Imagine…. You’re watching a segment of the highly regarded program Shark Tank. All the sharks are willing to invest in one of the entrepreneurs on the show after hearing his powerful proposal. It’s not just how he presents; it’s what he presents as well. He is able to attract mobile app investors to his business on his terms because to his self-assurance, thorough market analysis, and commitment to his venture.
Let’s face it, not everyone will be able to attend the concert. So, how do you find investors in the real business world for a new app?
Whether you want to start from fresh on your app project or scale an existing app, you will need money in both cases. You require growth potential in your app!
How to Convince Mobile App Investors to Fund your New App Startup?
How do you attract potential investors? By offering them a Foolproof Package!
You’ll concur that… When we subscribe to a scheme or insurance policy, we make sure that every little detail is covered. Similar to this, investors won’t accept (won’t pay for) a simple app concept with little to no investigation. They would demand all available information. What was the cause of it? They are investing their money in the funding of your mobile app, therefore it is evident!
Your proposal should be compelling enough for an investor to part with his money for your company, not just convincing enough.
What do Investors for Apps Look for While Investing in Tech Startups?
You must delve deeply into what investors look for when investing in tech firms if you want to master how to obtain investors for an app. Salespeople typically create sales techniques by placing themselves in the shoes of potential customers. They will trust your app more if you can identify their problem and offer a solution.
The motivation of a startup fuels its expansion. You need to know how to establish and maintain a strong market presence as you are the one who started the entire business plan. It will make seeking investors for your new venture easier.
What motivates investors to fund a startup? – Knowledge of investment strategies, market competition statistics, and well-researched app concepts can all be a bonus for you; a well-balanced combination of all these will help you have the best approach when pitching your company. more underneath
Ensure that you have a or are a:
- unique idea
- right fit for the market
- business plan
- scope of earning profits
- prototype ready (in case of startup) or app ready (in case of scaling the app)
- you have a skilled team structure for app development.
What is the Best Way to Find Investors? Steps to Gain their Trust for App Funding
The investor will begin anticipating the profits before they have even given you the money. It is therefore more than vital to win their trust and money.
It takes a lot of hard effort and smart work to be an entrepreneur. You are need to wear many hats. Have you ever wondered how to find investors for your app?
By using the following procedure, you can attract investors for your business:
1. Verify your Concept – How viable and pertinent is your concept? This has two sides to it. It must first be practically feasible and then have a distinctive USP.
2. Choose the Correct Market – You must select the appropriate market and location. You’ll need to be quite knowledgeable about the market for that.
3. Choose a Reliable App Development Partner – You should get into an app development partnership bond with a company that can help you to build a robust application.
4. Have a Basic Understanding of Investments – You should have some background in investing. You won’t be able to read someone else’s mind if you don’t know the fundamentals or rules.
5. Develop a revenue strategy – Demonstrate to the investor how you will help them increase their investment. They will feel safer about their money if you present them with a foolproof method.
6. Create a prototype or most-viable product – You can prepare a prototype or most-viable product (MVP) in advance. Find out more about creating MVP apps here.
5 Stages of Startup Funding with Types of Investors Involved
A human’s survival without money is similarly difficult. Imagine a situation like this and how a start-up might manage to survive. A start-prospects up’s of survival are worse when it has no money or less capital.
“Investing ought to be more enjoyable than watching paint dry or grass grow. Go to Las Vegas with $800 if you want excitement.
A lot of patience must be displayed on the part of the investor. It is admirable to anticipate the returns of the invested capital. But they cannot count on getting results right away. Returns last for varied amounts of time depending on the funding stage.
You may learn more about how to find investors for an app in the following section. The five stages are as follows, along with the various funding sources or, more precisely, investor types:
Stage 1 | Pre-seed Funding or Idea Stage
Pre-seed finance is the earliest type of funding in the world of entrepreneurship. It creates the foundation for the start of business. The stage that comes before the first stage is frequently referred to as the zero financing stage.
Quite a financial risk for a theory. Here, the investor gives an entrepreneur a loan of money to work on the application concept so that, if it hasn’t already, it can take on a tangible shape or create the prototype.
Additionally, the pre-seed capital loan frequently converts to stock once certain growth capabilities are reached.
- Bootstrapping is a different type of source. It’s comparable to “Do It Yourself” (DIY) or “Bring Your Own Finance” (BYOF). To establish and expand a business, one uses funds, personal equipment, and house/garage space. Bring in your financial resources from savings or any earmarked corporate cash. If you’ve tried everything, the only thing left to do is go through the process of getting your software funded.
- Relationships with friends and family Borrowing money from friends, family, and relatives is another approach to get pre-seed finance. This also implies that interpersonal connections might be useful in such dire circumstances.
Stage 2 | Seed Funding
‘Seed Funding’ can be considered a part of the seed growing into a plant analogy.
It is referred to as the startup’s initial funding stage. Your startup has now established itself as “a thing.”
The majority of startups never get past this stage, which is an amusing reality. Today, failing startups are commonplace. According to statistics, 39% of firms fail for lack of funding. So, how might an app attract investors?
These are the possible investor for mobile app startup sources in the seed stage:
- Startup Incubators – A startup incubator aids in the growth and success of firms via the use of a sound business strategy. In addition to providing money, they also assist with networking, management training, office space, and even corporate mentoring.
- Angel investors in apps Angel investing’s main goal is to provide funding for enterprises with potential but limited access to traditional financing. Before finalizing their investment, they perform technical due diligence. Angel investors also ensure advances, advise businesses, and leverage their contacts.
- Crowdsourcing – Receiving money from many investors at once in the form of loans, pre-orders, and contributions is referred to as crowdfunding. The investors anticipate receiving gifts or stock in the business in exchange.
Stage 3 | Series A
What’s the point of Series A fundraising, a common question? – The first round of funding comes after the seeding, and this is where you might meet startup investors. A long-term profit-generating strategy must be created at this phase. The initial iteration of the product has already been released on the market.
There are various rounds of fundraising via which a start-up might raise additional funds for itself, depending on the industry and potential investors. The investor seeks more than just a solid business concept during the Series A fundraising round. He wants the investor to have a plan in place to assist the business in making significant profits on the market.
Company valuation and Series A financing: Startups with a solid plan worth between $13 million and $16 million can raise about $15 million during this stage of fundraising.
- Angel Groups – A group of app funding firms is referred to as an Angel group when numerous app angel investors band together and sign a larger number of checks with low-exposed risks.
- Leveraged buyouts and growth financing are provided by private equity firms (PE). The only drawback is that this only benefits for-profit businesses and organisations.
- Compared to individual angel investors, venture capital investors are the type of venture capital corporations that invest in larger functioning companies. From the Series A and later phases, they are included in the investment cycle.
Table – Angel Investor vs Venture Capitalist
Parameter of Difference
Pre-seed or Seed
Series A, B, C & IPO
$20 – $250,000
$2M – $100M
Role in startup
Require full control
Require a say like the Board of Directors
Is Due Diligence required?
Stage 4 | Series B
When studying how to raise money for an app, you must understand that Series B rounds help companies grow past their startup stage. Investment aids business owners in expanding the market by boosting their market share. The business has a sizable user base and has shown investors that it is prepared for larger scale expansion after completing a seed and Series A fundraising program.
Therefore, Series B fundraising is a strategy to expand the company in order to satisfy this market’s demands. Quality training is necessary to create the greatest products for the consumer. Bulk purchases cost a business some pennies. They use the money from this round to meet the demands precisely.
Startups with revenue-generating models worth between $30 million and $60 million can raise $30 million during Series D financing. Company valuation and fundraising in the Series B stage.
The source of fund in this stage is Credit Investors.
- Credit Investments – Credit investments come in many shapes and sizes, and they all entail potential investors investing money into debt instruments like bonds, debentures, and long-term loans.
Stage 5 | Series C and Beyond
You will be shown how Series C funding operates in this section. Investors included in this series are accompanied by a number of groupings, including major secondary market groups, hedge funds, and investment banks. They come here expecting to invest enormous sums of money on businesses that are already successful, and the company has already demonstrated that its business plan is the most profitable.
- Hedge Funds: The reputation of the fund manager and investing in certain assets are the two factors that draw investors to entrusting their money to them. In actuality, when losses are taken into account, this is the most secure investment category.
Companies typically complete Series C of external financing. Some businesses, though, might pursue investment after this point. But thanks to these three investment rounds, the business is now qualified to raise money through an IPO. So, if you’re in need of more money, don’t be confused by the query “how to acquire investors for an app.” Try an IPO!
Table – Funding stages, amounts & return
% of Shares Expected in Return
$150,000 – $1,500,000
Series C & Beyond
How Much Investment Should You IDEALLY Ask For?
- Underfunding may leave you adrift in hot water because you’ll run into issues if you can’t secure the necessary funds within the allotted time.
- On the other hand, overfunding will force you to give more company stock to the investor(s) early on in the firm’s development. In the early stages, it can be hazardous to give away too much ownership.
In conclusion, both are negative in their own ways. Consequently, establishing equilibrium is crucial. How is this equilibrium achieved?
There are two fundamentals to master when discovering more on how to get investors for an app:
1. Know Whether Your App Idea is Simple OR Complex?
Depending on a number of criteria, the development of a mobile app can easily cost between $10,000 and $550,000. The features, complex UI/UX, API integration, design, and other functionalities.
2. Refine your ‘Elevator Pitch’
Candidates looking to land a job are not the only ones who use elevator pitches. In fact, entrepreneurs that are looking for investors should work on hone their elevator pitches as well.
You should have confidence when you are looking for money. You will probably only speak to the person you’re trying to shake for money for 30 seconds. You want to polish your app idea pitch so that it is as effective as possible and your app accomplishes all your idea should. Short and convincing pitches are what app investors are looking for.
We hope that at the end of this article, all of your inquiries regarding how to get investors for your startup firm have been addressed. Select just the best for any services, including mobile app development!
Be sure to maintain transparency with your investors regarding your business value estimates, concepts, and strategies. They have after all enabled you to operate your company. The strategy should be carried out precisely and quickly! It will
After receiving funding for your app, contact us an app development business.
Frequently Asked Questions (FAQs)
Why do investors invest in startups app?
Investors put their money in because they anticipate large Returns on Investment (ROI). Additionally, because these startups offer greater returns than conventional investments, they decide to invest in tech-related or non-tech startups.
How do mobile apps get funding?
Another way to phrase the question is, “How can I acquire investors for an app?” The funding for mobile applications comes from a variety of sources, including individual savings, bootstrapping, corporate contacts and networks, private investors, crowdfunding, bank loans, capital, and angel investors, among others.
How can MVP help with getting funding for an idea of app?
The Most Viable Product (MVP) aids in persuading the investor that the app idea is viable and not a hoax, and they can provide feedback after viewing the MVP.
Do you need investors to start an app?
Nothing in this response is as intricate as rocket science. It seems sense that you would have to contact investors if you lacked the necessary finances to begin your app development.