Top 10 Ways to Make Money for App Startup
In the modern era of technology, the dynamics of business are swiftly changing, according to statistics, 80% of consumers use the mobile application are easy to browse. For a responsive and successful business, the website is no longer the solution, and companies approach mobile applications as they are leading the world.
However, according to UK app developers, over 94% of businesses fail to establish mobile apps due to lack of money and capital; money is the lifeline of a business. The vast funds and capital are essential for the business for several reasons, such as expanding the association, developing new products, or continuous transactions. That’s the utmost reason that business entrepreneurs are anxious about funding and finance for app startups.
Generally, from the idea app to business revenue, entrepreneurs try to convince investors to invest in their app at all stages. Here are the top ways to make money for an app startup.
Top 10 proven way to make money for app startup
Bootstrapping refers to self-funding or self-starting for the business without external support; in this process, an entrepreneur uses his saving and capital for the business venture. According to the survey, more than 80% of the startup business are followed by bootstrapping. Initially, bootstrapping is driven from a phase in 19 centuries, “to pull oneself up by one’s bootstrap,” which means an impossible task, but now it refers to do a challenging task out of nothing.
Bootstrapping is one of the finest techniques to make money for app startup for the following reasons:
- lowers the financial risk
- keep the company focus
- represent the determination of an entrepreneur
- allows more experiments
- lower the pressure from investor
According to UK app developers, bootstrapping is an excellent step to make money for the app as it gives complete control to the business. Here are few suggestions for preparing yourself for bootstrapping:
- start saving from the beginning
- use from personal resources for the business
- lookout for deals
Crowdfunding is the practice of raising funds from more than one person simultaneously through the internet; it is one of the newest modes to raise money for the startup by taking loans, contributions, or investments. The traces of crowdfunding start from 1700. Jonathan swift provides loans to unprivileged families through the Irish Loan Fund, later in1997 British rock band funded their tour from donations by fans, which leads to the development of ArtistShare in 2000.
In this system, an entrepreneur shares the description of the business to the crowdfunding platform with complete details; afterward, customers read and place their donations and investment if they are interested in the business. Crowdfunding is an excellent technique to make money for the app, but it also provides help in marketing the service or products, gets feedback from expecting, and grabs audience attention.
An Angel investor is a kind of investor who provides funds in exchange for convertible debt or ownership equity. This technique is used by businesses and associations that do not have sufficient resources to secure business financing.
The prominent advantage of angel investment is that you do not have to pay back capital in case of business loss, however. Still, you lost control over your business due to ownership equity. The most exceptional business endeavor like Google, Yahoo, or Alibaba has taken help from the angel investors; the sources of an angel investor can be wealthy individuals, friends, or family.
Venture capital is the technique to raise funds for small businesses by private equity that has the potential for growth and development; basically, the venture capital source is banks or financial institutes. VC is the professional investment against the equity and exits when IPO attain.
It’s a considerable method for small businesses, but it’s not stable and flexible for more significant businesses due to larger transactions. However, VC has few drawbacks too, like loyalty is a concern, and they often ask for recovers within 3-5 years.
Business Incubators and Accelerators
Business incubators and accelerations provide capital and investment for the small-centric business; with the capital, they also help in service, managing training, office space, etc.
Business incubators and accelerators are an excellent way to make money for apps. Still, they also provide support and guidance for the business growth and motivation, and services to increase the productivity of the end product.
Raise Funds by Winning Contest
Contest and competition is a fun way to make money for app startups. The various contests help raise funds and capital to set up a business; on the other hand, they are suitable for marketing and attracting customers to your business. For example, ProfitBooks was runner up in Microsoft BizSparks in 2013, and Hot1oo Startup Award in 2014 won, both of them got a lot of benefits and success through the completion.
But for a contest, your project needs to be well-construct or planned to attract investors and succeed in the contest. And make sure your project should be innovative and unique to stand out from the crowd.
Even if you lose, you get a great response for your work, enhance credibility and attract people; here is the app contest you should have a look at:
- NYC BigApps
- CodeLaunch Pitch Day
- UChicago App Challenge
Raise Funds by Bank Loans
Bank loans are the most and most straightforward choice to make money for app startup, and there are two types of financial loans bank provides for small-scale business.
Capital loan; capital loans are used for short-term investment.
In this method, funding provides assets for the business in deposits, lending, or investment.
Microfinance Providers or NBFCs
When the bank does not approve your loan, there comes a microfinance provider. It is a banking service especially for an unprivileged individual or low-income person to meet the financial requirement. Similarly, NBFCs are a short form of non-banking financial corporations that provide bank serves without concerning legal matters.
Govt. Program That Offer Startup Capital
Various government programs offer capital for startup business plans; in this process, you have to provide a business plan to the authorities; if it gets approval, your loan will be sanctioned. You will receive a card like a credit card to purchase expenses according to your project.
Quick Ways to Raise Money for Business
There are several other ways to make money for app startup, such as:
- Product pre-sale; selling a product before launch is Apple and Samsung’s technique to grab customers’ attention and get feedback. It is a unique and efficient method for a business to raise money.
- Selling assets; selling assets is when businesses transfer or sell their business assets to other companies or individuals to raise funds; it is the most challenging method, but once the situation is in control, you can repurchase your assets.
- Credit cards; business credit cards are the way to start up your business and improve cash flow but remember that interest rates can be built quickly, carrying debt can negatively impact the business.
To grow a business, capital is the essential aspect of the business, and for that, you need an external source to raise funds and develop your business. Funding can help you to expand your business and develop your app efficiently.