The app development trend has attracted the interest of many investors. While there are many examples of apps which have received funding, finding investors in Australia is more difficult than you think. It takes significant commitment, diligence and creativity to be able to come up with a pitch (and product!) that investors will positively respond to.

Today, there are numerous reasons why app startups aren’t ready for funding by the time builders seek these all-important funds. Majority of the factors include:

Once you’ve looked into these potential handicaps above, it may be a good time to reach out to investors and present your app funding proposal. Chances are high that you will come across an Australian investor who is willing to fund your app.

Before seeking out a potential investor for your app startup, it may be beneficial to have a viable working app that has already received traction to present to prospective investors. With a Minimum viable product (MVP), you will have greater chances to get people to open up their wallets for you. Compared to an idea that only works on paper, a visible product is more likely to secure funding.

There are several types of investors you can get, each with their own advantages and disadvantages. We analyse all five.

Crowdfunding:

If you get investors with a lot of equity, this may oust you out of your own company later down the line. Most founders will have to make peace with it if they are looking to seek investors. Crowdfunding on the other hand involves getting a lot of people to invest in your company, meaning everyone chips in a small amount to contribute to the end goal. This can spread out the risk and no one person holds too much power or equity over your startup.

On the other hand, crowdfunding is costly. You will need to consider 8-10% crowdfunding platform fees, marketing costs for advertising and the possibility of running into potential scams, more specifically, companies promising to ensure that your project is funded by millions of people.

Angel investors

They’re not called angel investors for nothing. Most of the world’s famous tech startups have received angel funding at some point in their app development process. Some of the advantages that come with angel investors include bonafide experience. Many ‘angels’ are ‘high net worth’ individuals who have already made their money in the business. Angel investors also possess valuable connections as well as the flexibility to feel confident in the direction of your business.

Nevertheless, there are cons too. Angel investors often desire to become personally involved in the project, wanting to oversee its day to day operation. Looking for a reliable angel investor can also be a time consuming job in itself, taking your focus away from developing your app.

Venture Capitalists (VC)

This is the group of investors that everyone thinks of when seeking funding for their app. These professional investors can provide you technical support through their experienced networks of professionals they have at their disposal. This gives you better chances of getting to the next level.

However as with angel investors, you may face significant disappointment down the line. Fundraising from Venture Capitalists is time consuming with monthly reports taking up the majority of workload instead of going into app development. Additionally, a VC’s primary concern is focusing their return on investment, so it’s most likely they’ll be asking for a huge chunk of the equity of your app product.

On paper, finding an investor to fund your app seems straightforward but in reality, it’s never easy. In fact, most people encounter many rejections or give up on their app becoming successful, so don’t be too discouraged when facing hurdles. Whether it’s potential investors wanting too much control, or possessing too poor pitching skills, finding the right investor takes time and considerable patience!

If you’re serious about finding investors in Australia to fund your app startup, we suggest you take a step back and consider your options closely. It’s important to think about your business plans for it now and into the future.

Ask yourself. Do you want your customers prior to product launch? Do you want to execute more control? These crucial questions will help you decide what sort of investment you want to venture in.

In the end, it’s all about looking at what’s best for your business. Look into your company’s needs and wants, figure out the direction you want to take before you make a choice. While it’s nice to have a working app, it’s marketing and developing it constantly that will take it to the next level.