An unfortunate reality is that most startups and entrepreneurs have great ideas but no money or lack programming skills. From VC funded, to angel investment to self-funding, funding for app development can be done with multiple options.
How much money/funding do you need for app development totally depends on the kind of app you want to develop. Let’s give you a brief idea. A local single platform app would cost you as little as 25k, and a more complex cross-platform app may cost you between 50-100k. We can help you with the app scope or requirements if you want.
Moving on, there are many funding options, if you want complete control and ownership, can go with self-funding. Easy way to jumpstart yourself, however, you can never be sure of the app’s success once it’s tested in the real market. Usually, self-funding is not recommended. We recommend seeking venture capitalists or angel investors.
In this article, will share how to find investors by sharing the funding rounds details along with types of funding options and app development cost.
Table of Contents
1-How to find investors for funding?
Before sharing how to find investors, you should be well aware of where your investors are.
There are several investment rounds with a proper structure. By structure, we mean funding rounds. Let us guide you one by one.
Seed round – the very early round in funding app development. Usually, seed funding comes from the insiders who kickstart the startup via their capital and let the business establish.
Angel round – in this round the app looks for angel investors. This round is more formal and often comes from investors who buy common stock in a company and have formal terms and conditions.
Series A – a large-scale venture capital funding is asked for. The series A rounds generally bring $2 – $10 million.
Series B, C, D – Connects with tech startups and turns a startup into an enterprise. Usually, by series C, your business estimates at around$80-100+ million.
IPO (Initial Public Offering) – a startup is no more a small existence. The company sells shares to public. An excellent way of getting funding and accelerating growth.
List of sources for finding investors online
1- AngelList (it has more than 40,000 investors, but ideally pick only top 30-50)
3- Angel Investment Network
2-Types of funding options (how do apps get funded)
Normally, there are crowdfunding platforms where you can pitch your app idea and get the funding. Kickstarter and Indiegogo are popular crowdfunding platforms. In simple words, users/buyers/investors can buy your digital product before it gets developed/mature as they like the idea and think that it would break the market and earn handsome revenue.
ICO and IEO
Blockchain-based startups can literally seek advantages from ICO. The money raised here is in the form of cryptocurrencies. However, such funds are risky as you are uncertain of their future value. But blockchain projects totally understand such concerns.
Self-funded / Bootstrapping
You can be your app investor, oftentimes it’s considered wise to seed fund your startup as this will give you complete control over the app development. If your app succeeds, you may not need funding but can seek funding during the later stages of your business.
Incubation centers not just provide the initial seed funding but help in mentoring as they organize lectures, business meetings with useful business contacts, share insights, etc.
Angel investors or venture capitalists are generally looking for a startup with unique selling idea and they like to invest which intrigue their interest. In exchange, Angel investors won’t ask for much control but VCs usually ask for control over development.
The most common form for seeking funds is via banks. They lend you loans and keep your assets for guarantee. Also, these days governments support startups and banks with reasonable interest lend you loans.
If your business idea is targeting a specific industry you can pitch your idea to the relevant business tycoons. They may be more interested in funding then those who have little to no knowledge of your app niche/category.
Colleagues, family, and friends
If you have a well-connected circle of family or friends or colleagues who are eager to invest in your idea with a stake in the company, it’s a good idea.
3-How much does it cost to build an app? Phaedra Insight
An app development cost depends on variable factors like the type of app, complexity, the technology stack, and the region from where you are seeking development services.
An average app development cost starts from $50,000 and goes up to $140,000-170,000.
Simple app development cost – $50,000 – $70,000
Advance app development cost – $100,000 – $300,000
However, we prepared a detailed blog, do give it a read for a thorough understanding of pricing.
You should be asking yourself who will invest in your mobile app development idea. There are thousands of apps deployed on app stores daily, so instead of promising unrealistic revenue figures, do your market research. The idea of the app must draw investors’ attention. Uber is a perfect example. When the concept was shared, it was considered unique and Silicon Valley invested resources and finances in summer 2015.
Another key point here is selling ideas with confidence and keeping a backup monetization. For example, the Spotify app is in limelight, they have a freemium model and earning money via ads and app funding but it has a strong contender i.e. Apple music. Spotify is struggling with its idea and still hasn’t got venture capitalists but it has a backup in the form of freemium, and advertising royalty.
Do not fell prey for any other app development service provider. We take ownership of what we do so that you could grow your business in actual. Contact us.