Last updated on August 1st, 2024
Every mobile app idea needs significant funds to turn into a functional, profitable reality. A successful app launch that needs to undergo several stages, including market research, product development, and marketing activities, requires financial investments. And the ideal way to get funds for your app idea is to find investors for your mobile app startup.
While a unique and revolutionary app idea can attract investors, it’s not the only thing that convinces them to invest. They look for several other factors before funding an app startup, which is a potential reason why getting funds for an app is challenging.
So, how do you get investors for your app startup? Well, we have created this comprehensive blog that highlights the type of investors and the steps to get the required funding for your app idea.
Read on the blog to know more.
What Are The Different Types Of Investors?
Let’s dive into the different types of investors you could approach to fund your app:
Crowdfunding
- It involves raising funds from big groups of investors through social media platforms, apps, or websites.
- For a successful crowdfunding campaign, have a well-strategized promotional plan.
- It should comprise defining clear goals and objectives, knowing your target audience, creating a compelling campaign story, choosing the right crowdfunding platform, and implementing a multi-channel marketing strategy.
- Also necessitates harnessing personal networks, implementing a timeline and milestones, and adapting and monitoring your strategy.
- Maintain momentum and build long-term relationships by providing regular updates and engaging with supporters during and after the campaign.
These steps will help you achieve your crowdfunding goals and maximize your chances of getting funds for your app startup.
Angel Funding
- Ideal if you are seeking serious investment of funds into your app startup.
- These are influential figures in startup funding and offer capital to startups and entrepreneurs for equity in their companies.
- Successful funding from angel investors requires careful planning and a strong foundation for your app startup idea.
- Develop a faultless strategic plan comprising various aspects, including detailed app description and unique selling proposition, competitive landscape assessment, and target market analysis.
Venture Capital Firms
- These firms provide the necessary funding in exchange for equity during the expansion stage (we’ll cover the stages of funding in sections ahead).
- Venture Capital Firms specialize in financing high-potential startups for substantial returns.
- Venture capitalists are professional investors skilled in evaluating business models, market potential, and growth strategies.
- They conduct thorough due diligence before investing, assessing the team’s capabilities, competition, market opportunities, and profitability potential.
Funding Contests
- Participating in app funding contests allows startups to pitch their app to potential funders.
- Securing funding requires a solid marketing strategy and a minimal viable product (MVP).
- It should include in-depth market research, a unique selling proposition (USP), effective branding and positioning, a monetization plan, a user acquisition strategy, and a pricing structure.
- Presenting a compelling pitch that focuses on the app’s value proposition, business model, market opportunity, the team behind it, and marketing strategy is vital.
Family & Friends
One of the simplest ways to get funding for your startup are your friends and family. They are usually the easiest to convince that your app idea is worthy. While they may be able to fund your startup only at the beginning, it is a good place to start the journey to getting the right investor. You can use this fund to do market research and build a prototype to show to other investors.
Co-Founders
You can also invite your family or friends to become co-founders with you. You can also find trustworthy people outside your business to become co-founders and aid the startup financially. When someone believes your idea has great potential, they are likely to invest in your project.
Regardless of the type of investors you choose to fund your app startup, you must have a compelling argument to demonstrate why your idea deserves investment.
Also Read: How to Find Investors for a Startup Success
Stages Of Funding
Now that you know the types of investors, next you should also have some understanding of the funding stages. This will help you continue your startup progress with a steady flow of investment at each stage.
Pre-Seed
At the pre-seed funding stage, your app is essentially undeveloped and just an idea. Here, you just use your savings or take funds from friends, family, or relatives. Typically, the funds raised go towards building a founding team, providing MVPs or demonstrations, doing research, compiling data, and gaining early traction.
Seed Stage
It is the first official round of fundraising for the company. In this funding stage, the primary focus is on the initial growth of business. At this stage, the product is yet not developed and you are seeking funds for further research, testing the market-product compatibility, and hiring employees. The investors at this round who see the worth of your app idea are angel investors, startup incubators, and early-stage venture capitalists.
Series A
Startups that reach this stage are on their way to success. By now, you have established your brand’s objectives and confirmed your market-product fit. Your next step is to focus on the expansion of your company and its products. Give top priority to the growing app, improving marketability, and optimizing your business. Venture capital firms, “super” angel investors, and family offices are common Series-A investors at this point.
Series B, C, and Beyond
Reaching series B and beyond indicates that consumers are beginning to embrace your products. In order to draw in more consumers, this stage focuses on enhancing and expanding your product’s features. Your brand has a reputation and consumers are aware of your offerings. You now need to grow your app from a mobile app startup that is seeking capital to a mid-sized company. At this point, money is generated for collaborations, public offerings, branding upgrades, company acquisitions, and expanding into new markets while continuously developing and improving products.
What All You Need To Attract Investors For Your App Startup?
As already mentioned, having just an idea won’t help you win over your investors. Instead, they would be more interested in your analysis of your competitors, and how your product can succeed in the market.
Here are a few considerations you must pay attention to for gaining the trust of investors:
Know Your App’s Market
Mobile apps these days are a dime a dozen with new ones released almost every day. Therefore, investors are often reluctant to invest in app ideas that already exist. For this reason, thorough market research in your app’s niche is crucial.
Make sure to thoroughly explore existing apps and businesses to ensure your app idea is fresh and stands out. Ensure it is not a copy of what another company is offering, Investors need to see your concept as groundbreaking and impactful in the digital realm.
Further, validate your app idea by asking questions, such as, “What problem does my app solve?” or “How is it different from that of my competitors?” Answering these questions not only enhances your understanding of your app but also boosts your confidence in addressing the investors effectively.
Branding Your Application
Once you have validated your app idea, now is the time for its branding – giving it a label. Creating a logo for your app shows investors that you are serious and have put your thoughts into it. Good branding helps investors visualize your concept, making it more than just an idea.
Branding will also set the tone for the rest of the development phase. Brand your app with a domain, a prototype of a site, or a model of the app. This helps investors visualize your idea and better understand what you are proposing.
Elevator Pitch
Being extremely busy, you must have an elevator pitch ready before you meet the investors. If you are unfamiliar with the term “elevator pitch”, it is a quick summary of your company and the idea behind your startup app. The idea is to describe your app clearly within a short time frame to attract investors without consuming much of their time.
An elevator pitch can be your chance to form a real connection with the investors, which you can use later. While it’s not always necessary, you should be ready to deliver an elevator pitch in any situation.
Pitch Deck
A strong pitch deck demonstrates your commitment to your startup app and shows you have carefully thought through your idea. Investors want to see key elements in the pitch deck, including:
- Application model
- Target market
- SWOT analysis
- Marketing plans and goals
- Return on investment
- Potential risks, challenges, and obstacles (how you will deal with them).
Create A Minimal Viable Product (MVP)
An MVP typically is an identical version or a prototype of your app with minimal features. It allows the investors to understand the concept and workflow of your app effectively. An MVP is a great way to analyze if your app has the potential to succeed in the market.
Moreover, an MVP gives potential investors a tangible product to see and use in real life. Investors prefer to fund businesses that are already functional and show commitment from their owners, demonstrated by their time and personal investment.
How To Get Investors For Your Startup App Idea?
Having knowledge of the type of investors or having a compelling startup idea are essential to get investment for your app. However, the biggest dilemma is how to find the best investors and get app funding. Obviously, it’s not as breezy as giving a call and asking for funds!
Worry not! Here are some ways to find potential investors to pitch them for funds.
Networking
Networking helps connect startups with potential investors. Attending industry events and conferences, and joining entrepreneurial communities allow startups to meet investors, share their vision, and demonstrate their potential.
Through networking, startups gain insights, advice and opportunities for funding pitches. Personal connections often lead to introduction to investors looking for promising ventures, making networking crucial for accessing capital and mentorship essential for startup growth.
Cold Outreach
This process involves contacting potential investors without prior connections. It helps app startups by introducing them to investors who might be interested in funding innovative ideas. Through personalized emails or calls, startups can showcase their vision, product, and potential returns. However, it’s important to be professional, concise and respectful in your communication. Also, one should be careful not to do it too much so you don’t seem pushy.
This direct approach can lead to meetings where startups can pitch their ideas, build relationships, and secure funding essential for growth and development.
App Idea Funding Contests
These can be a great way to secure funds and attention for startups that are confident in their app’s potential. Sponsored annually by top organizations and investors, these contests offer both funding and guidance. However, the competition is quite fierce with thousands of participants. Carefully planning is important to enter such a funding contest. However, if you don’t win,participating can still boost visibility for your app idea.
In short, it’s a strategic opportunity to showcase your app’s value and attract interest, making it worthwhile despite the challenges.
Launching Crowdfunding Campaigns
Crowdfunding campaigns platforms help startups their network significantly, connecting them with a broader audience interested in their concept. This exposure not only boosts investor interest but also enhances their business visibility, ultimately driving higher revenues.
Building a strong startup relies on effective word-of-mouth marketing and stand-out applications. For those startups starting from scratch and without a dedicated support base, crowdfunding offers the best opportunity to cultivate one.
Read More: How to Find Mobile App Investors for Mobile App Startups?
What Next To Do When Your App Is Funded?
Your work doesn’t stop once you receive funds for your app. Since your app needs continuous improvement and updates, you should work on improving it and taking feedback from users and investors as it grows. Additionally, with the advent of new trends and technologies, you will need to upgrade your app continuously.
To ensure constant app evolution, you should hire a startup app development company that can help you with app improvement and its smooth functioning for the times ahead.
How Can iTechnolabs Help You With Attracting Investors to Fund Your Mobile App Startup?
At iTechnolabs, we excel in helping mobile app startups secure investor funding by creating high-quality MVPs that will look favorable to mobile app investors. By developing an MVP, we help you showcase your app’s potential, making it easier to attract investors. Our team ensures your MVP is not only functional but also polished, reflecting your commitment and vision. Investors are more likely to fund startups that demonstrate a working product and show dedication from their owners.
Partner with iTechnolabs – the best MVP development company to build an MVP that stands out, captures investor interest, and sets your mobile app startup on the path to success. Let’s turn your innovative idea into a reality! Contact us today.
