Tablets and smartphones now drive 1/3 of the time spent with digital media according to comscore’s report US Digital Future in Focus. In addition, comscore also reports that 152.5 million Americans own smartphonesin the three months ending November 2013. This is a 63.8% mobile market penetration and a 5% increase since August of the same year. By simple deduction therefore, every business, big or small, needs to embrace technology by having a  mobile strategy not only to keep abreast of this snowballing development, but also to take advantage of its benefits.

mobile crowd funding

But, developing a mobile App is not easy. It is time-consuming, complicated as well as expensive, whether you build it in-house or outsource it. For small or strat-up businesses, the cost of mobile App development could be beyond their financial resources. Although Apps have many benefits to the business, including additional revenue from it, executing and completing the project can be problematic without sufficient funding. There are several options for funding App development, and one of the most viable option available is crowdfunding.

What is crowdfunding?

According toInvestopedia,crowdfunding is “the use of small amounts of capital from a large number of individuals to finance a new business venture.”

Crowdfunding could potentially draw in millions of investors providing from large to small amounts of money, even as small as $1, to bankroll the development of a new product or service. It is an effective funding strategy since setting it up is simple and straightforward, it does not require much from a prospective investors and it has few documentary and reporting requirements.While crowdfunding is an exciting new way to draw in new funds, it is important to remember that money is still money. With that being said, it would be in your best interest to get a withholding calculator to figure out tax implications associated with the funds you receive. Otherwise, you might have the IRS knocking at your door.

Crowd Funding

In Australia, Greg Tanzer, Commissioner of the Australian Securities and Investment Commission said that‘Crowd funding, as a discrete activity, is not prohibited in Australia nor is it generally regulated by ASIC.’However, exisiting Australian investor protection laws which require excessive disclosure and compliance requirements make crowdfunding impractical and almost unachievable.

Advantages of crowdfunding

Crowdfunding is a much easier way to raise capital than the traditional way of applying for a bank loan. Banks and investment houses will invariably question the viability of the project and the risks involved. Getting a loan from these institutions is like passing through the eye of a needle. A business needing funds can even take advantage of their large network of family, friends and associates as potential investors. Social media networks such as Linkedin, Twitterand Facebook can also be used to disseminate the information and solicit investments. Others use crowdfunding websites such asKickstarter.

Using crowdfunding to finance a mobile App development project is a great way to get feedback on the project from experienced App developers. Enthusiastic feedbacks are signs that the project is acceptable to the community and that there is more reason to proceed. On the other hand, a dearth of responses could indicate that the idea is not well-accepted and there may be a need to go back to the drawing board for some revisions.

The same crowdfunding investors, sometimes legions of them, are the very same people that can help promote the App once it is completed and ready to be marketed and used.