As an entrepreneur, you may have had an app idea that you truly believe in. However, like most dreamers, lack of funds may be hindering your ability to turn that idea into a digital product.
Raising funds for business ideas or expansion is a significant obstacle that many entrepreneurs face. If you aren’t independently wealthy, you’ll need a helping hand.
But there is hope for every app entrepreneur with limited funds: attracting investor interest. However, a common misconception among aspiring entrepreneurs is that investors will automatically invest in a great app idea. Unfortunately, securing app funding is not that simple.
Or is it?
In this article, we’ll guide you through the four most critical steps to raising money for your startup.
Before you start seeking out potential investors or watching episodes of Shark Tank, it’s important to determine how much funding your app actually needs. A miscalculation could hurt you in two ways: if you get less funding than necessary, you’ll be back at square one after the funds run out, while getting more funds than needed could be a loss for you.
It’s important to keep in mind that the more funds you raise, the more ownership and control you may have to give up in the early stages of your business, which could impact your position as the app evolves into a brand. A good starting point to determine an accurate estimation of the funds you need is to understand the average cost of developing a mobile app.
- How Much Funding Should I Raise?
- How can I make my app attractive to investors and secure funding?
- Tips for Getting Funding for your startups
- What are the ways to locate investors for a mobile app?
- How and where to get list of the Investors ?
- Get Referrals
- What are different funding choices exist?
- Final Note
How Much Funding Should I Raise?
To determine the funding you require, you should ask yourself three key questions:
How much money is needed to build my app?
How much money is required to generate traction?
How much is needed for post-launch services?
Answering these questions will give you an estimate of the amount of effort you’ll need to put into raising money for your startup. Typically, the majority of funds go toward mobile app development, with the rest going to the other two areas.
Even if you’re partially funding your app from personal savings or with contributions from friends and family, it’s essential to have an estimate of the required funds. This will not only help you keep track of finances but also assist with planning for future app expansion.
Once you have estimated the necessary funding, it’s time to move onto the preparatory stage.
How can I make my app attractive to investors and secure funding?
To make your app an attractive investment opportunity, it’s essential to solidify your app idea and ensure that it solves a real problem. Investors are more likely to support an idea that has a validated need within a community.
To accurately answer the question of why an investor would fund your app, even a seemingly profitable idea should address the following factors:
- Find a problem that the app solves: The majority of apps on the market don’t solve a real problem, making it difficult to sustain in a competitive market. Unless your app is solving a unique problem, it’s going to be challenging to attract investment.
- Build an MVP: Solidifying your app idea also involves building a Minimum Viable Product (MVP), which proves that your idea actually works and solves a real problem. An MVP is an app version with key features intended to help raise money. The added benefit of an MVP is that it can provide constructive feedback that can be used to make improvements in the final product.
- To validate or solidify your app development idea for startup, the final step is to determine whether people are willing to pay for it by setting up a charge. This will help you gauge the app’s monetary value.
- Perfect your elevator pitch to quickly and effectively pitch your app idea to potential investors in 30 seconds or less.
- Know the market by understanding your target audience, competition, supporting stakeholders, and government regulations to ensure your app can succeed in the market.
- Show an interactive demo: Having a demo can be beneficial when presenting to investors. A functioning prototype may not fully showcase the app’s potential and can potentially have bugs if not developed thoroughly.
Tips for Getting Funding for your startups
As a business owner seeking to fund your startup, it is important to conduct thorough due diligence and research when it comes to fundraising, particularly when dealing with venture capital firms or angel investors. This involves taking the time to understand the terms of any funding deals and ensuring that they align with the long-term goals of your company.
In addition, it is critical to maintain accurate and up-to-date financial records, as potential investors will likely examine the state of your company’s books before considering any investment. By keeping track of all financial transactions, including revenue, expenses, and cash flow, you can present a more complete and transparent picture of your business’s financial health.
When pitching your company to investors or donors, it is important to highlight the unique aspects of your business that set it apart from others in the market. This may include innovative product features, unique value propositions, or proprietary technologies that can help your business gain a competitive edge. By effectively communicating these differentiators, you can make a stronger case for why your business is worthy of investment.
Finally, it’s important to be creative and resourceful when it comes to fundraising, and to think outside the box in order to generate interest and excitement from potential investors. This may include seeking out unconventional sources of funding, such as crowdfunding platforms or strategic partnerships with other businesses, or leveraging social media and other online channels to build awareness and generate buzz around your startup. By sharing your passion for your business and enlisting the support of others, you can maximize your chances of securing the funding you need to bring your vision to life.
What are the ways to locate investors for a mobile app?
As a high-end business decision maker, it is important to understand the structure of investment rounds in order to effectively find investors for your mobile app. Knowing which round of funding is appropriate for your stage of development can help you identify potential investors, plan your funding timeline, and secure the necessary capital to grow your app business.
The earliest stage of funding is the Seed Round, which typically comes from insiders providing initial capital for the establishment of the business. Angel Round is similar to Seed Round, but with more formal terms, and often involves outside investors buying common stock in the company.
The first stage of large-scale venture capital funding for an app business is the Series A round, which generally brings in $2 to $10 million in funding. This funding provides entrepreneurs with the necessary capital to fully develop their product and grow their business. Subsequent funding rounds, such as Series B, C, and D, are held based on the capital requirements of the company.
Once you understand the structure of investment rounds, the next step is to create a list of potential investors. By targeting investors who are interested in your specific stage of development, you can increase your chances of securing the necessary funding for your mobile app.
How and where to get list of the Investors ?
If you’re seeking funding for your app, you have many investors to choose from, but not all of them will be a good match. AngelList is one website with over 40,000 investors, but it’s best to narrow your focus to the top 40 or so for optimal results. Additional online resources for finding app investors include Funded.com and Angel Investment Network.
Utilize Your Network Leveraging your existing network is a useful way to locate potential investors for your mobile app. Seek referrals from people in your network who may have connections to investors or who can introduce you to mediators who work with funding companies. LinkedIn is an excellent platform for establishing connections and requesting referrals. Once you have made contact, you can send a pitch email containing all the necessary details to interested parties.
This concludes the second section on how to raise funds for mobile app startup development. Let’s move on to the final section and examine the various ways to raise funds for a startup.
If you’re looking for business startup app investors, you may not know where to start. However, finding investors for your app does not necessarily require a vast network of venture capital firms. Even your own network can be a great starting point. Consider reaching out to your college instructors, former coworkers, or bosses. You can also reach out to your alumni association and see if anyone knows someone who could introduce you to potential investors.
Another option is to look for app competitions Pitch competitions for mobile app concepts or startup ideas are organized by various organizations, businesses, and startup incubators. These competitions offer cash prizes to the winners. Though it requires a lot of effort and a great idea, winning a pitch competition is possible.
What are different funding choices exist?
- Pre-Seed Funding: Pre-seed funding is the initial stage of funding for startups, aimed at backing an idea. It is typically employed for validating an idea, creating a prototype, and commencing market testing. Angel investors, friends, and family members are the usual sources of this type of funding.
- Angel or Seed Funding: Angel investors are high net worth individuals who provide early-stage funding to startups in exchange for equity. Venture capitalists, on the other hand, are professional investors who invest in startups that have demonstrated some traction and are looking to scale. They usually take an active role in managing the business and have a larger stake in the company than angel investors. Both types of investors provide capital and mentorship to the startups they invest in.
- Self-funding or Bootstrapping: This involves using personal savings, credit cards, or other sources of personal funding to finance the startup. This method is a good way to retain full control of the business and is often used by entrepreneurs who are just starting out and have no access to external funding. However, this approach can be risky, and it may take longer to grow the business.
- Bank Loans: Startups can also secure loans from banks, either for personal or business purposes. The process of getting funds from a bank is relatively fast compared to other methods of funding, but it may require collateral. Many governments also offer funding assistance programs to support the growth of startups.
- Crowdfunding Platforms: Crowdfunding involves raising money from a large number of people, each contributing a small amount. This type of funding is usually done on online platforms or social media, and it often requires offering some kind of reward or equity in exchange for the contribution. Crowdfunding can be an effective way to test market demand and build a community around the startup.
- ICO & IEO: Initial Coin Offerings (ICOs) and Initial Exchange Offerings (IEOs) are popular funding methods for blockchain-based startups. These funding methods involve raising capital by issuing tokens or cryptocurrencies in exchange for funds. Although ICOs and IEOs can offer substantial funding, they come with risks because of the unpredictable value of cryptocurrencies and the absence of adequate regulations.
How can funding be obtained for a startup??
To raise funds for a mobile app startup, you need to first determine how much funding you need, identify potential investors, and explore different funding options. This may include pitching your idea to angel investors, seeking venture capital funding, self-funding or bootstrapping, applying for bank loans, exploring crowdfunding platforms, or considering ICO and IEO funding.
How to find investors for a mobile app?
. You can find potential investors for your mobile app through online platforms such as AngelList, Funded.com, and Angel Investment Network. You can also attend meetups and events for entrepreneurs and investors, or seek referrals from your personal and professional networks.
How can I find investors for my mobile app?
You can find potential investors through online platforms like AngelList, Funded.com, and Angel Investment Network, attend meetups and events for entrepreneurs and investors, or seek referrals from your personal and professional networks.
What is the optimal timing to seek funding for my app idea?
It’s best to seek funding after you’ve validated your idea and have a basic understanding of the app features and technologies you need to focus on.
What are the available funding options for app startups?
Available funding options include pre-seed funding, angel or seed funding, self-funding or bootstrapping, bank loans, crowdfunding platforms, and ICO and IEO funding.
What are the advantages of self-funding or bootstrapping?
Self-funding or bootstrapping gives you complete control over your business, and you won’t have to give up equity or control to outside investors. If your app becomes successful, you may not even need to seek funding in the future.
What is ICO and IEO funding?
? ICO and IEO funding is a great option for blockchain-based startups. The money is raised in the form of cryptocurrencies, which can be risky since their future value is uncertain. However, blockchain startups often understand the pros and cons of cryptocurrencies.
How can I pitch my app idea to potential investors?
To pitch your app idea, create a compelling pitch deck that showcases your business idea, target audience, competition, and revenue model. You should also be able to demonstrate how your app solves a specific problem and provides value to users.
Individuals who have been successful in raising funds for their business ventures often have invested some of their own money as well, which demonstrates to potential investors that they have a personal stake in the project. However, these personal funds are usually not used to develop the app itself, but rather for the funding procedures or similar projects. While all the stages of raising funds are important, the key to success is having a great app idea that will perform well in app stores. If you have that in place, the following steps can help you reach your goal of securing funds to launch your software.