How to Find Investors for Mobile Application?
How to Find Investors for Mobile App Business? Seeking investment for your mobile app idea as a startup? Here is a guide to get you through the process of securing funds with ease.
According to Grand View Research, the global mobile app market is anticipated to grow at a CAGR of 13.8% from 2022 to 2030 and reach a whopping $567.19 billion. Therefore, developing a mobile app in the digitized world can be highly profitable.
If you have an idea for mobile app development for your startup, you will also need capital and investment to bring the vision to life. That’s because developing a mobile app can cost up to $500,000, depending on its complexity, features, and tech stack.
We will cover everything you should know about investors and investments to find mobile app investors for your startup.
Types of Investors For Mobile Applications
There are many types of investors that you might come across, such as:
Incubators & Accelerators
The term investor refers to an organization or individual that offers funding for mobile app design and development. They seek promising ideas from startups and established companies that need financial support for creating and scaling their app.
At the initial stages, personal connections of an entrepreneur, mostly family and friends are likely to become investors. You can use the funds they provide you with for doing market research and building prototypes to attract other investors.
Co-founders can be an alternative to getting loans from family and friends for the app. Consider seeking a co-founder who possesses expertise in both marketing and development or who has established connections in the specific industry you are targeting. It may be advantageous to broaden your search beyond your network to find a co-founder who can address any skill gaps and assist with your financial needs during the early stages of your venture.
Read More: Types of Mobile Apps
Also known as seed investors, angel investors are individuals with wealth looking for higher rates of returns. They provide initial money for startups in exchange for the company’s ownership equity. These investors can either be involved on a professional basis or can be among the personal network of the entrepreneur. Angel investors are more likely to invest in a business idea they like in expectation of a reward if the business takes off.
VCs are the investors from venture capital firms that provide capital to the business in return for their ownership in the company’s equity. Venture capitalists seek companies with large market potential, strong management teams, and unique products. VCs prefer to invest in revenue-producing companies that are seeking commercialization opportunities rather than start-ups.
It is the method of raising money for a venture or project through the Internet from a large number of people. In crowdfunding, social media networks of people and crowdfunding websites are used to bring entrepreneurs and investors together.
Participating in an app competition offers a valuable platform to present your startup app idea to potential investors with the opportunity to secure investment capital or a cash prize. Even if your startup doesn't win the grand prize, the benefits of participating in such a competition are numerous and can provide a significant boost to your business.
Read More: Cross-Platform App Development
Incubators & Accelerators
A startup incubator helps develop and refine app ideas with high potential. They can provide a host of resources for one to five years. On the other hand, startup accelerators provide intensive resources, mentorship, and education programs to small or mid-level business owners along with funding in return for equity in the company.
What are Investment Rounds?
Investment rounds or funding rounds define the number of times a startup chooses to raise capital from the market. Each founding round is created to give money to the entrepreneurs to take their businesses to the next level.
There are several stages in the investment rounds, including:
It comprises funds from personal networks that are friends and family. It is the stage where the app concept is being tested to know its viability in the market.
It is the first official funding round a startup will commence. The source of seed funding is far more than the pre-seed one. Here the equity of the company is exchanged for the capital. Startups that are seeking seed investment have the app idea and need additional funds to transform it into reality. Often these funds are utilized for hiring critical personnel, conducting product–market fit testing, and app development.
As startups progress in their development, they reach different stages where they are required to provide more concrete evidence of their app idea's potential. When startups reach this stage, investors scrutinize the statistical data of the startup's past achievements resulting from previous investments. They don't just evaluate the profits but also the potential of the app and the measurable improvements in metrics.
Once a startup has proven its viability, it can proceed to the Series B investment stage. This stage is crucial as it enables businesses to expand their market reach. Startups can use the funds to strengthen their tech support, hire more employees, improve advertising efforts, and create better sales models. This stage is vital for startups to grow and become more established.
A company that enters Series C funding aims to diversify an already successful business. The funds are primarily used to develop new products, expand into additional markets, or acquire other businesses. Since the company is now a successful venture, more established and risk-averse capital sources, such as hedge funds, private equity firms, and investment banks, can provide support. This stage is essential for startups to become more competitive and expand their market share.
Initial Public Offering (IPO)
In an IPO, a startup sells shares directly to the public to raise funds. This stage is significant as it gives startups more visibility, and they can raise more funds to grow their business. However, it is a complex process that requires startups to meet several regulatory requirements and undergo a rigorous evaluation process to ensure investor confidence.
What do Investors Look for Before Investing in a Mobile App Idea?
Some of the essential things that the investor will seek before investing in your idea are:
Unique App Idea
Investors strive for uniqueness. If you want an investor to fund your app, you need to show the potential of the app, the issues it solves, and whether it's bringing any innovation to the target market.
Industry and Domain Knowledge
To ensure that you are pitching your app idea to the right investors, it is a must to look at their past market investments. Other than that, they are unlikely to invest in a company where the founders don’t have industry knowledge and experience. Your pitch should demonstrate your knowledge of the industry and ensure that you and your team understand it.
You need to show the investors that there is enough market for your app and the amount you are striving for should also make sense. To do so, you can show data that proves a large customer base and market for the product.
Read More: Native vs Cross-Platform App Development
Last but not least, it's important to present a solid business model that demonstrates how your plan will generate profits. Keep in mind that different investors may have different preferences and priorities, so it's important to customize your pitch accordingly. Showing that you understand your target audience and can tailor your business plan to meet their needs can go a long way in securing the investment you need to succeed.
Minimum Viable Product (MVP)
You can also design and develop an MVP that is the first, simplified version of the app with minimal features. It not only helps in testing market demand but also in creating a customer-centric final product. An MVP will also help in securing an investment as it is the best way to represent your app idea to the investors and let them see it in action.
Mobile app startups mostly fail due to insufficient funds. However, following the right approach can help you secure investment for your mobile app idea. Also, remember that mobile app development is not a one-time process rather it is a continuous process where you will have to keep it updated with the latest features to retain users.
If you are looking for a company to help you develop a captivating MVP for your app idea, Decipher Zone can help. We have worked with numerous brands across the globe and allowed them to achieve their digitalization goals.
To secure mobile app investment for your startup, contact us now!