How To Get Investors For Your Mobile App
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.
The problem is solved if you have the right funds and the desire to risk them. And if not? Then you have no choice but to pitch your app idea to investors.
The task is uneasy, as you can imagine. Firstly, you are far from the only one who wants your startup to be funded. Second, no one likes to waste money (and rich businessmen are no exception). So take your time and think over your strategy properly.
And start by reading our article. We're going to detail how to get investors for an app idea.
What Should You Know about Mobile App Investors in 2021?
Investments involve the participation of a third party or company in the financing of your project. Of course, it's not about the charity at all. The investment has to be reasonable and profitable.
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.
What are Investment Rounds?
Investment rounds describe the stages of raising funds required to implement the project. Below we illustrate each of them.
Why divide the investment process into rounds?
The name of the round speaks about the business stage, which is useful to project owners and potential investors. Both parties to the process can understand if their cooperation has a future, they won't have to lose time if their goals conflict.
Let's say you need seed funding. Therefore, you won't see eye to eye with mobile app investors focused on projects in the late stages (Series B and higher).
In fact, the above division isn’t a requirement. Sometimes a startup manages to grow without external funding and bypass the early investment rounds. Each project is very unique and needs a personal approach.
How to Find Investors for an App Project?
At least 75% of startups fail, so it's no surprise that investors are willing to fund only chosen projects. They have to believe their money would pay off.
And if you want to be among the lucky ones, go to the meeting with potential investors well-prepared.
#1. Choose the type
So, first, decide what kind of investors you'll be able to interest in your project. Does it make sense to apply to venture funds? Can angel investors help you? Do you have a suitable app contest in mind?
Consider these and other similar questions properly.
Before communicating with investors, you have to know the budget you might need (to be precise, the approximate cost of an app development). Believe us, successful startup founders wouldn't pitch their ideas to investors if they didn't know how much money they wanted to get.
#2. Conduct a thorough analysis
You have an idea to develop an app and you see all its prospects. However, the investor may not share your confidence. You'll have to convince him you're right, so get prepared:
analyze your market. Prove with precise numbers and statistics that your project is going to work;
pay attention to your competitors. Describe what they offer and why their digital products aren’t ideal. Your task is to find the problems of your competitors;
explain how your solution would outperform its competitors. Why is your product better than the rest?
#3. Take care of branding
To find app investors for your project, you have to present your company in a favorable light. That's when branding comes in. You need to create your corporate identity, including the fitting color scheme, logo, and even the company's philosophy.
The same applies to your product, it should also become a logical part of the corporate identity. The thing is, branding helps investors visualize your idea in a better way.
#4. Start your marketing activity
When are you planning to initiate marketing activities? After your product launch? If that's what you think, you’re at great risk. Such a misconception can lead to complete failure. Promotion should start as early as possible, and here's why:
test your idea on potential users (will there be demand at all?);
find maybe customers;
attract the attention of real investors (which is your immediate goal).
Thus, you'll clear the way and come to the investor with a prepared groundwork able to simplify your further business communication.
By the by, it's time to discuss the communication issue itself.
#5. Present your startup’s elevator pitch
Don't expect to convince an investor to give you money at your very first meeting. Your task at this stage is to initially interest the other party and persuade him or her to continue your communication at a higher level. To achieve such a goal, use the startup’s elevator pitch.
What is it?
Elevator pitch is a short (no longer than 2 minutes) story about the benefits of your project. What does the elevator have to do with it, you may ask? The fact is, in the middle of the 20th century in the United States, young businessmen used to catch potential investors in elevators. While the elevator was moving, they had the opportunity to discuss their startup and ask for financial help.
What to consider when preparing your app’s elevator pitch?
you cannot be 100% sure that at the first meeting you'll have a chance to demonstrate colorful graphs and illustrated statistics. You have to be convincing in words;
show your enthusiasm and speak in a positive way;
just in case, prepare all materials in electronic and paper forms (who knows what you might need?).
How to Pitch Your App Idea to Investors?
Suppose the first meeting with the future investor was successful. It's time to discuss your project in more detail.
What do you need to do to get the startup funding you want?
Prepare a pitch deck
The pitch deck answers various questions about your project and explains to the reader what your product is, why customers would use it, whom you plan to compete with, and so on. The visual part is important too: your presentation should look appealing and convincing. It's not enough to add beautiful pictures and motivating quotes. You need real business indicators.
The tasks of the presentation (which, in fact, is an extended version of the foregoing app’s elevator pitch) include:
promoting your project;
visualizing the benefits of a startup;
profit forecasting (yours and investors).
A perfect pitch deck (able to interest investors for app development) must have the following points:
The problem. Explain why your digital product is needed. You have to point out the existence of a certain problem (or desire). And any problem leads to demand for its solution.
Let’s say, if you decided to create an analog of Viber, the problem would be the difficulty of remote communication.
The solution to the above problem. So, the problem exists, but what do you propose to do to solve it? It's high time to mention your product. Don’t go into all the details yet, limit yourself to a few of the brightest facts to impress the investor.
Figures and statistics. Your chances of getting investors for your mobile app idea would be better if you prove your point. We hope, you've already conducted a market analysis earlier (as we suggested you do), so share with the reader the results obtained and your conclusions made:
target audience analysis: who will actively use your product (website or application)? What are these people like?
user demand in numbers (to finally convince investors that your idea is promising);
competitors and their disadvantages. You probably already mentioned them in an earlier discussion (remember the startup’s elevator pitch?). Now you need to make even more compelling and forceful arguments in your favor.
any other useful data, which you managed to find during market research.
Product benefits. Highlight the main benefits of your product and dedicate a colorful description to each. Spare no effort and imagination when doing so: too much depends on your persuasiveness at this pitch deck stage.
Road map. Be sure to add a paragraph to your document where you outline your action plan step by step. What and when do you intend to do and what resources are you going to use to achieve your goal?
The money you hope to get from investors also belongs to these resources, so feel free to mention them too.
Profits. How to get mobile application investors? The easiest way to attract and interest them is with the promise of high returns. Naturally, it’s too early to talk about real profit, but you should already understand when to expect a payback on the project.
Your team. And of course, don’t forget to tell investors about the people who will be working on the application. It is important to prove the expertise and experience of each team member.
Perfect pitch deck rules
Don't be too wordy. Impress investors with convincing data, not a number of facts, some of which are inherently useless.
Don't break the logic of the text. Think over the structure of your presentation and follow the plan. Earlier, we described how to find investors for an app. Also, we explained to you the best way to get them to finance your project using a pitch deck. So just take our advice (which is based on experience).
Adapt your pitch deck wisely. You should determine what audience your presentation is going to target. Who is likely to read it? Adapt your pitch deck to specific readers. At the end of the day, something that you and your other team members understand may be hazy to potential investors.
Create an MVP
If you want to bring your startup or app idea to investors and convince them of its promise, offer them more than just an appealing description. You need to give them the opportunity to really feel your product, so to speak.
When it comes to an application, the MVP model is a great solution. Being a simplified version of the future full-fledged mobile platform, it is quite suitable as a first approximation. Usually, such a model has only basic functionality and a minimalistic interface. The task is to create a product with must-have features in a short time and test it on end-users.
MVP has a wonderful added bonus. Namely, you'll be able to visit investors for app development, having a specific example of a working application with you. Therefore, you'll be much more convincing in your argumentation.
If you can't create an MVP before talking to investors, find another way to let them know what it means to use your product.
What will Mobile App Investors Pay Attention to?
Your enthusiasm. You, as a founder, are the driving force of the whole team, the success of a mobile app development startup depends on you in many ways. So get ready to show the investor that you are passionate about your idea and ready to work hard to make it happen.
Thorough knowledge of the market. As the initiator of the whole venture, you should have a good understanding of your market, its main players (your competitors), and other important indicators (such as the number of potential users interested in the product).
Project's special appeal. Almost every investor studies a huge number of startups on a daily basis. Why should he choose you and your team to finance? Be creative! In other words, add a certain highlight to your project. This would increase your chances of getting investors for your mobile app idea.
Buzzwords. Don't flaunt buzzwords unless you know their exact meaning and can explain how a particular technology works. Also, of course, you should be completely honest. If your product doesn't actually use blockchain or machine learning mechanisms, don't say otherwise. The lie will be exposed sooner or later.
Financial forecast. You’ll definitely be asked to provide all financial indicators and assess your company's prospects in this regard. Among other things, be prepared to name the customer acquisition cost.
Hot niche. It’s not a prerequisite and doesn’t guarantee you'll be able to find app investors for your project. However, belonging to a hot niche does make your startup more inviting.
Today on-demand services are especially popular in the app market. They're really in great request right now.
Your professionalism. Investors should understand that your team is not just enthusiasts, but real professionals. Hire experienced experts who know their stuff.
Why would investors turn you down?
We've explained to you how to get mobile application investors interested. But there is still a risk of being rejected, because, according to statistics, only one out of a hundred startups succeeds in obtaining funding.
Here are the three most popular reasons to explain investor rejection:
The unconvincing, inexpressive idea of the project;
Incomprehensible financial projections along with obvious monetary risks;
Disbelief in the founder's ability to organize and effectively conduct business.