We’re sure the world has lost a lot of cool ideas because their inventors didn’t have enough capital to develop a particular technology or simply didn’t think about looking for additional investments.
If you have a promising concept for an application but have no idea how to fund an app, this article is for you.
We will discuss the following steps:
- Statistical insights into app financing
- App ideas that will be funded in 2020
- 6-step process to attract investors to your app
- 7 proven options for app funding
Let’s get straight to the point 🙂
App Funding: Statistical Insights
Today, in late 2020, apps on our phones are replacing friends, coaches, teachers, etc. The pandemic has changed our lives and made apps a meaningful place to spend our time.
According to Apptica Intelligence, programs in the “Business” and “Education” categories saw the greatest growth at 109.6% and 68.1%, respectively. These statistics are based on the company’s desire to continue working even in times of severe constraints: companies began to organize remote offices, establish contacts between employees, etc.
People who switched to remote work or even temporarily lost their position did not waste time and decided to improve their professional skills with the help of special software.
The same source predicts this trend will continue after the pandemic.
Type of app ideas funded in 2020
2020 is the year of high technology.
And software development companies like MLSDev, which have a dedicated development team to build complex apps, have grown in popularity.
This year has shown that the demand for blockchain, fintech, health tech and cybersecurity apps is increasing.
This investment section contains many different apps, such as the best Ethereum wallets, price calculators, news aggregators, etc.
Blockchain technology offers the advantages of high security, trustworthiness and reduced costs. This technology can be used in many industries such as healthcare, banking and finance, etc., and apps in these areas can attract investors.
At the beginning of 2019, this industry recorded more than $ 400 billion for around 800 transactions.
You can say, “We’re talking about 2020 here!”
Yes, here I want to tell you that attention to fintech has increased in 2020 and will be even higher in 2021.
You’ll agree when I say we need more hours day and night, won’t you?
Because of this busy life, people are excited to schedule an appointment with their doctor online! Of course, it’s not about surgery – I’m talking about nutritionists, psychologists, etc.
The pandemic created a huge demand for online booking appointments, which brought new apps to the market.
The more websites and solutions appear on the market, the more important the role of cybersecurity becomes.
Just note: Since 2013, investments in cybersecurity apps have increased by 300%.
How to get investors for an app: 6 step process
It is clear that you will not come to an investor with the phrase “I want to develop an app”. The process takes a lot more time to review the prospects of your application.
But do not worry, we will help you to prepare for this important meeting in just 6 actions.
1. Develop an MVP
Investors are usually busy people. Many of them take 30 seconds to understand the value of your product.
Visualizing your product and creating a Minimum Viable Product (MVP) is a powerful step that you will definitely appreciate. Also, it will create an end product in their minds that is easier to evaluate. The chances of a positive review will definitely increase.
2. Go to your early adopters
You have probably seen various platforms or apps offering beta subscriptions with a good discount.
Such offers are often in high demand, especially if your application is relevant and the potential audience likes it.
3. Establish a brand
The brand attracts people and enables them to remember your service based on the slogan, colors or functions of the application.
Why is your product unique?
What is there that is not yet on the market?
What emotions and feelings should it evoke in users?
This is exactly what your brand should convey.
4. Make a list of potential investors
Now we’re not talking about big app finance companies or investors just yet. Here we are talking about your environment ready to invest in the early stages of your product.
Family, friends, ex-colleagues, acquaintances who might be interested in your application and its development – create a list of these people.
5. Prepare the elevator pitch
The name “Elevator Pitch” comes from the fact that it takes about 30 seconds to go from the 1st to the 21st. In other words, an elevator space is basically a 30 second or less presentation that you should give in order to perfectly get the point to a potential investor – and convince them along the way.
But what is such a presentation about?
As we told you before, investors are busy people. The most effective presentation, win. That’s why you collect the most important and interesting things, turn them into a juicy short presentation and look for the next elevator. Don’t leave it until you’re done in 30 seconds (just kidding).
6. Present the deck to the investors
If you’ve already got investors interested with your app startup elevator slot, it’s time to give them a full picture of the product.
Prepare a pitch deck. Show them the future layout of the product, stats, forecasts and industry conditions so they can see that you are prepared and have analyzed the market.
7 Proven App Funding Options
Now you are definitely ready for the meeting. But how can you actually find investors for an app?
Do not wait for them near business centers. Below we offer you six options that you can use to reach the investors.
1. Start your business with co-founders
It often happens that several bright minds decide to bring their product to the market and, accordingly, do everything themselves. This is a great option for finding a co-founder on your app launch, sharing risks and investments.
It is important to calculate your costs in advance (at least roughly) to evaluate the options available.
2. Start a crowdfunding campaign
Crowdfunding is a way of attracting funds for a project or your company using special internet platforms such as Indiegogo, Patreon, GoFundMe, etc.
Money can be borrowed or exchanged for part of your future profits. In all cases, they are not issued by the bank or the state, but by other people or companies.
3. Personal network
We would like to remind you that it was recommended that you compile a list of mobile app investors in your area. If possible, an investment from your personal network is a perfect way out.
First, these investors have all sorts of reasons to trust you and, second, they are actually easier to negotiate with.
4. Collect donations
Most emerging projects usually have a “Donate” button or something similar.
Let’s say you started a beta version of your project with a 70% discount on the subscription price. People don’t spend a lot on your product, but they really like it because it’s unique and modern.
To support future app development, users can donate some money as soon as they like the idea.
The better the project, the more money you can collect from donations.
5. Contact Angel Investors & Partners
Angel investors are people who want to support prominent startups. These investors look for app ideas and in return receive a percentage of your profit or other compensation.
What is the difference between a Joint Investor and an Angel Investor?
The thing is, in the event that your idea doesn’t turn out to be profitable (let’s hope it does), you won’t be required to give the money to angel investors!
Here is the key.
6. Consider accelerators
An accelerator is a special program that can last up to 12 months to provide mentoring, education, knowledge and experience, and ultimately, grant app development grants to accelerate the new idea.
Of course, not all participants receive funding for mobile apps – only the best. However, this is a very good chance to get money to develop your project and get knowledge and support from experts.
7. Get a bank loan
This option on how to fund an app is the last. If you are unsuccessful with the above, you can consider taking out a bank loan.
When taking out a loan, you need to understand that you have a certain amount of time and amount to return. And if your idea fails, you have to give this money anyway.
Because of this, startups typically don’t take advantage of this option and try to look at other sources of funding.
How to get app funding for an app: Conclusion
You need to be prepared that the process of finding app investors will be tedious and difficult.
But we want to take the examples from Coinbase and Snapchat. These projects received huge investments in development and got their projects backed up as quickly as possible. This gave you strength and made it clear that nothing is impossible.
If you have a clear understanding and vision of your project, a demo version, a good presentation for investors, and a decision about investing in an app, you will succeed.