Just as many business people take loans to finance new businesses and expansions, multiple options exist for you if you’re looking to get app funded.
A quick note: this article is a logical extension of our previous guide on getting funding for a mobile application. Looks like you may be serious about raising some money for your mobile product – definitely, go check that one out.
Spoiler alert: it’s about pitching VCs, the types of apps that get funded more often. Oh yes, and failed dreams, too.
You know what? Let’s overcome the fear and bitterness, and talk about fails right away. Starting with fails iецs organic in the world of starting new businesses.
The part about failed businesses, shattered dreams and keeping it up
Don’t build castles in the sky.
Seriously. For your own sake, let’s leave illusions behind if you want to succeed.
The sad truth is that most apps are poorly researched and badly executed. Don’t be those statistics.
Here’s a little list of articles that take you through a tough but necessary reality check: (updated)
- Top 3 Harsh Reasons Why Mobile Apps Fail
- How to Validate App Idea and Save it From Failure
- Cross-platform Mobile Development: Advantages and Risks
The real challenge is knowing the fail rate, and still giving it a shot. Remember that stuff about falling and standing up? Time to put that mindset to action.
Okay, back to getting money to build your app.
There’s no “one size fits all” when it comes to finding and securing mobile app development. Each of the following 7 options has been vetted to work for someone in your position – needing some financial assistance to help bring your idea to reality.
Small Business Loans
Provided you meet eligibility requirements, the US Small Business Administration’s 7(a) Program can provide low-interest loans for up to $5 million or Microloans for up to $50,000.
Similarly, the European Union and the European Bank for Reconstruction and Development (EBRD) also have programs for start-ups, entrepreneurs, small businesses and SME’s.
Issued on a conditional basis and usually for specific purposes, but who wouldn’t be interested in possible free money for their business? Grants and partnership programs can be found with US AID and the EU’s Horizon 2020 Project.
Horizon 2020 has allocated over $80 billion through 2020 for research and development for businesses in the European Union and other participating countries.
Real life example: Before raising $1M in seed, the famous time tracking app, Timely, got $100K as a grant.
These are two of the largest sources of grants, suffice that many other governments and private foundations also issue grants on a regular basis.
Governments frequently issue contracts forbid – things they need companies and contractors to do or provide. These can be wide-ranging, for the United States, you might take a look at Federal Business Opportunities.
In the EU, you want to visit SIMAP and Tenders Electronic Daily (TED) for specific opportunities by country. Most are not mobile app related, but some are.
If you’re more into exploring the “dark side” – there’s DARPA.
Corporate sponsorships are not limited to events. Equally diverse possibilities can be found for corporate sponsorships for mobile apps, especially for truly creative businesses.
Mobile apps can be a great source of advertising, a means of developing brand awareness, to facilitate involvement in special interests, raise funds for non-profit organizations, and otherwise.
Incubators and Accelerators
Numerous programs exist which can help put entrepreneurs on the fast track in getting their products to market, bring in investments from venture capital firms or possibly launch an Initial Public Offering. Each operates differently, but many run in cycles where they accept perhaps 10 start-ups, run them through their course and select the Top 3 to actively promote.
Note: Usually mobile apps aren’t goals of accelerators, but the great idea will be funded.
Hand-picked on start-ups: 4 Qualities Every Successful Tech Startup Has
These usually involve a combination of a fee and other obligations which may include a share of equity or long-term service agreements.
Nearly infinite opportunities exist for two or more businesses to help get your app funded. If you are in the business of selling automotive insurance you have the potential to reach out to car dealers, gasoline stations, lawyers (for traffic tickets, accidents, etc.), car washes, and other businesses focused on cars.
This works best on a local or community basis, suffice that, too is the basis for B2B collaboration.
The “court of last resort” – when you can’t get financed any other way but you are convinced that you have something valuable to offer, you can rely on the “wisdom of the crowd.”
This is not as easy as some have made it out to be, as it has been misused and has had “fulfillment” issues, nevertheless Kickstarter, Indiegogo, RocketHub and others enable you to present your idea in the hopes that others will “buy/donate” into it.
Oculus Rift, the Pebble Watch series, and Elio Motors are just three of thousands of products (and businesses) who secured millions from crowdfunding.
75% of our client startups got funded within the first year. Get consulted by an expert business analysis, UI/UX design, and development team today.
So that’s 7 ways to get app funded. We promised 8.
The eighth way is a little bit different, albeit a standard business practice. Google, Microsoft, and Facebook own a lot of companies, not all of which are reflected on their balance sheet.
Many are the result of acquisitions, some the result of B2B or other organizational collaboration, and some the result of an internal decision to expand into a new area of business.
That brings us to…
Special Purpose Vehicles (SPV’s)
These are usually subsidiary companies with their own legal status, assets, and liabilities. SPV’s allow you to “partition” multiple business activities.
While they are not a source of funding, it can be a means to fund and/or diversify your overall business activities without necessarily impacting or exposing the assets of your core business.
Like any business activity, creating an SPV requires careful consideration and in many cases might warrant talking with an attorney specializing in corporate law and perhaps a tax advisor. In line with B2B, there are also Joint Special Purpose Vehicles and in conjunction with government organizations, Public-Private Partnerships.
So many ways to get app funded! Make sure to build your strategy with one (or few) in mind.