Should I Try And Crowdfund My Mobile App Idea?
With the increasing costs of developing a good app, some people are asking, ‘should I try and crowdfund my Mobile App idea’ rather than going a more traditional route. This question can come up for a few reasons including developers not wanting to put so much of their personal time and energy into a creation when they haven’t made money in the past developing an app.
Basically crowdfunding is based on the idea of getting other people to help finance the creation of a product. Using Kickstarter or Indiegogo can help entrepreneurs and developers have the upfront capital they need to launch an idea past the concept phase and closer, if not fully, into reality.
Since 2008 crowdfunding has been a way for everyone from artists and film makers to now app developers to finance creative projects. In case you aren’t aware, these aren’t just nickel and dime projects. Conservative estimates have primary crowdfunding options raising approximately 2 billion dollars combined since inception.
The success of crowdfunding is basic capitalism at work. The economy has been rebounding since 2008 and part of that rebound has been supported by expanding e-commerce in the retail sector. That means people have become more accustomed finding things they want no matter where in the world they are. In turn people are finding interesting, unique businesses and ideas that they connect to and want to be a part of.
With the success of companies like Apple that started so modestly there are plenty of people that are hoping to find lighting in a bottle and be on the ground floor of the next massive skyscraper of success. Shows like Shark Tank are also examples of what an infusion of capital and some strong mentoring can do for a great idea.
Other finance options:
To be perfectly honest, there are very limited options available to most developers these days. The primary problem is that there are too many fish in the sea and simply not enough investment food to feed them with.
Investors can be extremely picky with the ideas they are willing to back and currently they expect a combination of a great idea, professional pitch and experienced people on board before they are going to part with their hard-earned money.
The same can be said for larger development companies that in the past might have footed a large portion of costs themselves in exchange for ownership in the product. It is simply too hard to guarantee success for most people to be willing to toss a large chunk of cash at an idea they are not personally attach to or in love with.
Can you easily crowdfund an app?
Unfortunately, because what we have outlined above, that means a lot of people are jumping into the crowdfunding an app idea. Much like with traditional investors this is leading to the problem of too many fish and not enough fishermen. In essence an app is a non-tangible product and those are never highly funded.
So how can you try and ensure success with your crowdfunding attempt?
There are a few successful models you can try and utilize:
- Donation model – The donation model is highly used with sites like GoFundMe or CrowdRise for a wide variety of things. People have used GoFundMe for things like funds towards marriage counseling to save a relationship so why not an app? This model could be used for products that people will be passionate about or have the potential to change the world in that you will find donors willing to help fight the good fight and part willingly with their money in exchange for nothing.
- Equity model – This is a fairly standard form of investment where people exchange cash for equity in a company. Crowdfunder and AngelList are two of the more popular and notable platforms out there, although there are others out there. The upside of this method is that the owner typically keeps either a controlling interest in the business or retains full control regardless of investment which means people are only involved for profit. Unlike something like a Shark Tank scenario where you also get advice and help from equity holders, this also means less legitimacy for those without a proven track record.
- Rewards model – This model offers rewards typically such as free products. Kickstarter and Indiegogo are the kings of this area (among others). Basically you are generating pre-sales based on your idea and those sales will fund your product development. It can be a great method for a strong idea to develop as you do not give up any equity but also can’t expect to be paid until after the pre-orders have been handled, which of course is rather easy in an inventory-less business such as apps.
- While we mentioned a few of the big hitters in the funding world based on various models, there are also some great app-friendly platforms that we should mention as well. These are AppSplit, AppBackr, SellanApp, Patreon, AppsFunder, RocketHub, AppStori, and TechnoFunding. While not nearly as big as Kickstarter or Indiegogo, they are still worth looking at.
Tips for success
Along with finding the right place for funding there are a few things you can try and do to shift the odds in your favor:
- Showcase value – Investors like to see how a product will make money. While most apps are free that doesn’t mean you have to only have free options. Bundle concepts, paid memberships for other services or paid premium models are all good ways to add value to a concept.
- Early access – Beta or early access perks are a nice idea for a reward to a backer versus cheap swag like a t-shirt. Some people have that “I was first” mentality wired into their brain and love to be the first group of people to have access to a product or service.
- Appeal to an audience – An existing audience is fertile grounds for backers because there is a sense of trust and appeal already in place. Businesses that have existing mailing lists for example suddenly have a group of possible investors to start things off on a crowdfunding platform and in some cases once the ball is rolling other people are happy to jump aboard.
- Long-term value – Another reward concept is VIP access, year-long membership or other values that extend over a period of time. For example, if your app concept is going to target business owners who will need to subscribe to a service for maximum value, offering X number of subscriptions or a 2-year free subscription followed by 20% off subsequent years after launch is value that lasts.
The bottom line is the crowdfunding is still a new and exciting way to generate money for ideas and concepts of all types, including apps. With a lack of other options for funding, there really isn’t much of a question about should you try and crowdfund my app idea or not as it makes a lot of sense to at least try after crafting a good plan on how to do so; at the very least you will gain some exposure for your idea.