Developing a successful mobile app requires more than just a great idea. In order to bring your vision to life, you’ll need to invest in the project. From product development to market research and marketing, every aspect of creating an app requires resources. That’s where funding comes in. Without the right funding, bringing your mobile app idea to fruition can be challenging. This is where investors come in.
Securing funding from investors isn’t an easy task, especially when you consider the fierce competition in the startup world. Additionally, investors don’t like to throw their money away, even if they have the means to do so. As such, it’s crucial to carefully consider your strategy before approaching investors. Before proceeding, strategize, and consider our article as a great starting point. It guides you through the steps to acquire funding for your mobile app startup idea.
An Overview Of Types Of Investors For A Startup
You can get investors for mobile apps in various ways on the market. Based on your app idea, funding need, and stage, you should look for funding in different places and approach them differently. Let’s explore the types of investors for a startup you might encounter.
1. Family and Friends
The easiest crowd to convince to develop your app idea is the people closest to you. Normally, your family and friends can only offer support at the beginning of a startup. Research the market using this money and create a prototype for potential investors. If you want to go further, you should consider other options, too.
Invite your family or friends to join the company as co-founders. Investing in your project is likely when someone believes your idea has potential. If you trust people outside your circle, you can get them to help you start your business.
3. Online Lending Platforms
With the incredible restrictions now involved with getting a bank loans for a start-up, new solutions have emerged through the advent of online lending platforms that serve a similar function. These can be peer-to-peer platforms, non-traditional lending sources, or large investors looking to help out small businesses and profiting from the lending terms. Some credible online lending platforms include Prosper, TrustLeaf, OnDeck, and Lending Club.
This form of fundraising relies on collective efforts online and through other networks. Crowdfunding campaigns are difficult to run with little time, effort, or marketing funds.
However, it offers a variety of investor types, ranging from the general public seeking the next big thing (Kickstarter, Pebblebackers, and Indiegogo) to philanthropists who want to support promising projects (RocketHub) and accredited investors looking for new investment opportunities (OurCrowd). Each crowdfunding site has its unique focus and offers different incentives for investors.
5. Venture Capitalists and Angel Investors
If your mobile app startup needs serious investment, start looking for venture capitalists and angel investors. Venture capitalists are investors who provide funding to early-stage companies with high growth potential.
Finding an angel investor who not only funds your startup but also acts as a mentor can be a game-changer for your business. Fortunately, there are several resources available to help you locate such investors like Funded, Angel Capital Association and Angel Investment Network. For a more localized search, the Angel Capital Association offers a directory listing of regional angel investors based on location and platform type.
6. Incubators and accelerators
Incubators and accelerators go beyond funding and also provide a physical space for you to set up your office. This space is often shared with other start-ups, creating an environment where you can exchange ideas and grow together. The National Business Incubation Association (NBIA) has a directory to help you find a local incubator. However, in exchange for funding, these investors may request a stake in your start-up. Therefore, you will need to decide how much ownership you are willing to give up. If you are interested in accelerator programs, companies such as 500Startups, TechStars, and Ycombinator offer advice, small seed funding, and connections to other investors in their network.
“Most app investors decide in the first few minutes whether you seem like a winner or a loser, and once their opinion is set it’s hard to change. Every startup has reasons both to invest and not to invest. If app investors think you’re a winner they focus on the former, and if not they focus on the latter.’’ - Paul Graham
Funding Stages For Startups
In a typical bootstrapping scenario, private networks fund the startup. You are developing and evaluating your idea at the beginning of your startup. In this stage, a portion of the funding goes toward market research before the pitch presentation.
If there is sufficient funding, it is possible to build a prototype at the pre-seed stage. Startup companies pop up like mushrooms, and many require funding for mobile applications. The scenario has created a highly competitive market. When you offer a lot more than an idea and initial calculations, it increases your chances of acquiring investors for a startup.
The first stage of funding comes from substantial sources. You need money beyond your savings, and your network can provide it. The pre-seed stage can attract angel investors, but they usually show up during the seed stage.
Recent reports have indicated the presence of venture capital firms as well. You should allocate funds from the seed stage, at the very least, towards growing your mobile app development team with more experienced professionals.
A seed-stage idea becomes valid after the minimum viable product (MVP) development. As soon as the MVP is ready, make it available to the general public and investors. At the seed stage, your idea is most likely to generate revenue.
The active growth of a startup begins with Series A funding. Thus, venture capital makes sense at this stage of the process – on top of that, firms investing in venture capital often invest in mobile app development startups with high growth potential. Series A is the first stage in venture capital, where investors face the most risks. A strong elevator pitch will help you get funding at this stage. Once it passes this stage, it will have a greater probability of success.
Series A suffers the most from a drop in survivorship. If your app has reached Series B, it is likely to succeed. However, mistakes do happen, so don’t take this for granted. Series B funding allows you to expand your business faster. The value of your shares increases at this time, enabling you to sell fewer shares to venture capitalists. In addition, you retain ownership of your company.
Your business is most certainly alive if it is still operating at this stage. In other words, you make enough money from your business to cover your expenses without requesting additional funding. After Series B funding, each stage targets large-scale expansion, substantial improvements, and more.
How To Find Investors For Mobile App Projects?
Approximately 75% of startups fail as investors only fund selected projects. Investors must believe the money will be worth it. To increase your chances of success, plan for a meeting with potential investors.
1. Determine The Type
To start, figure out how you will attract an investor for a mobile app project. Are venture funds a good option? What about angel investors? Would a contest be a suitable option? Answer these questions and other similar ones carefully. Determine the approximate cost of the mobile app development before approaching investors. A successful startup founder will pitch the investor only if they know the budget of the app.
2. Analyze The Situation Thoroughly
A new app idea comes to you, and you recognize the prospects. Unfortunately, the investor doesn’t share those same beliefs. Prepare yourself to convince him with the project statistics. Analyze the products of your competitors and why they are unsuitable for success. Therefore, it is easier to explain how your solution is better than others.
3. Manage Your Brand
App investors are looking for companies that have a favorable image. Having a strong brand is important. The company’s identity includes the logo, color scheme, and even its philosophy. Your brand should flow naturally into a product. Investors are better able to visualize your idea with branding.
4. Engage In Marketing Activities
How soon will you begin marketing activities? After your product launch? It’s a risky approach. Start your promotion early, for the following reasons:
- Consider testing your idea with potential users
- Find potential clients;
- Reach out to interested investors
As of the first quarter of 2022, holding companies have raised over 156 billion U.S. dollars in venture capital funding, representing a steady upward trend in investment. This surge in funding suggests that investors are increasingly confident in the potential of startup companies and are willing to take risks in order to secure a stake in emerging industries.
What Are Investors Looking For In Mobile Apps?
A mobile app development startup’s success depends in many ways on its founder, who is its driving force. Prepare yourself with enthusiasm for your project and be prepared for hard work.
- Know The Market Thoroughly
As the initiator of the whole venture, you should have a good understanding of your market, its key players (your competitors), and other relevant indicators (such as the number of potential users interested in the product).
- Your Unique Selling Point
Every day, almost every investor studies a large number of startups. What makes you and your team stand out? Think creatively! Make your project memorable! If you succeed in doing so, you will be more likely to obtain investment for your app.
Make sure you understand the exact meaning of buzzwords and have a fairly good understanding of their meaning. Make it clear that your product does not utilize blockchain or machine learning mechanisms. If the lie persists, the truth will eventually emerge.
- Economic Forecast.
The audit will ask for all financial indicators to determine your company’s prospects. Be prepared to list your customer acquisition cost as well.
- Be Professional
A potential investor should realize that your team consists of professionals and enthusiasts. Make sure to hire experienced specialists with extensive expertise.
Improvement is possible at any time. This saying fits well with apps. If you get funding, your work does not end. Ensure you launch new features, making the app more engaging, and expanding for better investment opportunities. As the trend of venture capital fundraising continues to rise, it has become increasingly important for businesses to partner with a reputable software development company in order to create a product that meets the standards of potential investors. At West Agile Labs, we specialize in developing innovative, efficient, and user-friendly solutions tailored to meet your unique needs. To ensure your product has a future, contact us.
– Contests for funding and app contests
– Seed funding
– Bank Loans
– Develop your app with the help of an outside contractor
– Generate revenue for investors
– Split the revenue with your developer
– Develop your proof-of-concept
– App through funding contests
A mobile app can cost over $10,000. If you want high-end technology and features, the price will increase. If you are looking for ways to fund your app, we have outlined the steps of the entire process, along with tips on how to approach potential investors.