two pieces, family and friends, are going to need additional coaxing from you to convince them your idea is going to be a success. not everyone’s family and friends are so loving as to throw money at any idea you have, but if you send them an email explaining why you’re doing this — focusing on your personal motivations, dreams, or goals — they’ll be inspired to support their loved ones.
Fools:
- The ‘fools’ are not actually fools, but they’re the people who regularly contribute to kickstarter campaigns and like to see people make cool ideas come to life.
However, relying on Family, Friends and Fools is not enough to have a successful kickstarter campaign — kickstarter relies heavily on people driving their own traffic.
If you decide to do a kickstarter-model campaign, be sure to read up on what makes a successful kickstarter campaign before beginning work on the actual campaign. It can mean the difference between success and failure.
2. Applits
Applits is a unique service that allows you to develop an app without having to the bulk of the app development work. After developing the wireframes and idea you submit your idea to the applits competition & compete with other ideas to be that month’s winner. The winner gets their app developed for them, from the graphical design to the programming to the listing on the app store.
It removes a lot of the pain of making an app, and is a good route for people who have no dreams of managing or developing apps full time and would be happy with a little money on the side.
The downside is that it’s a little costly — the winners get a cut of revenue, around 15% of the monthly revenue, which you may realize by now isn’t a ton.
However, that’s 15% for virtually no work besides having the app idea — and if you’re someone who has a lot of app ideas and tends not to be a finisher, this is a great opportunity for you.
Even those who don’t win the competition on this website get a wonderful chance to get feedback and exposure to new ideas for their own app.
4. Investors (Venture Capitalist)
A more traditional way people finance a startup company or small business (when it’s in tech or high-growth industries) is by seeking funding from a venture capital firm or business angel investor.
You set up a meeting with a group and pitch your app idea or business to the group. These pitches include conventions such as including sample financial earnings, assessing the market, and how much money you’re asking for as an investment.
Traditionally these groups do not invest less than $20,000 in one venture due to the decreased return on investment, but if you have an idea which legitimately requires more capital, you should consider this investment type. The money is actually a trade for company equity, which means if your app company gets acquired, they get a portion of the sale money.
This is much more complicated than was briefly covered here, and if you are interested in this route of investment the internet is awash with resources to help you down this complex and challenging road. However, if you are successful with this investment, it could change your life in ways you can’t imagine.
You can find venture capital or business angels a couple of places online:
- Startups.co
- Find a tech angel group on Meetup.
Also look around your local community for access to venture capitalists. They can be found connected to local tech accelerators, or through a simple google search for “venture capitalist + [your city here]”
5. Find a business partner of some sort.
There are many resources on the internet that connect people with ideas to people who want to get invested in an idea by joining the company. This could be the perfect opportunity for you to find the programming / marketing talent you’re missing.
These people do not always have money to bring to the venture, but they do have skills to bring — you can usually search websites and people by their skills.
Also keep your eyes open in your regular life for opportunities to bring someone on as a partner. Many famous apps and companies began as friends or spouses making an app together.
Here are some places online you can find a partner for your app venture:
6. Bank
A traditional way of financing any small business venture is to seek a small business loan from the bank or the SBA (Small Business Association). You show your business plan to the bank, and if they believe in your business plan they are willing to give you a loan or a line of credit on interest.
This is another funding source which is complex because of the legal red tape surrounding it; if you’re interested, talk to a banker at your local bank about what it would take to do this.
The pros of this loan is that it is not trading equity, and if you pay it off quickly your credit score will be boosted as a result.
Another pro is that you do not have to plan and pull off a successful pitch or campaign, merely show your business plan to the bank and have a conversation with a consultant at the bank.
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