Expert Guide Series

How Can I Fund My App If Banks Say No?

A productivity app called Forest raised about three hundred grand through friends, family and a waiting list before writing a single line of code, proving that traditional bank loans are just one way to fund app development... and often not the best way for most founders who come to us with an idea but no track record that satisfies bank lending criteria.

Banks want proven income streams and physical stuff they can claim if things go wrong, which puts most app ideas outside their comfort zone no matter how good the concept might be

The rejection from traditional lenders usually happens because apps are seen as risky, they have no equipment or property to secure against, and the banker across the desk probably doesn't understand why anyone would pay for a digital product when there are free alternatives available. We've watched probably forty clients over the years get turned down by high street banks, and nearly all of them found better funding sources that came with fewer strings attached and often more useful support than a bank manager could provide anyway.

Friends and Family Funding Without Damaging Relationships

The fastest money you'll raise comes from people who already trust you, but I've seen three friendships end badly and one family stop talking because the terms weren't clear from the start... so treating this like proper business matters more than you might think. Write everything down. Simple as that. When someone close offers you five grand or fifty grand for your app, you need a written agreement that explains whether it's a loan with interest, an investment for shares, or a gift you'll repay when you can. The number of times I've had clients come back saying "my uncle thinks he owns half the company" is ridiculous, and it always traces back to a handshake deal over Sunday lunch that both sides remember differently. Set realistic expectations about timeframes and what happens if the app doesn't work out, because your mum probably thinks apps make money in three months while you know it might take two years to see proper income. Regular updates help too, even when there's not much to report, because silence makes people nervous about their money and that's when relationships get strained. The best approach I've seen was a client who took twenty grand from family members, gave them a simple one-page agreement showing they'd get their money back plus ten per cent within three years or fifteen per cent of any sale price if the app got bought out, whichever came first. Everyone knew where they stood.

Pre-Sales and Customer Funding Models That Work

Getting people to pay before you've built anything sounds backwards, but it's probably the smartest money you can raise because customers who pay upfront are telling you they actually want what you're making, not just being polite about your idea. We built an app for a fitness coach who sold lifetime memberships for £299 before the app existed, just based on detailed descriptions and mockup screens of what it would do. She raised eighteen grand from sixty-three people in six weeks, which paid for the entire first version and proved there was real demand rather than just people saying "yeah that sounds good" at parties.

Create three pricing tiers for pre-sales where early supporters get the best deal... maybe lifetime access for £199 when it'll normally cost £9.99 monthly, so they're saving hundreds over a few years and you're getting cash now to actually build the thing

The approach needs a landing page that explains what you're building, mockups that show how it'll work, and a clear timeline for delivery. People understand that development takes time if you're honest about it, but they'll get annoyed if you promise March and deliver in September without explanation. Before building anything, consider testing your app concept to validate demand.

Offer early-bird pricing that's genuinely better than launch prices
Show mockups or prototypes so people can see what they're buying
Give regular development updates to keep supporters interested
Start with a small target that covers your minimum budget

Apps with subscription models work well for this because you can offer yearly plans at half price or lifetime deals that sound expensive now but are cheap compared to years of payments. A client doing a meal planning app sold two hundred lifetime memberships at £149 each and raised nearly thirty grand, then used the feedback from those early users to make the app better before launching publicly.

Angel Investors Who Actually Understand Apps

Angel investors are wealthy individuals who invest their own money into early-stage businesses, and the good ones bring more than just cash because they've usually built or sold companies themselves and can introduce you to useful contacts or give advice when you're stuck. Finding angels who understand apps matters because you don't want to spend months educating someone about why development costs what it costs or why you need to spend money on user testing. Look for investors who've made money in tech or digital products, not someone whose wealth comes from property or traditional retail who thinks an app should cost three grand to build.

Where to Find Them	What to Expect
Angel networks like UK Business Angels Association	Formal pitching process, investments from £10k to £500k
Tech meetups and startup events	Informal connections, smaller amounts but quicker decisions
LinkedIn outreach to people with "angel investor" in bio	Cold approach needs strong pitch deck, hit rate about one in fifty
Through introductions from other founders	Best conversion rate because trust already exists

Angels typically want between ten and thirty per cent of your company for investments ranging from twenty grand to two hundred grand, depending on your stage and their interest level. They're looking for apps that could be worth millions in five years, so you need to show how your idea scales beyond just local users or a small niche.

What Angels Actually Look For

The pitch deck matters less than you think, but your answers to their questions matter more than you expect. Angels invest in people as much as ideas, so they're watching how you think through problems and whether you can take feedback without getting defensive. We've helped about fifteen clients prepare for angel meetings, and the ones who get funded are always realistic about challenges, clear about what they don't know, and able to explain why their app will make money in simple terms that don't need a business degree to understand. Making your app more attractive to funders often comes down to having clear answers about your market and monetisation strategy.

Crowdfunding Platforms Beyond Kickstarter

Kickstarter gets all the attention but it's not always the best choice for apps, partly because the all-or-nothing model means you get zero pounds if you raise ninety-eight per cent of your goal, and partly because the platform takes a decent chunk of whatever you raise.

Crowdfunding works best when you already have an audience or a really clear problem that lots of people recognise immediately without needing much explanation

Seedrs and Crowdcube let you sell actual shares in your company to lots of small investors, which works well if you've got some proof that the app idea works... maybe a prototype with a few hundred users or early income that shows people will pay. These platforms attract people who understand business and digital products better than random Kickstarter backers, so you get more useful feedback and connections alongside the money. Indiegogo offers flexible funding where you keep whatever you raise even if you don't hit your target, which reduces risk but can look bad if you only raise thirty per cent of what you asked for because it suggests nobody wants what you're making. We had a client raise forty-seven grand on Indiegogo for a language learning app by offering lifetime access, physical merchandise like notebooks with phrases, and even personalised video lessons for higher-tier backers.

Making Your Campaign Actually Work

Most crowdfunding campaigns fail because the founder thinks putting up a page is enough, when really you need to drive traffic to that page through your own network, social media, press coverage and anywhere else you can get attention. The platform itself will send almost zero people to your campaign unless it's already doing well. Plan for the campaign to be a full-time job for at least two months, maybe three if you're doing it properly. You'll need a video that explains the app in under two minutes, rewards at different price points that feel like good value, and a communication plan for keeping backers updated throughout development. Building an email list before launch can significantly improve your crowdfunding success rates.

Revenue-Based Financing for Apps With Traction

If your app is already making some money, even just a few hundred quid monthly, you can get funding that's paid back as a percentage of your income rather than fixed monthly payments... which means you're not stressed about repayments during slow months when cash is tight. Companies like Clearco and Uncapped offer this kind of financing where they might give you fifty grand and you pay back sixty grand through monthly payments that are five or ten per cent of your revenue. When you have a good month and make eight grand, you pay more, but when you only make two grand you pay less, so it flexes with your business.

Provider	Typical Terms	Best For
Clearco	Repay 1.06x to 1.12x the amount borrowed	Apps with consistent monthly income above £5k
Uncapped	Repay 1.08x to 1.15x through revenue share	Apps spending on ads and needing growth money
Wayflyer	Repay 1.05x to 1.10x over 3-9 months	E-commerce apps with proven sales

The catch is you need to show regular income, usually at least a few thousand pounds monthly for several months running, and they'll want access to your bank account and payment processor to verify the numbers. They're not giving money to ideas or early-stage apps, this is for when you've proven the model works and just need cash to grow faster. A client with a meditation app making about four grand monthly got thirty-five thousand pounds to spend on marketing and new content creation, paying it back over eight months as a percentage of income. It let them grow without giving away shares or taking on debt that required fixed payments regardless of how the business performed.

Government Grants and R&D Tax Credits

The government offers various grants and tax breaks for businesses developing new technology, and apps definitely qualify if you're creating something that solves a problem in a new way or uses tech in ways that haven't been done before. Innovate UK runs competitions throughout the year where you can win grants from twenty-five grand up to several hundred thousand for projects that fit their current themes... maybe health tech one quarter, education another time, sustainability another. The application process takes time and the competition is tough, but it's free money you don't pay back or give shares for.

R&D tax credits let you claim back up to thirty-three pence for every pound you spend on qualifying development work... so if you spend sixty grand building your app and it qualifies, you could get nearly twenty grand back from HMRC

Most app development includes qualifying R&D work because you're solving technical problems or creating new functionality, but you need to document what you're doing and why it's technically challenging. We've helped clients claim back anywhere from eight thousand to ninety thousand pounds through R&D credits, which often surprises them because they didn't realise standard app development could count. When building innovative features, understanding how to test if new technology helps users can strengthen your R&D documentation.

Research available grants through gov.uk and Innovate UK
Document your development process and technical challenges
Consider hiring a specialist R&D tax credit advisor
Apply for credits even in loss-making years
Local Enterprise Partnerships offer regional grants too

Getting Help With Applications

Grant applications need specific language and structure that's different from normal business writing, so getting help from someone who knows what the assessors want to see is worth the cost. We've worked with grant writers who charge about two grand to prepare an Innovate UK application, which sounds expensive until you realise they're helping you compete for grants worth fifty grand or more. R&D tax credit specialists usually work on commission, taking twenty to thirty per cent of whatever they claim back for you, so there's no upfront cost and they're motivated to get you the maximum amount. Just make sure you use someone who's registered and has good references because HMRC doesn't like dodgy claims.

Bootstrapping Strategies That Let You Build Lean

Bootstrapping means funding development yourself through personal savings, income from other work, or revenue the app generates as you build it... and it's slower than getting a big chunk of investment but you keep full control and don't owe anyone anything. If maintaining control is important to you, there are funding approaches that preserve ownership while still providing growth capital. The key is breaking development into small pieces you can afford one at a time, rather than trying to build everything before launching. Start with the absolute minimum version that does one thing well, get it into users' hands even if it's rough around the edges, then use feedback and any early income to fund the next piece.

Bootstrapping Approach	Approximate Cost	Timeline
DIY with no-code tools	£500-2k	1-2 months
Hire freelancers part-time	£3k-8k	2-4 months
Use offshore development team	£5k-15k	2-5 months
Work with UK agency for MVP	£15k-30k	3-4 months

We've built probably thirty apps using phased approaches where the client pays for each stage as they can afford it, maybe spending eight grand to get a working prototype, then another six grand three months later to add the next features, then more as income allows. It takes longer but it's manageable and you're never betting everything on one big launch.

Making Your Money Go Further

Use cross-platform tools so you're building for iPhone and Android at the same time rather than paying twice. Focus on features that directly make you money or get you users rather than nice-to-have stuff that can wait. Test everything with real users before adding more features because you'll often find that what you thought people wanted isn't actually what they use. A client bootstrapped a recipe app by starting with just fifty recipes and basic search, launching it for £2.99, then using the income from a few hundred downloads to pay for adding meal planning features, then shopping lists, then social sharing. Took about eighteen months to get to the full vision but they never needed outside money and still own the whole thing. When making feature decisions, consider whether to build competitive features or create unique functionality that differentiates your app.

Strategic Partnerships and Co-Development Deals

Sometimes the best funding comes from partnering with a company that needs what you're building, where they pay for development in exchange for exclusive use for a period or a share of ownership that makes sense for both sides.

The right partner brings money, industry knowledge, an existing customer base, and motivation to make your app succeed because their business depends on it too

We worked with a founder who had an idea for a booking app aimed at beauty salons, and rather than trying to raise money and build it speculatively, she approached a salon chain with twenty locations and offered to build it for them if they'd pay development costs and let her keep ownership to sell to other salons later. They paid forty grand for development, she built exactly what real salons needed because she had direct access to users, and then sold it to eighty other salons in the first year after the exclusivity period ended. The structure needs careful planning because you're balancing their need for value against your need to own something you can scale. Maybe they get exclusive use in their region or industry for twelve months, or they get the software at a massive discount forever, or they get a small ownership stake that's worth it for the funding and market access they provide.

Finding the Right Partners

Look for businesses that would benefit from your app but don't have the skills or time to build it themselves... maybe they've mentioned wanting an app but haven't done anything about it, or they're using something that doesn't quite fit their needs. The conversation is easier than asking for pure investment because you're solving their problem while funding yours. Make sure any agreement is clear about who owns what, who can sell to whom, and what happens if the partnership ends. We've seen deals fall apart when these details weren't sorted upfront, and untangling shared ownership of software is complicated and expensive when relationships go bad.

Choosing Your Funding Path

The right funding depends on where you are now, how quickly you need to move, and how much control you want to keep. Apps that need fast development and have big market potential might suit investors or crowdfunding, while apps you're building alongside other work might be better bootstrapped or funded through pre-sales. Most founders use a mix of sources... maybe starting with friends and family to build a prototype, then doing pre-sales to fund the full version, then getting angel investment to scale up marketing. There's no single right answer, just what works for your situation and the relationships you can build with the people or organisations providing money. Some founders prefer to weigh up whether to give away equity or take on debt depending on their long-term goals. The banks that said no probably did you a favour because their debt and monthly repayments would put pressure on your cash flow before the app proves itself, whereas most other funding options give you more flexibility or come from people who understand that apps take time to find their audience and start making proper money.

If you're working through funding options for your app idea and want to talk through what makes sense for your specific situation, get in touch with us and we can share what we've seen work for businesses similar to yours.

Frequently Asked Questions

Angels typically want between 10-30% of your company for investments ranging from £20k to £200k, depending on your stage and traction. The exact percentage depends on your app's potential value, existing user base, and how much money you're raising relative to your current valuation.

Yes, most app development includes qualifying R&D work because you're solving technical problems or creating new functionality that hasn't been done before. You can claim back up to 33p for every pound spent on qualifying development work, but you need to document the technical challenges and innovations properly.

Most revenue-based financing providers like Clearco and Uncapped require consistent monthly income of at least £5k for several months running. They'll want access to your bank account and payment processor to verify the numbers, so this option only works for apps with proven traction.

Always put everything in writing with a simple agreement that explains whether it's a loan with interest, investment for shares, or a gift you'll repay. Set realistic expectations about timeframes and provide regular updates even when there's not much progress to report.

Kickstarter's all-or-nothing model can be risky since you get zero if you hit 98% of your goal, while Indiegogo offers flexible funding where you keep whatever you raise. For apps, equity crowdfunding platforms like Seedrs or Crowdcube often work better since backers understand digital products better.

Bootstrapping works well if you break development into affordable phases rather than trying to build everything upfront. Start with a minimum version that does one thing well, launch it to get user feedback and early revenue, then fund additional features gradually as income allows.

Pre-sales and friends/family funding can happen within weeks, while angel investment usually takes 3-6 months from first contact to receiving money. Government grants can take 6-12 months due to application cycles and approval processes, so factor in these timelines when planning your development schedule.

Bank rejection is common for apps since they prefer proven income streams and physical assets they can claim if things go wrong. Focus on alternative funding sources like pre-sales, angel investors, or revenue-based financing that better understand digital products and don't require traditional collateral.

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