Having an idea for an innovative mobile app is hardly enough to make it a reality. You also need money to bring the project to life. Market research, product development, marketing activities: these and other stages require financial investments.
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.
What should you know about mobile app investors in 2022?
Investments involve the participation of a third party or company in the financing of your project. Of course, it's not about charity at all. The investment has to be reasonable and profitable.
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Has COVID-19 affected your chances of getting investors for your mobile app idea?
The answer to the above question, alas, is yes. Your chances have really dropped recently (and the coronavirus pandemic is to blame). Many venture capital funds have lost a lot of money and therefore aren't willing to risk their funds.
However, not all startups are doomed to fail. You just have to work harder to get potential investors interested.
Types of Investors
Before considering how to get mobile application investors, you have to know what options are available in general.
Family and friends
Of course, the first way to raise money for app development is possible only if you have wealthy relatives or friends. If they're poor, they cannot help you even if they want to (at least financially).
And in any case, the funds received from relatives are unlikely to be enough to bring your project to life. You may use that money to do market research, prototype a product, and find real sponsors, but that’s it. To do more, you have to consider other options either.
The second way to find app investors for your project is somewhat similar to the previous one. The difference is that instead of borrowing money from a friend or relative, you invite him or her to become your co-founder. You submit your idea, and your partner provides his funds. So we’re dealing with a classic “win-win” situation.
By the by, a complete stranger can also become your partner if you have reason to trust him.
You've probably heard about crowdfunding platforms. They gained great popularity some time ago and are still in demand among those in need of startup money.
The bottom line is simple: you register on the site, describe your startup idea, and ask everyone indifferent to support your project. In return, you should promise certain benefits (say, free use of the service). But keep in mind, crowdfunding resources are quite different in their specifics, so carefully study each option to choose the one, which best suits your strategy.
Why is crowdfunding so good? The point is, you’re not risking anyone's money (since it has been obtained through charity). But, surely, you have to use your funds wisely anyway so as not to disappoint those who helped you.
All kinds of startup contests are also a good option, and it's not necessary to win them. The main task is to pitch your app idea to investors and convince them to finance your project. In addition, there is always an opportunity to study your competitors.
Official project support
Sometimes it's easier to resort to official support and help. Various funds run special programs to stimulate the economy from time to time. You just need to be vigilant and watch them (it'd be a pity to miss an interesting offer).
To get the representatives of official foundations interested, you must go hard and do your utmost to convince them you're the best. Write a compelling business plan, analyze the market and your prospects. However, we'll talk about all this further in our article.
Social networks of professionals
When answering the question of how to get investors for an app idea, you shouldn't neglect the excellent opportunity offered by professional social networks. LinkedIn is a prime example, but it's far from the only option. Check out sites like Xing, EFactor, Plaxo, Cofoundr, and Meetup.
Of course, you'll have to be proactive and initiative and forcefully bring your idea to investors. The game is clearly worth the candle, though.
Online loan platforms
Getting a bank loan isn’t easy, especially recently. So sometimes it’s wiser to take advantage of special online platforms, which offer more favorable conditions. The owners of such resources are non-traditional funds and large investors willing to help small businesses.
Most of these platforms (say, Posper and Lending Club) operate on the principle of peer-to-peer lending.
Those who are confident in the prospects of their project pitch their ideas to investors of a higher level, figuratively speaking. We're talking about the so-called angel investors.
Angel investors are usually wealthy people who are ready to support a project in its early stages. When your idea is implemented and proven to be successful, they usually sell their stake to either you or other entrepreneurs.
What’s more, angel investors don’t mind taking part in the development of the project itself. Among other things, they can help you with useful contacts and financial tie-ups.
Venture capital firms
And the last way of getting investors for your mobile app idea is to apply to venture funds. They specialize in financing new projects and have large funds. They can afford to budget a startup if they are interested in it.
However, there is one problem. If you have only a rough idea so far, you won't be able to invite the attention of VCs. You have a better chance of convincing angel investors.
How to get investors for your app
Analyze your app's niche:
The Google Play Store has more than 2.8 million apps while the Apple App Store has more than 2.2 million apps. This adds up to a whopping 5 million apps on both these app stores. There’s an app to serve almost every single purpose imaginable.
From lifestyle apps to gaming apps to even personal wardrobe assistant apps, the app stores are flooded. So if you believe that your app idea is unique and has never been done before, you need to be really sure about it as investors as highly unlikely to say yes to an app idea that’s already been done to death.
Research your app’s niche and check out who your competitors are and what their exact service model is. Also, you will need to research on their monetization strategies as well as their revenue growth over the years.
The investors are going to ask you really difficult questions like “What problem will your app help solve?” “Do you know what your competitive landscape is?” “How can you be sure that users will like your app and use it like you envision them to” “How can you prove that your app is unique from that being offered by your competitors?”
Before going to investors, you need to brainstorm all such possible questions and then find out credible, well research answers for each them. Investors have a zero-sum approach i.e. invest money in something, get the business venture to multiply the amount.
This is where you need to prove to them that they are not funding a generic app idea. You need to show them that you know the audience you are targeting, what special features your app will have, what your monetization strategies will be among other similar aspects so that they can become confident that your app idea is worth investing in.
Branding & visualizing your app idea
Now that you know what your app does, it’s time to start branding it. Having a logo or a domain for your app shows investors that you are serious about your app idea and have put a lot of thought into your vision for it. Branding helps investors visualize your idea rather than keeping it an ambiguous thought.
At the core of every business is their branding; when in doubt, fall back on branding. This is just as true for your app idea because its branding will be the foundation for the rest of the development process. Whether it’s a domain, a mockup of a site, a mockup of the app - brand your app so investors can visualize your idea to gain a better understanding of what you’re pitching to them.
Develop a great elevator pitch
You have a very limited amount of time to explain your idea to potential investors – they’re busy people, after all. This is why you need an excellent elevator pitch. An elevator pitch is how you’d describe your app to someone if you only had a short elevator ride to speak to them. Once they’re interested, you can expand the conversation, but you need to pull them in right off the bat.
Determine the kind of funding you need
It may happen that you might not have any idea about how you ought to come up with the money, but once you are approaching the investors for raising funds, you need to understand the way to do it.
You need to understand that investment comes piecemeal and you would like to be clear about the sort of money you are looking for.
Once you just have a vague app idea to figure on, then you will be into the pre-seed stage of investment. At this stage, you will not have much revenue, to begin with, and you can’t expect much from the investors too. So set your expectations to reality when it involves money expectation.
The amount of money that flows into your mobile app at each new stage will increase, and it’s important to know how much funding you need. Underfunding a project is a clear way to failure if you can’t secure additional money in time.
There’s no estimated amount of funding for a mobile app startup. Though you will find rough estimates, precise numbers will depend upon your idea, its complexity, and also the team you’ll be working with.
Create an app prototype or MVP
Much like branding gives investors something to visualize, creating a demo or MVP of your app makes your app tangible. Having an MVP shows you’re serious about making this app the next big thing. It also gives investors the opportunity to see and interact with your idea, not just listen to you ramble about it.
A demo of your app can either be a flat mockup or something you’ve already launched. It’s important to note that if you do provide an interactive demo experience, you run the risk of potential bugs and glitches coming to surface.
No matter what route you take, investors will be impressed that you’ve put this much thought into bringing your app to life.