Hey there! I am here to help you out in understanding the complexities of getting funds for your app business. The app business is not easy as you might need a software developer, a graphic designer and even customer support, and all of that requires money. The complexities of the business make you need help and that help costs you money.
This whole business is a very long term process and you need to keep patience before going anywhere. If you are running on a very tight budget then I believe this is not the right time to begin with the business as it will require you to spend money and time every now and then.
Set your Budget
Getting started, you need to analyze the size of your business. Analyzing the size of project will help you become realize your capital needs. A small project requires a capital anywhere from $500 to $5000. Initially, app development drains out a lot of money, therefore, if you yourself are going to be the developer then you can save a lot of money. Having the right team comes next. If you are the developer then a lot of problem is solved right in the beginning but still that doesn’t make you a graphic designer. Eventually, you will need someone to do that for you.
Ready Made Apps
In a very minimalist and simplistic approach you can head to a website like “Code Canyon” where they sell the templates which basically include game designs. All you need to do is hire a freelancer who can modify codes and put ads. That’s it! You have an app. Since this is very easy, there are many people doing it and therefore your chances of succeeding drop considerably. If you can get someone selling you the code and you are the developer then its great. You can modify the code as per your requirement and improve it, you can also take the help of a freelancer and get things done. But all of these mean short term thinning. In the long term process you might make a mix up. If you are not the developer and you buy codes to be developed by someone else then they might not understand the language and make a complete mess. Ready coded apps do not Indemnify you from the fact that you will need a developer later on.
Another thing that we suggest you is to go get a job, make some savings and then comeback to the business. This will help you succeed if you are running on a very low budget. Now, if you are someone who is finding all this very cumbersome and slow and want to go for a ride and develop a completely new coded app then welcome on-board! For that to happen you need capital, if you have money then good, if you don’t then you will need to find ways to get money.
There are different ways of generating capital and that completely depends on the country that you live in. You can take a loan which I don’t suggest personally. You can rather sell on a site like eBay and fund yourself a little. You can also rake in a co-founder to help you get started. You can choose a Kick-starter like Indiegogo and put your idea there and see if people like it or not. There are also risks associated with putting your idea on the web for everyone to see as there are developers with money and team who can easily start working on your idea even without you knowing it. I fear making my idea publicly but there has been a good success rate too.
Get back to Job!
One very easy approach is going back to office. Yes, keep working as you were and save a lot of money. The saved amount can be used as a capital to fund your app business. I know this sounds a little difficult but it will surely help you in the long term as everything will be under your control. You might have to work even on the weekends but there is going to be a lot of job safety and no one will ever get to steal your idea or own your business.
There is one more way, probably, the most common and “easiest way” too and is to get investors. What basically happens when you take an investor in your project is that labor, time and knowledge is yours, but money comes in from the investor. The investor must be able to understand your idea in order to invest in your business. If you are good at selling your idea or project, then you can get the money to grow or start your business. Once you have the investor in, they will ask for a piece of your idea or business.
I would strongly recommend you to go on Google and check out the ways to to get an investor, all this comes free of cost, you don’t need to pay a penny. The internet will teach you how to get the folders researched and other stuff done. You will have to schedule a meeting with your investor and explain them about your ideas. Obviously, its easier said than done but its worth the hard work.
Understand Your Investor targeting
A real and good investor that also invest his or her time into your business is not easy to get, you need to hustle long, DM everyone and then maybe you get a chance. There are different types of investors too, some might only look at a particular type of business. An investor might only invest in an entrepreneur that is black men or women, minorities, apps related with food, clothes, etc, etc. There are investors who are only interested in tech companies. There are also investors who will invest in food business. Therefore, it sometimes become really hard to find an investor who is looking to invest in app business as there are many developers already trying their part in the market.
You must also understand that an investor will definitely look for returns. The returns can be in the form of interest on the loan provided. Mostly an investor will be interested to purchase a part of your company. This might sound scary but it is never a bad option. You must learn not to be romantic about your business. Sure, you might have dreams, a company name, plans and so much more which might make you feel a little too sentimental. In business there is more space for intelligence than sentiments. A person having 0.001% shares in Facebook is way richer than anyone owing a 100% of a new business. You have to let go of something to get something.
An angel investor is slightly different. They are long term thinkers, they will invest in your company over a horizon of at least 5 years, 10 years or maybe 20 years as well. They will want your company to grow and sell well. An angel investor is more than a normal investor as they will also help in the working of your company. They will go deeper into the numbers that the company is generating. An angel investor also helps by providing insights.
The thing is that angel investment is needed if you dream to go as big as Facebook. You have got to plan for the rounds of funding. For the initial investment Round A will be pumped in and then as per project requirements Round B, C etc. will be allotted. Investors might set up some sort of target before you get another series of funding.
These things are still a level above when you just getting into the business of app development. You need to do a lot of research before you finally delve into the business of app development. More info on the video below!