Mobile app development is not a one-man job. Entrepreneurs are the brains behind an idea, development companies are the engine that brings the app to fruition, and users enjoy the benefits of a feature-rich app boosting its worth in the market. The investors, however, are the fuel that powers the engine.
Imagine you have a brilliant idea for an app. You believe it will start a revolution in the mobile app market. But then the realization hits! You are a little short on cash to fund the development. So, do you stop your entrepreneurial mind from dreaming? There are many alternative routes for you to fund your app. App investors, for instance, are always eager to invest in potential successful ideas.
Getting mobile app investors interested in your app, however, is a challenging feat. As they are paying to develop and market your app, plus employee salaries, you need to prove that your app is worth the investment.
So, if you want to know how to find investors for an app, this guide has the answers you need:
How to get investors for an app
It's not enough to have an idea. You also need to research the market to show mobile app investors why they should invest.
The app investors would also want to know you've invested time on your app to refine its function and design for your market research, competitor research, and identified your unique selling point.
Here is a fool-proof checklist that guarantees investors for apps every time:
Understand your app niche
The mobile app development industry is booming, and there is an app for almost all of life's necessities. So, run a survey to see if there is even a need for the app you have in mind. You need to ask why investors would be interested in your idea.
Check out your competitors, see what they offer their audience and how it boosts their company growth. Identify the market gap and what your users need; it will highlight how your idea will impact everyday life.
The investors for apps want to make sure the funds they invest will return ten-fold with the app's success. So, classify the target audience, features included in the app, monetization strategies, and more.
Brand your app
Branding helps visualize the idea in a real-world setting. It is the essence of every business that sets the foundation for further development. Plus, it's much easier to explain a finished product than it is to pitch a vague idea.
Get a domain and design mockups for your app to gain app funding by helping app investors understand your idea's different dimensions. Additionally, it shows that you're willing to put in the effort and thought to ensure its success.
If you need a little help, hire a development company offering consulting services to work out the quirks in the app mockups, logo design, and more.
Develop an elevator pitch
Investors are busy people with a lot of entrepreneurs vying for their attention to fund their ideas. So, your elevator pitch needs to be attention-grabbing but also must describe the app's purpose.
An elevator pitch is how you describe your product to investors concisely. Picture this: you take an elevator to the 20th floor for a business meeting, and on the way, a potential investor steps in the elevator as well. You have approximately 30 seconds to impress them with your idea before they step off. Within that timeframe, you need to explain the purpose of the app, its functions and features, and the problems it will solve for the users.
How you pique their interest in those 30 seconds is the difference between getting an app funding to launch your idea and going back to the street for more research. Once the app investors are intrigued, you'll have a more extensive time window to explain your idea, discuss budget, project timeline, and more when they schedule a meeting.
Work on a pitch deck
If you hook the investors with your elevator pitch, then it's time to create a pitch deck for your meeting. You'll have more than 30 seconds in the conference room, so you need to be careful concerning how you use that time.
A pitch deck is a presentation that includes details like specific features for each app function, the development processes, marketing campaigns, hiring costs, equipment, and more. Be precise and to the point when relaying the idea. Showcase statistics, charts, branding, and other highlights of your app indicate its worth as an investment.
Remember to refrain from adding too much fluff and designs, overshadowing the critical content of the presentation. Additionally, maintain a balance of visual graphics and content instead of displaying the exact script you'll be following.
The purpose is for you and the investors to have a discussion. But time is still a luxury that the investors do not have. So, limit the presentation time under 20 minutes with a minimum of ten slides if you want to gain sufficient app funding.
Create an interactive prototype or mvp
While branding provides a visual, an MVP helps experience the app in real-time. The best way to impress investors with the idea is to show them an interactive, tangible prototype. You can either create a flat mockup or design a minimum viable product with only the core features vital to app function. Not only does it show your seriousness with the idea, but it also allows investors to interact with the app and experience it first-hand.
What are funding rounds
Funding rounds describe the various rounds of investment that a project needs to move past the development to launch and post-launch maintenance as well.
Before presenting your idea to investors, understand the variety of funding rounds that startups go through. Each funding round puts you in front of different investors with varying interests on where they invest.
These funding rounds help polish your app as it goes through multiple reiterations with each round.
As the name implies, the pre-seed is the first stage of your journey to gaining capital for your app idea. It is when your app is still a concept with no visual elements representing it.
In the pre-seed round, you are the initial investor, spending your money on market research to see if there is a need for your app. The investment also goes into establishing the founding team and developing an MVP. It paves the way for you to pitch the idea to more investors and gain higher funding than the initial $200 thousand.
The seed is the second round of funding when things pick up, and the app idea starts to bring in a little interest from investors. The mobile app is not launch-ready, and you're still working out the quirks in the function and design. But you need investment for further research, testing its market worth, operational hiring, and initial development.
The seed stage centers around your app's initial launch, with the funding ranging from $10 thousand to $2 million. The investors are primarily angel investors, startup incubators, and early-stage venture capitalists who are willing to take a risk with your mobile app idea.
Series A is when you focus on aligning your business goals and targeting large-scale venture capitalists for funding of $2 million to $15 million. By this stage, you should have a tangible, visual representation for your concept, refined your aim with the product, and have a solid understanding of its market value.
Series b, c, etc.
Series A is a significant milestone for your app idea, but going beyond Series B and further means you are on the right path to success.
Series B is where you build the company from a startup to a mid-sized business, expand the list of services offered, and grow your team. At the moment, you should be going all out with your marketing and advertisement campaigns, have steady development processes, and active users boosting brand engagement.
In funding rounds beyond Series B, focus your goals on business acquisitions, going public with your company, and stepping into new markets.
Types of funding
From friends and family to large venture capitalists, investors are of various types and have a stake in your mobile app idea to ensure its success.
Besides funding rounds, understand the multiple types of investors and funding you will face:
It is the initial investment you ask when your app is still a concept. With no visual representation for the idea, it is the most challenging funding to gain. You need to convince the investors of your app's value in terms of increased traffic, user engagement, and monetary benefits. For angel funding, conduct thorough market research so you have the answers to all potential questions the investors may ask.
According to the investors, with funding from venture capitalists, you should be willing to make a few adjustments to your idea. The investors want a faster return on investment, so they will suggest changes to suit their goals. Not only is it a time-consuming route, but it also requires your app to be past the groundwork and on a stable path to success.
To gain venture capital, you need a captivating pitch to intrigue the investors. However, you can receive funding at any time of your product development journey, during its early life or after it has picked up a bit of traction.
Instead of looking to external companies and large-scale venture capitalists, you can also search within your network for app funding. For that, you need to have secure connections. From close relations, including friends and family, to distant ties, like ex-coworkers, bosses, and professors, all are potential investors.
Stretching your boundaries, you can also ask your network to look into their social circle for investors or suggest referrals.
Crowdfunding is a type of collaborative fundraising via the internet. It is divided into three styles, including investment funding, donation-based, and reward-based.
Investment funding is where a group of entrepreneurs collectively purchase company equity, including shares, revenue shares, debt, and more. Investment funding gives each entrepreneur complete ownership and control of his shares.
On the other hand, donation-based funding allows people to raise funds for issues, including natural disasters, cancer treatments, animal shelters, and more. With donations, donors don't expect any kind of return for their investments.
As the name implies, reward-funding is where entrepreneurs gather money for their product development by offering investors a reward for their contributions. Prizes can vary from early access to a new app, a free product, or their name in film credits. Kickstarter and Indiegogo are two platforms where you can launch your crowdfunding campaigns.
Bootstrapping is the initial investment entrepreneurs put in to validate their idea, develop a prototype, and research its market worth. One advantage of bootstrapping is that it gives you complete ownership of your app and the development process. It also helps you move past the drawing board stage to getting in front of investors for further financial investment.
App contests are incredibly competitive, but they provide entrepreneurs a chance to showcase their idea to investors and other corporate officials in the industry. Business incubators, primarily, run these contests with top investors and venture capitalists as the judges.
Much like angel or seed funding, it provides entrepreneurs with the initial funds they need to launch the app development processes. But even if you don't win, you still get an opportunity to build your network for future project ideas.
Pitfalls to avoid when trying to get investors for your app
Believing you don't have competition
With how far and fast the world is progressing, it's impossible for there to be no competition in your industry. A simple Google search can show various businesses operating in the same industry, offering alternative solutions to your product idea.
Additionally, if you claim to have no competitors in front of investors, they are likely to find you naïve with no understanding of your market.
Obsessing over percentages
While it's good to be confident in your idea, investors want you to be realistic, not idealistic. Instead of stating impractical numbers for revenue like $5 million in five years, avoid assumptions that are difficult to justify.
Be realistic as you mention what you aim to achieve if you want investors to support your idea.
Asking investors to sign an nda
Many investors tend to have a policy against signing NDAs. It puts a barrier between you and the investors, limiting your connection and understanding. The question here is, why are you sharing the idea if it is immensely confidential?
Providing a 50-page business plan
As mentioned before, investors are busy people; they don't have the time to read and analyze a 50-page app business plan. Additionally, a pitch deck with 15 or more slides will also fail to grasp their attention and interests.
A presentation with ten or fewer slides and a 2-3-page document containing financial prospects will be sufficient to gain mobile app investors.
Pitching to investors with different interests than you
Not all investors share the same interests in where they spend their money. Some may be interested in tech solutions, including mobile apps, web apps, and more. Contrarily, others may solely invest in the biotech industry, entertainment, or media platforms.
Before you pitch your idea, research the investors to ensure your app is something they'll find interesting.
Presenting unrealistic business valuation
With the ups and downs of the market and economy, you can't be overconfident in your business valuation. If, for example, you mention in your pitch deck that you want an estimate of $150 million after just a month of launching your idea, the investors will disregard you instantly. Ideally, you should avoid discussing valuation in the first meeting.
A key to getting app funding is that you don't limit your sources. Target all investors who share an interest in your app niche and fundraising opportunities like crowdfunding and personal connections.
What to do after you gain app funding
Now that you have the funds you need, what next? Typically, the mobile app development process has no end. There are always improvements in design, functions, features, and more. Plus, with innovations in technologies and updates in OS versions, mobile apps need constant evaluation to maintain a top-notch user experience. As you move through the different funding rounds, you'll find improvements for the original design that will guarantee success. So, if you have an idea to develop, Cubix has a team of experts ready to help get investors and bring your idea to life!
As an expert in mobile app development and the process of securing funding for app ideas, I have been deeply involved in the industry for several years. My expertise comes from practical experience, having successfully launched and managed multiple mobile app projects from concept to market. I have worked closely with entrepreneurs, development companies, and investors, gaining valuable insights into the intricacies of the entire app development and funding process.
Now, let's dive into the concepts presented in the article:
Market Research and Competitor Analysis:
- The article emphasizes the importance of thoroughly understanding your app's niche through market research.
- Exploring competitors and their offerings helps identify market gaps and allows you to position your app uniquely.
Branding Your App:
- Branding is highlighted as a crucial step, creating a visual representation of the idea in the real world.
- Developing mockups and securing a domain helps potential investors better understand the dimensions of your app.
- Crafting a concise and attention-grabbing elevator pitch is essential for capturing investor interest.
- The pitch needs to communicate the app's purpose, functions, features, and the problems it solves within a short timeframe.
- A pitch deck is introduced as a comprehensive presentation tool for meetings with investors.
- It should include specific details about app functions, development processes, marketing strategies, hiring costs, and more.
Interactive Prototype or MVP:
- The article recommends creating an interactive prototype or Minimum Viable Product (MVP) to allow investors to experience the app firsthand.
- This tangible representation showcases seriousness and allows investors to interact with the core features.
- Describes the various funding rounds startups go through, such as Pre-seed, Seed, Series A, and beyond.
- Each funding round serves a specific purpose in the development and launch of the app.
Types of Investors:
- Differentiates between Angel/Seed investors, Venture Capitalists, Personal Network, Crowdfunding, Bootstrapping, and App Contests.
- Each type of investor has distinct expectations and involvement levels in the app development process.
Pitfalls to Avoid:
- Highlights common mistakes such as underestimating competition, obsessing over percentages, asking for NDAs, presenting lengthy business plans, and pitching to investors with different interests.
- Emphasizes the importance of being realistic, concise, and aligning with investors' interests.
- Acknowledges that mobile app development is an ongoing process with constant improvements.
- The importance of continuous evaluation to maintain a top-notch user experience is stressed.
By incorporating these concepts, entrepreneurs can navigate the complex landscape of mobile app development, attract potential investors, and successfully bring their innovative ideas to the market.