Fundraising is no longer tough for app startups. Today fundraising opportunities are absolutely in possible ways, thanks to entrepreneurs and evolving startup landscape.
If you’re able to manage the total cost incurred to start your app business, you’d probably take a less-tensioned, more confident next step. Otherwise, you would need to be more strategic to return to stakeholders while growing the business. But a great app idea and a great bank balance don’t always go hand-in-hand. If you’re facing the same, then this guide is exclusively for you.
Top 5 Ways to Raise Fund for App Business
- Incubators and accelerators
Accelerators support startups for a specific period of time, usually from 90 days to 120 days and offer a specific amount of capital, usually around $20,000. In an exchange, accelerators expect 3 to 8 or more percent ownership of your company.
The goal of accelerators is to not to go in your success roadmap, instead as their name suggests, they will accelerate until you get your next round of funding from VC firms. Some popular sources to get accelerators: TechStars and Y-Combinators.
Incubators focus on preparing you to get fund from accelerators. Incubators take little to no equity in your company, in fact they don’t invest, and moreover, they help you as a mentor. Many incubators are funded by grants through universities. Incubators usually accept startups with whom they already have a rapport. So be clever enough to perfect and utilize your networking skills.
Some large companies, community development organisations and universities offer incubators and accelerators for startups. Their help can include mentoring, support to set up office space, and seed capital at little to no cost. Some top sources to get incubators and accelerators: National Business Incubation Association and Iowa Regional Business Center.
Crowdfunding is relatively a new source of funding small businesses. It allows you to reach out to a likeminded people. But in order to attract mass audience, your product or offering should be very attractive. It should stimulate their interest. Before creating your first crowdfunding campaign, make sure you follow these steps:
- Set realistic campaign goals
- Choose right crowdfunding platform (s), for example, Fundable
- Right marketing strategies
- Venture capital firms
We can call VCs as an advanced form of accelerators. They back you with both capital investment and valuable experience. The experience they bring enables you to build better business strategies and tackle complex business challenges effectively. And even they help you in business promotion, setting up the right office space and building team.
But in order to attract VC firms, you should have been accelerated by accelerators. In worst case, your app should be compelling. For example, the app developed by FuGenX, a technology services company, helped India’s largest online grocery store Big Basket raise fund from global VC firms. And India’s largest e-learning company Byju’s raised fund from Facebook CEO Mark Zuckerberg, where the app developed by FuGenX had an impression.
- Angel Investors (Individual Investors)
Angel investors are high income individuals who invest in exchange for an ownership interest. They can invest between $25,000 and $500,000. They may ask to convert the debt into equity when the company starts to grow. Angel List is one of the best places to find angel investors. You can also find angel investors in your family and friends, angel investor networks and fund raising advisers.
- Super Angles
Super Angles are high income individuals than angel investors. With a huge capital they have, they can invest more than $500,000.
- Small business grants and community assistance
Government support and community assistance are other ways to fund your startup. They include a lengthy application process and approval, but for a reliable funding, you can consider them. Below are some government led startup programs:
For US based businesses: SBA
- Partnering with app developers
You can ask mobile app development company by whom you develop app to be partner for your app venture. Not all mobile app development companies entertain this, but some companies with good investment capability can accept your request.
5 Tips to Pitch Your Idea to Investors:
If you get the opportunity to pitch your idea to prospects, you should be strategic enough. Here are top 5 tips to perfectly pitch your idea.
- Don’t try to present everything you could do, instead, pitch only core points that has the highest impact.
- When someone wants to interrupt, allow them. No investor goes with a half-boiled idea, so let them well understand your concept.
- Don’t drag your idea. Keeps it short, focusing on the most important aspects.
- Ask for feedback throughout your presentation.
- Talk to people who have done this before.
Hope now you’ve got a better understanding of fund raising trends. You are recommended to have a support of mobile app development company who holds experience in helping startup clients raise funds with quality apps, as it is also one of the key aspects to attract investors.