Planning to take your app business off the ground? Well, it is not possible without having a substantial amount of funding. And getting the funding requires winning the trust of investors along with an amazing mobile app idea. But, how can you do this? Let’s find out:
If you are a startup geek planning to nail the funding rounds for your app idea, let me tell you, your journey isn’t going to be easy. Investors these days don’t get impressed with what they hear. Until they see the potential in your app startup idea, they are not going to put their money into it.
This is something that makes the process of getting the funding a bit complicated. Even if your app idea is great, nobody is going to fund it up until you prove the same. But, how you should prove the potentials of your app idea in front of investors? We will find the answer to this question in this blog. So, let’s dig in.
To start with, let’s first see what are different ways using which you can get the funding:
Without capital, it will be difficult for you as an entrepreneur to purchase stock, manage payroll or the numerous other expenses related to launching a business. So, what are the main sources through which you can get the investment? Let’s find out.
Getting funds from angel investors and venture capitalists is the most ideal approach to take your business off the ground. Angel investors are experienced rich individuals who want substantially less control in return for money and would try to help you wherever they can.
On the other hand, VC’s will demand more control and will provide more valuable mentorship in return. Generally, these two are considered as the most ideal approaches to raise high volume funds for the app business.
Numerous fundraising contests are held everywhere around the globe to offer an opportunity for young entrepreneurs to show their ideas to a large audience of investors. These contests are usually judged by a board of venture capitalist and business experts.
But, before planning to participate in these contests you should keep in mind that these are incredibly competitive. You will be given approx. time of 10-15 minutes to present your app idea. Aside from increased competition and crowd, the process of raising funds in these contests is much like seed funding.
Bootstrapping means starting your business with your own money or savings. This is one of the most beneficial ways of building a startup. You can also build a prototype while working on a job and once you get the proof of your concept, you can raise funds from an investment firm.
If you can make some money initially, you might not even need the funding. As a result, you can have full authority over your business.
Crowdfunding is the process of raising funds from a huge pool of investors each offering a little contribution. This is usually done using social media networks and the internet. Kickstarter is one of the well-known platforms that enable entrepreneurs to present their ideas and raise funding on a huge scale.
The funds can be raised in exchange for a reward, for some shares in the business or in the form of donation.
Initial Coin Offering (ICO) is a platform used for raising funds for blockchain-based app ideas and startups. In this case, entrepreneurs usually make a prototype subsequent to raising initial funds. By writing your entire plan on paper and making a presentation page for credibility, you can raise funds for your business.
This is a bit unsafe procedure as you will raise capital in the form of digital currency and the eventual future of such funds is profoundly uncertain. Now, that you know various sources through which you can get the required funding, let’s check out some tips using which you can impress the investors easily.
To get the funding, you’ll have to have every one of your bases covered. What does that involve? How might you get the funding you need? Here are a couple of tips for you:
To secure the funding, you will have to make a proper business plan so that you can present it in front of your investors. And that plan should include a few essential elements which are:
Your Customer Segment: To present a business idea in front of investors, you have to first find out your target audience – the group of people for which you are planning to build a solution.
What problems you are solving with your business? And, how will you do that? An investor needs to know the answers to all these questions before he invests in your business.
Your Value Proposition: What value your app will provide to your users? This should be a clear statement about the benefits of your app and how it differentiates you from the already present apps in the market.
Market Stats: In addition to defining your target audience, you also have to show your investors that you know the ins and outs of your industry by presenting them with some details about your market, its size, projections, and some data about the competitors.
Your Cost Structure and Revenue Model: How will you make money from your app? What will be your expenses and how much funding will you need? An investor wants to know the answer to all these questions before investing in your business.
The best way to present all this information is by making a business model canvas. Here is how it looks like:
When planning to get the funding for your app idea, ensure to include every detail in your business model canvas to present it in front of investors. Having everything written in a structured manner, you will have the option to reply to every query of your investors.
An MVP is a testable model of your application that will work to show the value of your product to potential investors. Investors often avoid putting resources into ideas that are not tangible, and building an MVP empowers you to show a useful representation of the product.
Not only an MVP will help you in securing funding, but it’ll also help you with various things. Here are some of the benefits of building an MVP:
MVP is a process in which a new product is developed with just the core functionalities, to test how the target market would react to it. Then, the actual product, with a full set of features, is created after getting the user’s feedback and a few iterations. The image below shows how you should build an MVP:
If you have an MVP ready before you meet your investors, they will get the message that you are serious about your idea. As the mobile application market is consistently developing, it gets hard for investors to understand the application, if they don’t see it.
If you have some funds, consider hiring an expert developer to assist you in the process of building an MVP. And, if you don’t have any funds, you can try out a few tools available online to build the same. At the time when you get an opportunity to present your application idea in front of an investor, having an MVP can be extremely helpful.
An elevator pitch is a short description of your idea that explains the entire concept of your business in less time. It should be informative, short and should get the attention of investors right away. The reason why you are given just 30 seconds to represent your idea is that VCs and angel investors are busy people.
So, when you get their attention, you should make the most out of it and should not exhaust them with long speeches.
Just as we mentioned above, building an MVP will help you a ton in impressing investors. Actually showing that people like and are using your product is going to make an even bigger impact on investors.
“The ratings and reviews of users are your best weapon while making a pitch.”
-says Nanxi Liu of Enplug – an American technology company that offers software for digital displays.
You can make a spreadsheet of your top customers with some additional data, for example, quotes from those users, from how long they are your customers, how much they are paying you, what benefit they received from your startup and other achievements if any.
In addition to the fact that keeping tracks of and sharing this data shows that users are interested in your services or product, it also proves your commitment to the growth of your startup. It will also show them that you care about results.
While investors may have had trust in your business, all that they want from their investment is Returns. So, it is crucial to highlight what benefits they will gain from it.
“Whether you’re pitching an angel investor, VC, or your rich relative, it’s crucial to show how you will get them a return. It’s enticing to concentrate on yourself and your business model, but, at the end of the day, investors need to understand how might this benefit them.
The most ideal approach to stand out and get their interest in your business is to clearly show them how and when you will get them a good return on their investment.
Investors often want to see the team behind a potential investment opportunity and they also like to know that the individuals that are managing everything are talented, passionate and the best at what they do.
That’s why it’s important that you not only hire skilled professionals, you must also ensure investors that you have the most talented team for performing the job they are investing in. All-in-all, it may be possible that an idea looks great on paper, but if it doesn’t have an incredible team backing it up, it can still easily fail.
You may have too much on your plate once you start looking for funding, but if you say that you’ll catch up with a potential investor, do it.
Raising funds is generally not a fast process. Try to engage an investor before you need the money.
Let them know where you are as of now, where you will be before shutting the next round and what the new funding will empower you to do. Let them believe that everything is making sense and then pitch them. Everybody likes a person with a reputation of doing what they say they will do!”
Now that you know how you can pitch your idea to investors effectively, you can undoubtedly convince them to invest in your project. By presenting them the business model, giving them a clear picture of your customer segment and market, you can improve your chances of getting the required funding.
It is only a little effort that you have to make to get the desired success. Since now you are well aware of areas you have to make efforts in, be ready to convince your investors.