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Leverage Crowdfunding to Finance Your Startup App Company

Writing a business planCrowdfunding has become a reliable, successful way to raise money for all kinds of entrepreneurial endeavors, from documentary films to new consumer goods. But for many app developers, crowdfunding has not been the panacea that has led to start-up funds that let creators bring an idea to market.

Why has crowdfunding not been kind to app developers? For many would-be investors, it’s the challenge of seeing a highly conceptual idea as an actual downloadable and usable application. In addition, the message many developers have sent potential donors has been muddy.

Fortunately, with the right planning, clarity of purpose and proper platforms, app developers can turn around the poor performance of what has been a transformational funding mechanism. When writing a business plan, keep crowdfunding in mind as a possible funding model.

Crowdfunding 101

Crowdfunding is fundamentally a way to get other people to pay for the development of a product. For entrepreneurs, crowdfunding can alleviate the daunting prospect of financing operating costs during a time when there is little to no income coming in.

Crowdfunding is powerful because it allows a way for small investors to feel a connection with hungry, upstart people who have a vision and a dream. Crowdfunding investors often feel a personal bond with the creators. These connections are fostered by perks, which can range from samples to acknowledgments to personalized communication and updates.

The app challenge

So why has it been so hard to leverage crowdfunding to finance your start-up app company? In some ways, the very nature of apps is one of the biggest challenges.

Crowdfunding is most successful when there is a tangible, touchable product. You can see the film that’s financed. You get a letter and photos, sometimes in real time, from the students whose study-abroad trip you helped support. It’s difficult to offer app-based perks, especially high-value ones for larger donations.

With an app, it’s not quite as obvious. Crowdfunding originally focused on physical things – the molds needed for an art project or the financing necessary to buy digital cameras for a movie or student project.

What do apps need? Time and talent. Both are unquestionably important, valuable and essential to success. But they frankly are far less real or sexy to would-be investors.

Writing a business plan

Downloads or dollars?

The other core struggle that has challenged crowdfunding for apps is that the app developer is unclear about what is most desired. For some, the most valuable thing is to expand beta tests and users and create crowdfunding campaigns that ask for those things. Others are looking for valuable dollars to keep the lights on (or the wireless connection running).

When app developers try to do both, they dilute the message and make it far less compelling.

Find the right platform, offer compelling incentives

Fortunately, there are a large number of new crowdfunding platforms that are directly aimed at app creators. These sites are designed for app and software developers and attract investors eager to invest in these products.

Having the right platform and the right counsel is essential for any successful start-up. At Cayenne Consulting, we work with entrepreneurs to offer the right support and counsel on how to write a business plan, to secure funding, navigate crowdfunding platforms and create compelling business cases. To find out how Cayenne Consulting can help you secure financing, users and buzz for your app, contact us today!

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