Securing Venture Capital for that Next App Development

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January 16, 2013 at 4:46PM

Whether you’re a single app developer looking to increase the size and scale of an upcoming release or the owner of a fledgling app development company, it can be incredibly beneficial to take on some form of venture or other funding in order to grow your business, to hire other employees and more. Let’s take a look at a few ways that an app developer can secure some venture, angel or other investment in order to finance operations or expand their development efforts. 

 
Always Begin with “Easy” Money
 
The first time you go looking for outside cash as an app developer you’re going to want to start with the easiest sources of funding: family and friends. One thing that makes sourcing new cash a bit easier is that you can show off your app(s) to pretty much everyone you come across, as you generally have your phone with you and you’ll likely have the latest alpha or beta release on there. When you decide to ask a friend or family member for investment it’s better to approach things from the side. Share with them what you’re doing, let them play around with your apps and then mention in passing that you’re looking for outside investment and ask them to forward along anyone that they think might be interested in investing in your app or your development company. At best you get a new investor on the spot and at worst you’ll get some new leads which may pan out.
 
Aim for Local Investment, if Possible
 
If at all possible it’s better to close investors that are local to your business operations – even if you develop apps from your basement or one-man office. This will enable you to gain access to mentorship from your investors, which can be incredibly valuable in growing your business into something more long-term and sustainable. You’ll also be able to quickly meet with any of your more “hands on” investors who prefer to be around and see exactly what’s happening with the money they invested. Sure, this type of thing can be done over something like Skype, but nothing beats face-to-face interaction.
 
Carefully Consider Online Funding Sources
 
There’s a lot of news around crowd-sourced funding options like Kickstarter, but beware that these aren’t the greatest ways to fund app development. Typically you’ll want to have some sort of product or service that you can trade to the funders in exchange for them pledging money – but early access to an app that you intend to price at $0.99 or $1.99 isn’t going to get you a whole lot of investment. App developers are usually better off going after traditional sources of venture funding.
 
Spend the Money Wisely
 
Finally you’ll want to ensure that you spend any venture funding very wisely; mishandling VC funds is an excellent way to tarnish your reputation and make it all but impossible to find additional investment in the future. Venture capitalists and angel investors are well-connected groups that don’t soon forget when someone blows their cash with little to show for it. Stick to the game plan and spend the VC cash properly; you’ll be far better off than when you started. Many entrepreneurs and app developers find it tough to swallow giving up a portion of their app’s future earnings or their entire company in order to receive venture funding and investment. However, if you have a well-thought-out strategy for monetizing your apps and a plan for future development you will likely find that the additional cash, resources and mentorship that come with venture funding are a huge help. Good luck!