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The Best Ways To Fund An App Startup

Entrepreneurship has found great footholds among the world of smartphone app creators. It’s such a widespread market, in fact, that funding can be one of the only things standing in the way of entrepreneurs trying to pass the barriers of entry. Smartphones are one of the most consumed objects in the modern world, with nearly 3 billion users projected for 2020. With such simple access to the internet, apps are starting to replace websites and computers as more and more entrepreneurs join the app markets. Funding is certainly one of the most powerful barriers to entry, but there are plenty of ways to surmount the obstacle.

Lending Aid

Loans are certainly the most common way to fund an entrepreneurship adventure, and app development is no exception. Business loans, credit cards, and credit lines account for a massive percentage of the funding of new businesses. Some entrepreneurs may feel that their credit is shot and might stand in the way of obtaining a loan, but there are many ways to pursue funding and financial aid. It’s important to have a good pitch, so one should make certain their app idea is viable and marketable. Moving into an over-saturated or dated market can kill the idea before it has time to sprout seeds. Entrepreneurs should consider having a demo of the product if possible to show that there’s true potential and intent behind the product the loan would be funding.

Help From The Crowd

Crowdfunding and audience-funded campaigns have become incredibly effective and popular in recent years. This allows the entrepreneur to form a platform or campaign and pitch the idea to a crowd in the hope of raising the funds from fan interest. There’s a huge amount of potential funding depending on how desired the product is or how well it’s been marketed. Plenty of apps have been funded through crowd efforts and campaigns, but it’s just as important here for entrepreneurs to have a convincing, compelling pitch. It’s important for audiences to be drawn in and convinced to give their own hard earned funds to a project. A passionate video and a well-made showcase is vital to secure funding through this method.

Gather Investors

Crowdfunding is done with no expectation of return, essentially a donation given in faith or desire to see the product made. An alternate way to gather funds in a crowdfunded manner is through gathering investors. This often comes with the expectation of some sort of return, whether it be through monetary reimbursement or through an acknowledgement of the investment.

Depending on the way that an entrepreneur may want to proceed, investing can take many forms. Some entrepreneurs may be willing to give some percentage or stake in the company, meaning that investors will own some small bit of the company. In return, the entrepreneur is given finances to help fund their startup. The amount given correlates to the percentage of ownership that the investor may gain in the company, and is completely up to the system set up by the entrepreneur.

An additional reward given would be acknowledgement, rather than shares in the company. This calls attention the philanthropy of the investor, garnering them public acknowledgement and the pride of being publically involved with the startup. This reward is somewhat less common than shareholding, but is still an excellent way to reward those that find an entrepreneur’s ideas worth supporting.

Mix Together

There’s no reason to limit a startup to a single method of funding. Sometimes one may find that the loan that they’ve qualified for was inadequate to fund the entire project, or that they were unable to raise the funds needed through crowdsourcing or investors. In this situation, it may be possible to mix the methods of funding to reach the goals an entrepreneur needs to reach to fund the project.

Many of the ways may blend together excellently. For example, crowdfunding is often seen as a form of investing due to the tiers of rewards that are commonly given to those that are supporting the project. Entrepreneurs may find it a useful strategy to make one of the highest tiers of reward to be the same rewards they may have given to an investor, combining the two methods.

One could also use the loan they acquired for funding to create further funding, such as using it to finance a fundraiser or to purchase rewards tantalizing enough to attract more investors and crowdfunders. Another pairing could be using the same loan to finance a sponsorship with an app with a similar target audience to the startup’s. This can help garner a fanbase that loyally awaits the launch of the project.

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