How do I fund my app idea in Melbourne?
So, you have a brilliant idea for an app and are now looking for ways to fund the development of the app in Melbourne?
Here are some proven ways that will get you started with building the app.
1. Using your savings to fund the app development
Yes, this isn’t what you came here to read, although, the most successful entrepreneurs always have skin in the game.
You don’t have to fund the entire development but setting aside your own hard earned savings will help you push through the difficult times in running a business, which will no doubt happen in any entrepreneur’s journey. It could be as little as $5k but it can still make a difference between giving up and building a successful company. Remember that building the app is only one part of the equation. You’ll need to consider building a successful business around the app.
Adding co-founders with complimentary skills into your team is one of the best things you can do for your startup. As an added bonus, with the right co-founding team, you may not even need a budget to develop the app. Some of the more common founding roles are:
- Sales/Marketing – Someone who doesn’t mind getting their hands dirty doing the cold calling, networking at events, and selling the product. Someone who is an expert at social media marketing and search engine optimisation.
- Designer – A UI/UX (user interface/user experience) specialist who can design the app, website and potentially even the logo and branding for the startup.
- App Developer – The engineer/coder that will develop the app or website for the startup.
3. Startup accelerators
Startup accelerators are a great way to fund the building of your app. It is a program that usually lasts between 3-6 months that aims to help you grow and scale your early stage business. Not only do they provide some amount of capital but the best thing about accelerators is the mentoring, guidance and their connections to other industry leaders and investors who can no doubt help you take your business from an idea to the next stage.
Most accelerators would take some equity in your company in return for the assistance provided above. Although, there are also some accelerators (mainly university-backed ones) that would do all this without taking a drop of equity from your company.
Here are a list of university-backed accelerators in Melbourne:
Melbourne Uni Accelerator Program (MAP) | Monash Uni Accelerator | RMIT Activator | Deakin Spark
Here are a list of other accelerators in Melbourne:
Startmate | Boab AI accelerator (Artificial Intelligence) | Techstars SportsTech Accelerator | Skalata Ventures | MedTech Actuator
You can find a few more listed here: https://launchvic.org/programs/accelerators-and-incubators-1
Most accelerators would have around 10 spots per intake, and applying for one would require you to compete against hundreds of other startups. To have a good chance, you’ll need a great pitch deck. There are tons of material online about creating a pitch deck for your startup.
4. Angel investors
Angel investors are usually high net-worth individuals looking to diversify their portfolio of investments. When looking for an angel investor, it would be preferable to find someone who can bring in more than just capital, such as expertise in the relevant domains, valuable connections and general experience in running a business.
Angel investors usually invests anywhere between $10k to $100k in return for some equity in your company. The amount of equity you provide would be determined by the agreed valuation of your company at the time of investment. This is why it’s crucial to have a good pitch deck ready before approaching angel investors.
There is a group in Melbourne called the Melbourne Angels which consists of investors looking to invest in startups. Going through this group would be a great way to gain exposure by pitching to many investors at a time, as opposed to going through each one individually. The group streamlines the entire investment process and can take as quick as 3 months to get some funds through the door. Having worked with the group in the past, we highly recommend them as an option you’re going down this road.
5. Venture Capital (VC)
It is rare to obtain venture capital funding for early stage startups, but we’ll leave this in here for completeness sake. Venture capital funds usually invests around $500k upwards to a couple of million dollars per round (Series A, B, etc). This also means that they would require a larger equity portion of your business.
For a VC to be interested, you’ll need to have the following:
- A working product
- Good traction (active users/revenue)
- Some sort of revenue
- Large enough target market
- A potential 10x return for their investment in 10 years
5. Government Grants
Last but not least would be government grants in your area, usually set up to help businesses that will have a direct impact on the economy or quality of living in the area. Some of the grants that are available to startups based in Melbourne (or Australia in general) are: R&D Tax Incentive, City of Melbourne Small Business Grant, and the Accelerating Commercialisation Grant to name a few.
We hope that this guide provides a good starting point for you to start your next app idea. There is obviously more than one way to skin a cat and I’m sure that not all of the options above are meant for every business. If you would like to discuss any of the options above in further detail, feel free to reach out below.