How to Get Investors for Your Mobile App Startups?
Google play store has 2.65 million apps as per Statista. Do you know around 49% of people open an app more than 11 times a day? Moreover, an average smartphone owner uses 10 applications per day. It shows that people look at apps to find every solution. It increased the demand for mobile app investors. Because people want enough funds to turn their app idea into reality.
If you have an idea for a mobile app startup, you will need venture capitalists. It is because developing products, market research, and marketing of the product require investment funding. So, how to get investors for an app idea?
If you think that you need money to pay only the app development team, then you are wrong.
Hiring a Mobile app development company requires you to spend at least 10,000 dollars for simple mobile app development. Since the app’s market is growing with time, more people are coming to it and this is increasing the competition. Thereby, competition to make the best mobile apps is also increasing.
For a scalable, robust, and interactive app, a good investment is a must. You have an amazing startup idea, but your own money is not enough to begin. In this stage, many startups go for early-stage venture capitalists. It will help you to launch MVP (Minimum viable product).
Types of Mobile App Investors
You can raise money for your app idea in various ways by finding the right potential investors. Mobile apps for business in 2022 have become a vital thing, so funding is crucial. The investors for your mobile app depend on the app type, idea, thorough research, and your level of seriousness for the app development.
Before you know how to find investors, you need to know the types of app investors.
Different investors are available in the market. You have to pitch them differently for seed funding or complete funding. Here are some of the most common investors.
- Family and Friends
- Co-Founders
- App Contests
- Crowdfunding
- Angel Investors & Venture Capitalists
- BootStrapping
Let’s know about each investor in the details below.
1. Family and Friends
Getting funds for mobile app development is easy from family and friends because they know you. You don’t have to build trust with family and friends as you have to build with other investors. Your half work is done already which is building trust. Many businesses have family offices due to a share in the business investment.
But you can get only funds that will support your mobile app startup. Most probably you will need to look for other inventors as well. You can use this money for research and make the business model robust.
2. Co-Founders
A co-founder is a person who helps to execute the business idea. It is a kind of support for the owner or founder. You can offer the position of co-founder to your friends or family members. This is also one of the ways for finding investors for startups.
Or if you can trust the people outside your circle, you can also take their help to start the business. But, make sure, you will have to discuss the cost to design a mobile app and complete the project with the co-founder.
3. App Contests
App contests provide you a chance to show your app idea to different investors and get funds. These contests take place in different parts of the world.
Entrepreneurs can show their ideas to investors during the competition. It is the best and most effective way to find investors for your mobile app development.
4. Crowdfunding
Crowdfunding is a collective method to raise funds for mobile apps. Some crowdfunding sites are available through which you can get funds. However, running a crowdfunding site is difficult because it also requires funds, and finding potential investors is a tiresome job.
Likewise, it requires time and effort to raise money. So, for a successful crowdfunding campaign, you will need to prepare in advance and plan effectively. There are two types of crowdfunding.
- Donation-based funding: A collective effort for raising funds for a specific concern is called a donation-based funding campaign. The contributors do not expect any reward for giving money or their donation.
- Equity/Investment funding: In this type of crowdfunding, entrepreneurs raise funds through an equity investment. They issue the securities of their firm. It is similar to venture capital investment.
5. App Angel Investors & Venture Capitalists
Angel investment is the popular mobile app funding. You have to pitch an app idea effectively to the investors so that they get convinced with your idea and give you app funding. You will have to discuss the average annual investment total with the angel investors.
With the help of an angel investing app, you can get funds. Angel investor app allows you to get funds after a process for your app idea. Likewise, venture capitalists can provide you with the huge amount of money that you require for early-stage startups and the complete app.
You have to be ready with a very compelling argument to convince the angel and venture investors. In addition, tell them that your idea will surely generate revenue.
Remember, whoever is investing in your app concept, will have control over what you sell, offer, and your transactions also.
What are venture capital firms?
A venture capital firm is a form of private equity. Venture capital firms help new businesses to start. Moreover, some venture capitalists provide you with financial guidance.
6. Bootstrapping
Various successful apps began with bootstrapping. Because this is the cost-effective way and allows sustainable app building. It makes you able to start the business with as little capital as it can be. It is possible after analyzing the owner’s time and resources.
“Bootstrap” term came from the idea of pulling oneself up by their bootstrap. The vital benefit of Bootstrap is that you have complete ownership of your application and workflow. It can be helpful for preparing an MVP. With Bootstrapping, you can check how deep the water is.
How to Prepare to Find Investors for Your App Idea?
How are you going to look for investors and pitch your app idea to them? It is an important question. You must know the steps to gain the trust of your potential investors.
You can’t directly tell the investors to give money, as this is not going to work anyway.
You have to prepare yourself for convincing the angel investors. For this follow the below ways.
- Market Research
- Validate Your Idea
- Learn the Investment Basics
- Make a Revenue Strategy
- Create Minimum Viable Product
1. Market Research
Conducting market research makes you able to know how many funding rounds are needed. You can also know whether your idea is feasible or not. When you study the competitive environment, you can define the market size for your mobile app and raise money accordingly.
Define your target audience and market share. It will help you put forth the potential mobile app stakeholders. Moreover, without knowing the real figures of opportunities and risks, you can’t be sure of getting successful in app building.
You can also understand how to generate revenue with the same. So, go to market strategy for an effective startup. In addition, research the top mobile app development trends so that you can know the level of the app.
know the difference between UI and UX designs. It will help you find the cost of hiring developers.
2. Validate Your Idea
After the market analysis, you have to think about how to come up with new app ideas. But, soon you have to screen the ideas based on your target market analysis conclusions. Identify in which niche you can attract more audience for your app, and analyze the pain points of the people so that you can provide them with a solution.
Find out the landscape of your app’s market, and analyze the opportunities and competitors. However, working in the areas of your interest would be more effective for your business.
You can explain your idea to the investors for your mobile app in a more impressive way if the idea is of your interest. Look for the right market in your interest areas and understand the competitive landscape.
3. Learn the Investment Basics
You must know the basics of running a startup. It helps to pitch the idea better. The investors also consider it secure funding. You can gain the trust of your potential investors if you know the basics of investment. Moreover, you can understand the stages of investment from the potential investor better.
After the first funding process, when you have the capital, you can use it in a better way, if you know the investment basics. Often, the lack of investment basics stops you from providing a solution for product market fit.
Likewise, you will know better where to use the seed money of million dollars for the business app.
4. Make a Revenue Strategy
You want to put money into the idea because you want to generate revenue, as simple as that. So, commencing a business without thinking about revenue generation strategies can be a mess. The investors will not invest until you pitch deck effectively for revenue generation.
Because they also want their money to be invested in the right place. So that the success of the app also benefits the startup incubators. Your revenue strategy should be clear and concise so that the investors can understand it quickly.
For this, conduct research and study many monetization strategies to make an effective revenue strategy. Have a look at the image below to know the revenue of mobile apps worldwide from 2017 to 2025.
5. Create a Minimum Viable Product
The business can be small or big, but it should begin with MVP (Minimum viable product). It is the best and most sustainable way for landing in the market. MVP is the first version of your app and contains a basic set of features.
MVP helps to find out whether your app is capable enough to survive in the market or not. You can get feedback from the app users and implement the changes to improve the application. This type of product (MVP) is affordable and can be started with own savings or with the help of typically angel investors.
An app funded after the success of its MVP can be a product market fit. The initial growth of the app depends on how good its MVP is.
What Are the Funding Stages for Startups?
Investment is not made at once for the entire app. There are some seed rounds or funding rounds for timely and sustainable investment in app developers. Here are the funding stages.
- Pre Seed Stage
- Seed Stage
- Series A
- Series B
- Series C
1. Pre Seed Stage
The pre-seed stage is not related to the app creation process directly. Here comes research and information collection. However, it also requires some sort of investment. Most investors ask about the pre-seed funding to the app owner.
It helps to make a calculative decision about further investment. This type of funding comes from personal connections. Investment from the personal network helps in further research.
A portion of investment goes to conducting research.
Likewise, you can build the prototype with the help of app developers if you have enough funding at this stage. Preparation for the application development with preliminary research is the initial stage. So put your best foot forward.
2. Seed Stage
The seed stage is also called initial investment or the first official funding round for new business ventures. This type of funding is provided by investors in exchange for convertible debt or equity in the company.
Likewise, it is the initial investment for growing a business like a plant. In this second stage of seed funding, the focus is on the initial growth of the business. It is like, if you nurture the tree properly, it will become robust and give fruits. In this seed round also you are working on improving the product.
At this stage, you look for the workforce, and developers, and begin testing of product market fit. For all this, you need funding. Minimum Viable Product is also developed at this stage. Even at the seed stage, your idea must be ready to generate revenue.
3. Series A
If you are at this stage it means you are good to go. Now the time has come to take some action. The growth of startup companies begins with series A funding. Different companies investing in venture capital many times invest in mobile application development with excellent growth potential.
You have already established product capabilities and defined the objectives of your app idea in the previous stages. Now your main focus should be on the growth and optimizing the functioning of the app. So, use the strong elevator pitch to get the funds for further process.
4. Series B
In series A, you must struggle and take some actions to survive in the market. So, if your app has reached series B for funding, it will succeed.
However, small mistakes in the new business can lead to problems. So, you must be focused all the time and think of expanding the business.
Series B funding helps in the same. It accelerates the growth of your business and gives your business global exposure. Likewise, the value of your shares increases.
It also helps to generate some money for investment. You can sell fewer shares of your company to venture capitalists and invest money in your business.
5. Series C
If you require series c funding it means you want to expand your business or take it to the next level. You can make enough money now to cover your expenses and maintain the workforce better than before.
You may require funds for business acquisitions. Series C funding can make your business a global company with billions of dollars worth. This investment leads to substantial improvements. There are seed D and E stages also for infusing more money into the business for more profit.
How Much Funding Do You Need for Your Startup Idea?
Different businesses require different funding because of the size of the business. So, how much funding does your application development require? Well, unfortunately, there is no fixed number to tell you.
From the beginning of the research to launching the app and maintaining it, you need funds at different stages. So, telling you the fixed price at the first stage would be conflicting. However, estimated funding can help you to be ready and make up your mind about how much money you need to spend.
A simple Minimum Viable Product with few features can cost around $10,000 to $50,000. Well, the price completely depends on the type of idea and the app’s complexity. However, complex apps require more time and effort so the price for this type of app development is also high.
Complex or advanced app building can cost you around $50,000 to $150,000.
So, now you can figure out how much money you need. Many times, a development team and tech stack affect the cost of development. If you want APIs integration then also the cost of application development can vary.
Likewise, UI and UX designs are crucial for an impressive app. The price of UX developers is $25 to $50. However, the prices for the front-end and back-end developers vary as per region.
Since you already read how to find investors for startups and how to raise funds in the blog you should not worry about investment much. But an extremely competitive landscape requires you to be ready for any type of hurdle and embrace collaborative efforts.
For more detail, you can check out how to create an app from scratch in 2022, write up and understand the stages of app development.
What to Do After Getting Funds?
Do you know how to manage the fund, where to invest the first portion of the money, and whether are you ready with the market research or not? These questions must be clear to you. Numerous startups fail not because they don’t get enough money for business but because they can’t manage the funds and use them in an incorrect way.
Do proper homework, plan impeccably, and invest your money in the right place. If you have launched the app, now you need funds for the improvement and maintenance of the app. Don’t stop getting feedback from the app users. It will help you improve your product effortlessly.
Wrapping Up
Now you know how to find investors for startups. So, consider all the steps, grasp every piece of information, and be ready to turn your long-awaited idea into reality. If you have any doubts regarding the investment and application creation process, you can talk to the world-class experts at Technource.
They will provide you with solutions to your app development questions and clear your doubts. Technource has many experienced web and app developers who work with different technologies. You can hire a development team at the lowest price from this firm.
Frequently Asked Questions
What are the ways to find investors for mobile app development?
How much funding is required for application creation?
How long does it take to create a new app?
How to start an app without money?
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