How to Get Funding for an App Idea: The Only Guide You’ll Need

A business idea transforms into reality on the base of significant capital!

You need funds to facilitate ideation, planning, design, development, testing, and launch activities-”objectivity is essential.”

While you are trying to get funds for app development, being objective about your goals matters the most.

So, if you are still stuck on “how to get funding for an app?”

The first step is to find the objective behind your application.

Clarity on the application need and funds help build it. A BBC survey expects a decline in investment, and the primary reason is a lack of business confidence.

Objectiveness in your startup pitch infuses confidence.

We will discuss the objective aspects of your investor pitch but also.

• How to find investors for your startup idea?
• What are your options for startup funding?
• How to ensure that your pitch attracts funding?
• What are the prerequisites to get funding?

Let’s start by understanding the startup funding stages for your mobile app development.

How to Get Funding for App Development: Funding Stages

Securing funds for your mobile app development startup requires clarity of requirements.

It’s not just about how to get funding for app development; what value you offer to investors becomes crucial.

For example, some funding options require you to offer a stake or shareholding for the investors.

So, the first question you must clarify is what will you offer? This can differ for every stage of the funding and type of investor.

Series A funding

This is a stage where most entrepreneurs try to attract third-party investors for app funding.

Some of the essential prerequisites for series A funding are:

• Tried and tested business models
• Decent client base
• Decent revenue cycle
• Returns on initial investments.

Series B funding

This stage is where tech startups scale and transform their business into enterprise-grade organizations.

Such startups have proven business viability and are looking to enter new markets.

Series C funding

This app funding stage is for mature startups with more than $100 million in valuation.

So, suppose you are wondering how to get funding for an app with higher revenue and needs an equal amount for further expansion.

In that case, you are at the series C stage.

IPO (Initial Public Offering)

IPO is the ultimate level of startup app funding, where you offer a share of the organization to the public for funds.

Attracting investment in your organization from the public requires a strong balance sheet and financials.

Understanding these stages is crucial for any entrepreneur because the strategy for each stage differs.

So, if you are an entrepreneur forming a strategy to get funding for app development, knowing the stages helps.

However, you also need o adapt app funding strategies based on the fund source.

So, let’s understand funding sources!

Funding Sources for Your Application Development Project

Building a business with reliable sources like a grant from friends or family members is popular.

However, it is a source that can help kick start some aspects of business, but you need higher investment to scale.

Initially, a grant from friends and family is a valuable addition to the primary sources, like a bootstrapped investment.

#1. Bootstrap your business

Bootstrapping is your money acting as an app funding source. In other words, you start your mobile app development startup using your money as an investment.

This is a safe option as you don’t need to offer any stake in your company to investors.

However, there are limits to the kind of money you can invest.

As you scale your app development startup, bootstrapping may not be enough.

For example, startups in the Series A funding stage have already generated returns on bootstrapped money.

A significant issue is burnout, where you spend heavily on bringing the idea to life without monetary success leading to higher burn rates.

Burn Rate = Total Cash Position Change/Specified Period.

Reducing the burn rate requires high control of the cash burn and improved revenue.

One way to achieve this is to leverage a lean startup approach where you develop minimum viable products to test efficacy.

One best practice to follow is to leverage local developers for optimized communications and reduced collaboration problems.

For example, choosing London app developers in the UK makes more sense and helps reduce the cash burn.

#2. Compete in an app funding contest

App funding contests are one of the best sources to get funds for your project if you have a revolutionary idea that solves user problems.

These competitions are held by investors, industry leaders, and organizations that fund startup ideas.

Some of the significant app funding contests to look forward to in 2024 are:

• NACUE Varsity Pitch Competition attracts startup ideas from students and entrepreneurs in the UK. (Prize money: £15,000)
• Startup World Cup by Pegasis Tech Ventures will have 60+ regional events and a finale in San Fransico, USA. (Prize money: $1,000,000)
• Collision in Toronto, Canada, attracted more than 25,000 startups. (No prize money but a pitch trophy)
• TechCrunch Disrupt with several startups across AI, ML, robotics, and other domains. (Prize money: $1,00,000)

#3. Find high-worth angel investors

Angel investors are high-net-worth individuals and are best to boost initial capital investment in your start-up businesses in exchange for a company share.

You can get funding from angel investors for various purposes, including mobile app development.

It is essential to understand the terms of investment while you seek funding from an angel investor.

The primary reason is your company’s stake, which an angel inverter can ask for in exchange for funds.

This could mean losing control of the company if the investor’s share is higher.

#4. Approach venture capital firms

Venture capital firms invest in your start-up businesses in exchange for equity in the company.

They usually look for businesses with a strong team, a clear market need, and a unique selling point.

So, you need to adjust the pitch accordingly and showcase how strong your team is and what makes the application stand out amidst the competition.

#5. Crowdfund your application project

Crowdfunding is a popular way to raise funds for your application development project.

You can use online platforms to raise app funding. An important aspect you need to understand about crowdfunding is the community benefits.

Most crowdfunding activities involve people who believe that startups will solve specific problems.

So, you must pitch how the application or solution you want to develop will solve crucial user problems.

Now that you know what funding sources you require for your mobile app development startup, let’s understand the amount estimation for your pitch.

How to Calculate a Startup Pitch?

When designing a digital product, it is crucial to plan the software development budget, which is also helpful in attracting investors.

Below are some tips on determining the pitch amount for app funding.

Choose a platform

What platform you choose to deploy apps on can affect the budget for creating an application.

How much does it cost to make an app will differ based on whether you decide to develop a native app running on one platform or a cross-platform app.

For example, the cost of an Android application differs from an iOS application.

Further, if you develop a cross-platform app its cost may be lower compared to two separate native apps.

So, you need to determine the primary requirement for your project and estimate the pitch amount accordingly.

Identify key features

Once you have the type of app decided, identifying what features will be needed for the application to deliver value to users becomes crucial.

The functionality you plan for your application directly affects the final software development budget.

For example, a simple login feature for your eCommerce application will cost less than the more complex functionality of advanced product search.

So, you need to have a list of features and how much each cost to estimate the pitch amount.

Set revenue goals

Before starting mobile app development, it is crucial to determine revenue goals.

This is essential to understand how much time it will take to break even and when you can reinvest for advanced features.

Find the right team

Finally, you need to find a trustworthy vendor who will help to build a reliable product prototype.

In the early stages, having a full-fledged in-house team can prove costly. You need to take care of rent, resource costs, and the cost of hiring employees.

The best practice is to outsource app development to a leading outsourcing company.

Experienced outsourced app developers charge less than in-house ones but still guarantee high performance for your software solution.

Location-based app development rates

The rates of hiring developers vary significantly across the globe, so you need to plan your budget accordingly.

However, the choice of developers or outsourcing vendors does not solely depend on pricing.

You need to consider collaboration hurdles, skill set requirements, communication aspects, and the price developers charge.

For example, if you are a startup in the UK and require mobile app developers, finding talents in the local market does help in reducing communication issues.

However, choose a hybrid model if finding specific talents within the local market is difficult.

Here is an estimate of the cost to hire mobile app developers across the United Kingdom: