The app market is a booming business. Successes such as Instagram, Wordfeud and Draw Something inspire entrepreneurs to start an app business themselves. Many entrepreneurs have an app concept in mind, but have often doubted whether to develope it into an actual app. The making of an application is often accompanied by serious costs. In this article we will discuss the possibilities to finance your app business.
Writing a business plan
Just like setting up a business, it is advisable to write a business plan for an app. the app concept is defined in the plan, functionalities, competition, financing and other relevant matters. With a good business plan you create a clear picture of your value proposition, opportunities and threats, the capital and in addition you have a nice document to present to potential investors. DTT can moreover assist with developing your business plan. Call or email for more information.
The costs for developing an application are related with the complexity and the desired functionality of the application. With a custom app, you should consider a minimum investment of € 5000, - which can be up to an amount of over € 100 000, -. And do not forget to finance the costs of promotion and maintenance of the app. Below is a list of potential investors that you can find for your app business.
Family and friends
Family and friends can be an important source of funding. This form of finance will be faster and easier to get than with other types of investors. However, making clear agreements is a must, for not to put pressure on the good relationships.
Banks have a wide range of financial products. A product that is ideally suited for the financing of an app is a personal loan. Banks offer persons over 18 years old the opportunity to borrow an amount between 2,500 and 75,000 euros, depending on your situation. Banks will state a monthly payment with a relatively low interest rates, and the term of the loan.
Caution: Always be well informed about the pros and cons before you decide to take out a personal loan.
Instead of searching one or several investors for your app idea, it is also an opportunity to find a lot of investors who can pay larger sum all together. This concept of 'crowdfunding' rapidly gains popularity, and is relatively accessible. Kickstarter, SellanApp and Appbacker are some examples of sharing an app idea and finding investors. In exchange for a percentage of future earnings or shares, investors fund an amount in the app business.
A fourth option is to finance the app by angel investors (known as business angels in the Netherlands). Angel investors are often experienced entrepreneurs who have earned a lot of money with the (partial) sale of a company. This money they often use to reinvest in startups. The main reason for this group to invest money are: fun, community involvement,and a need for a balanced investment portfolio.
It is difficult to find angel investors, they usually operate behind the scenes, because they do not always flaunt their capital and investments. But how do you find these angel investors then? For a start, you can look around inside your network, ask family and friends if they know someone. You can also go toentrepreneurs meetings, here you can get in touch with the right people. There are also special events for wealthy entrepreneurs. These meetings are often held by major banks, incubators and pitch-meetings.
Once you have found a suitable angel investor, make sure that you have a solid business plan or development proposal where you clear the potential return, the market growth and innovation maps. DTT can optionally help in preparing such a proposal.
Are you looking for more information about app development or do you have a great app idea? Do not hesitate and contact DTT. We are happy to discuss the possibilities and impossibilities of your app idea. DTT writes development proposals and app business plans on behalf of companies and individuals. Thanks to these proposals our clients have received multiple apps funding. Also app plans were approved within large (government) organizations' with development proposals submitted by DTT.