With the proliferation in smartphones, many startups have found success in selling mobile apps. Mobile apps are one of the most accessible products available to the global market. Many startups nowadays find their success in selling mobile apps; however, this industry presents its own challenges that are unique to businesses in the sector. So what exactly are the challenges these businesses face? How can mobile app and game developers make playing their game easier?
Challenges for app developers
The app store payment cycle is slow. Payment from Apple’s App Store can take up to 55 days to be paid out to developers. This phenomenon is called accounts receivable delay (AR delay) and developers sometimes have to wait almost 2 months to be able to pay themselves and fund more business operations.
Revenue from app sales is also unstable. Assuming that its marketing campaigns were strong, an app’s peak sales will be on it’s first day. Afterwards, there will be a slump with occasional peaks. Inconsistency in app sales will result in fluctuating revenue. This can be a problem for startups as it will decrease cash flow capacity.
Additionally, app sales are directly correlated with ad-spending. However, startups may have trouble financing ad-campaigns without funding upfront. Traditional methods of fundraising, such as Venture capitalists (VC), would provide ad-spending capital for a stake in the startup, but this involves giving ownership to VCs just to buy ads on facebook, which can be unfair for founders.
Choco Up’s tailored solution for app developers
Choco Up can invest a high percentage of a mobile app business’ quarterly revenue back to startups and provide it in smaller portions on a weekly basis to ensure that app developers have a constant, and reliable stream of income to conduct daily operations. Additionally, Choco Up’s investment can be used for revenue-linked spending, such as ad-spending, funding new marketing campaigns, and expanding the reach of mobile apps.
Choco Up’s solution is particularly fitting to app development businesses since their revenue typically goes up and down based on app sales. Choco Up’s revenue based financing (RBF) model, allows app developers to pay more when revenue is up, and pay less when revenue is lower providing protection against the volatility of the industry.
How does Choco Up’s RBF model work?
Choco Up offers an initial financing amount as funding to startups. In addition to the principal, the borrower will pay a small one-time fee to Choco Up. This total amount is paid back by the borrower through revenue share.
About Choco Up
Choco Up is Asia's leading revenue-based financing (RBF) firm created by founders for founders. As a RBF company, Choco Up puts client performance first and understands that a helping hand can help startups realize their full potential. Click here to apply for funding!
Interested in learning more about raising capital for your company? Check out the following guides we prepared for you: