Are you tired of letting your brilliant app idea collect dust due to lack of funding? You're not alone. According to Statista, more than 90% of mobile apps fail to reach their potential audience, and one of the biggest reasons is a lack of funding. But don't worry! With the right strategies, you can secure the funds needed to bring your app startup idea to life.
Know Exactly How Much Funding You Need
Before you start asking for money, it's essential to have a clear plan with numbers. Investors and funding platforms want to see a detailed breakdown of how much it costs to develop, launch, and market your app. Here's why:
Development Costs: The cost to develop an MVP version can range from $15,000 to over $200,000 for a fully-functional app with multiple platforms and custom features.
Marketing and User Acquisition: Acquiring your first 10,000 users can cost $10,000 to $50,000, depending on your marketing strategy and competitive landscape.
Design and User Experience: A good design can cost anywhere from $5,000 to $25,000, but it's worth every penny to increase user retention in mobile apps.
Maintenance and Updates: Mobile applications require constant updates, bug fixes, and server maintenance. Experts recommend budgeting 15–20% of your development costs per year for maintenance.
Why This Step Matters
Knowing your funding requirements is not just about numbers; it builds credibility. Investors, friends, or family are far more likely to support your mobile app idea if you can clearly show:
- Where every dollar will go
- What the MVP will include
- How do you plan to reach your first users
Without this clarity, you're risking asking for too much or too little funding, both of which can hurt your chances.
Common Ways to Get Funding for an App
Before raising capital, you should have a clear understanding of the primary funding options available to you. Here are some common sources to get funding for an app:
- Bootstrapping: Funding Your App Yourself
Bootstrapping is the classic DIY approach. Many successful applications started by founders using their own savings to bring their ideas to life.
The principle is simple: You use your personal resources to fund development and growth without giving up equity or control.
Why Bootstrapping Works:
- You maintain full control over your mobile app and business decisions.
- It forces you to focus on essentials and avoid unnecessary spending.
- Investors often see bootstrapped founders as resourceful and committed.
How much can you invest: A common approach is to allocate 10-30% of your personal savings toward an MVP. For example, if you have $15,000 in savings, you might spend $10,000 on core development and $5,000 on initial marketing.
Tips for successful bootstrapping:
- Develop an MVP first and focus only on core features.
- Do not overspend even a small amount, as it can cause a tight budget.
- Just make sure your MVP can scale if you secure additional funding later.
- Friends and Family Funding
If your savings are not enough, friends and family are often the first people to provide funding for an e-wallet app idea. This can be a really fast and flexible way to raise small amounts of capital.
How it works: Suppose you borrow money from people you trust, and you can offer them a small equity stake in your startup. Although funds are usually smaller, they can range from $5,000 to $50,000. It totally depends on your network's capacity.
Tips for Success:
- Draft clear agreements that specify repayment terms or equity shares.
- Share your budget, goals, and risks.
- Update them regularly on progress to maintain trust.
- Angel Investors
Angel investors are individuals who invest their personal money into early-stage startups. Unlike banks, angels are willing to take risks on new ideas. And especially if they believe in the founder and the market opportunity.
According to the Angel Capital Association, angel investors fund over 70,000 startups every year. They provide more than $25 billion in early-stage capital globally. Many of today's biggest apps received angel funding in their early days.
Angel investments generally range from $10,000 to $250,000. This makes them ideal for app startups that have a working MVP, early users, traction, and a clear business model.
How to attract angel investors for your app? Here is what angels typically look for:
- Your app should solve a real, painful problem.
- Angels invest in people as much as ideas.
By understanding the different funding options available, you can increase your chances of securing the funds needed to bring your app startup idea to life. Remember, it's essential to have a clear plan with numbers and be prepared to present your vision to potential investors.