The mobile apps market has to be considered one of the fastest-growing in the areas of business and technology. It’s undeniable the revenue that it can bring in is substantial if you know how to utilize it. The global mobile app market size had a value of $106.27 billion in 2018, according to Allied Market Research. They predict that by 2026, the value will be $407.31 billion. The CAGR will be approximately 18.4% between 2019 and 2026.
While the growth for mobile app is assured, so is the investment in it. Two groups are sure to see a profit from these trends. One is the companies that design the apps. The other is investors who sink money into ventures for a cut of the revenue. Funding app ideas is a viable way to make a lot of money, so there are plenty of entities and individuals out there that are willing to do it.
How to Get Funding for an App
With venture capitalism, you have entities that are engaged in private equity financing. Venture capital firms invest money into startups or companies that are in the emerging or early stages. If you want to get funding for an app through this source, then you’ll need to present a valid case for why your idea has merit. At this early stage, you’ll need to stretch every dollar as far as you can, and venture capital firms fully understand this. If individuals or other entities see that you can use your investment money wisely, they’ll be more likely to invest more later on.
Crowdfunding Your App
This is where you use app funding sites like Kickstarter or Indiegogo. It’s a proven method for raising capital, as some tech crowdfunding campaigns have raised millions of dollars to get their ideas off the ground. Crowdfunding also represents built-in validation for your ideas. If you can run a crowdfunding campaign and reach a large group of individuals to pledge real money towards your mobile app, that confirms the demand for what you’re trying to build.
You can raise capital this way, and you can also prove that it’s worth spending that money to develop the app. You can even cultivate your community of backers to be the first users of the finished product. When you are looking at how to find investors for an app, this is one of the easiest ways that is worth your consideration.
As you are looking at how to get funding for an app idea, you should certainly consider angel investing. An angel investor is someone who provides the capital for a business startup, or an app, in this case. Angel investors are like venture capitalists, except they operate on their own instead of being a part of larger firms. If you take on an angel investor, what they’re going to look for in return is either ownership equity or convertible debt. Angel investors may be your best option if you cannot get money through a venture capital firm. For instance, Joist app funding through an angel investor would have made a lot of sense.
Accelerators are also sometimes called seed or startup accelerators. They are cohort-based programs that can help you if you’re in the midst of developing your app. You might think of them as app funding companies. They may put up a seed investment, but they also might provide help with your connections, mentorship, or educational components to help the process along. They may also help you set up a public pitch event when you’re getting close to launching the app. TechStars, AngelPad, and Y Combinator would be some examples of apps fund entities.
App Contests & Incubators
An app idea contest is a way of generating app ideas from a select group of individuals with knowledge of a particular niche. You have a contest, and then once you pay out the agreed-upon prize, you usually get the intellectual property rights for the winning idea.
At that point, you start looking around for fund ideas. Incubators are periods of immersive education that are meant to accelerate the app-creation process. The first one of these might be a viable option if you’re trying to come up with an app idea within a particular niche. The second would be when you already have an idea, but you’re trying to get clarity before you forge ahead with the development. As you are thinking about how to get investors for an app, you should look into these two concepts.
What are Startup Funding Rounds?
If you do manage to get in front of potential app investors, it’s vital to know how startup funding rounds are structured.
- Seed Round: Seed funding usually comes from industry insiders. It provides the initial startup capital for your business.
- Angel Round: The angel round is similar to a seed round, but it is often more formal. Angel investors sometimes have limited knowledge of the niche in which your app is meant to operate. They are outside investors who will buy common stock in the company, usually after agreeing to more formal terms than seed investors.
- Series A: This is often the first round of large-scale venture capital funding for a business. Series A rounds can bring in $2 to $10 million. They provide capital for the business entity to fully develop its product and grow.
- Series B, C, etc.: These are further rounds that may be held based on the company’s later capital needs, should any be necessary.
Read Also: How Startup Funding Works
How to Get Investors for a Mobile App
Start with Minimum Viable Product (MVP)
Let’s say that you are in the idea stage with an app. You might not be able to land any mobile app investors until you develop the MVP version of your product. This version of the app despite it is not full-scale has just enough features to generate excitement and investor interest.
Collect Money from Early Adopters
An adaptor differs from other forms of investors. Adaptors are those within your circle who have the earliest vested interest in the app, and probably know the most about it. Often, adaptors turn out to be part of the creative team behind the app. If they have no developer knowledge, they’ll need to hire devs to handle the creation process for them.
Establish a Brand
As you are creating your app, it would be beneficial for you to work on establishing your brand, if you hope to get access to a mobile app fund. If you are recognizable and seen as knowledgeable and appealing within a particular niche, then it makes it much more likely that you’ll be able to generate outside investor interest in your projects.
Research the List of Potential Investors
Next up, you can find investors for app development. Candidates might include venture capital firms, angel investors, or other entities.
Perfecting Your Elevator Pitch
You should next come up with a concise way of telling potential investors about your app. Try to land on points like what the market is for it, and why it’s likely to be successful. Try not to get too technical, since investors may not know too much about your niche.
Read Also: 4 Types Of Startup Pitch You Need To Know About
Create an Interactive Demo
As a way of generating more interest if you have an investor on the fence, you should now be able to give a demo with the MVP that you developed earlier. The app should now be in a version where the investor can clearly see what the potential is and why it’s in their best interest to get behind your company financially.
Read Also: 7 Ways to Prepare Your Startup for Scaling
Now, you know how to raise money for an app. If you have an idea for a mobile app that is truly exciting and original, then that often proves to be the hardest part of the process. Hopefully, finding investors for apps and enlisting the help of devs should not prove to be very challenging. If your idea is resonant enough, then how to fund it should not be all that tricky, and it ought to be able to find an audience.