To develop an application, you often need more than an idea and motivation. But the main question that many young entrepreneurs ask is “how to get funding for my app?” In this article, we will talk about how to find investment for your dream and build the right approach to business.
9 sources to raise funds for a mobile app idea
Start-up capital is required, which is not always easy to get. You can use various sources to help you in this situation, including a loan and crowdfunding. But first, you will need to understand how do apps get funded.
Startup Funding Stages
Investment rounds are called stages of project financing by investors. Each stage is characterized by certain criteria, tasks, type of investor, and amount of financing.
Rounds are divided into:
- early — pre-seed, seed, Round A, optionally, this may include angel funding;
- late — Round B, C, D and others.
The most risky are the early stages of startup development, as the risk of failure is very high and the prospects are unclear. Let’s look at each stage in a little more detail.
Steps to prepare an App to Become a Fund-Magnet
Looking at many apps today, such as Snapchat, Twitter or Instagram, many users get the feeling that it is not possible for an average person with no useful links or vast amounts of income to create something similar. Although there are certain difficulties in this field, a person who knows the right approach and prepares beforehand can succeed. First, we need to understand what steps you should take before launching an app:
- Do market research.
Market research — is an exploration of users’ behavior. What drives the customer to use or purchase the product? How do they act while using it and how can I gain their trust? Find out what people search for and how many of them are concerned about one problem. Come up with a solution for their issues by reading stories and comments on different apps. There are two types of research: primary and secondary. The first step involves determining needs and creating a working business model. The second — analyzing the weaknesses, opportunities and threats of your app. Secondary research also includes adaptation and development of working strategies. - Form a clear vision of your project.
After the research, take notes and analyze the needs of customers. Decide what exactly you want to build and how your project will be beneficial to similar ones. If you hesitate — take a management class or find a Product Manager. Hiring a specialist will prevent you from wasting time and money on failed projects. A specialist can also explain how to raise money for your mobile app startup. - Get a development team.
Before hiring a development team, determine what you want from them. What are they planning to focus on? Back or front end? Insights into UI or UX design? Who’s in charge of the team of programmers? Everyone in your dev team should clearly understand what their job is. You can hire people in your area or overseas. The only thing to remember is that with the second choice you will also need to take into account language barriers and time zones. - Build an MVP or a prototype.
Interactive digital prototype for an app — is a sketch, an idea, which will help to visualize future products. You can present your prototype to investors or stakeholders, so they can understand your vision and inform you whether this project has potential. MVP (Minimum Viable Product) — is a basic version of your digital product prepared specifically to collect feedback from users. With MVP development you can take notes on certain issues with your project, understand the needs of your target audience and steer your app in the right direction. With a prototype you can only fix technical issues, design flaws and present ideas to the public. On the other hand, MVPs are built to inform your team about the needs and preferences of the target audience. - Analyze the feedback and make changes (if needed).
Collect feedback from users. It can be made by clicking on the widget in the app itself or a website with a feedback form. - Prepare your pitch.
Pitch deck is a presentation of your project. It needs to be done in order to make users and investors understand the main goal of your project. It is an easy way to find investors for an app. In contrast to sitting alone trying to reach any contacts to promote your app, you can attract investors from big companies with the right pitch.
How to Calculate Investments for an App Startup
Valuation is important for founders and investors, because they expect that each side will get a fair deal. Calculating investments for an app startup is a tricky thing, and the result will never be 100% accurate. Here is the simplest way to calculate the costs for your project to start getting funding for an app:
- Select an app platform (or make a cross-platform app).
You will have to decide what is best for your app: native development or cross-platform development. Native development is the creation of software that runs on only one platform (Android or iOS). So, for each platform you will have to build two separate apps. The main benefit of native development is that it can take full advantage of internal features of the device — camera, storage, compass, etc. The UI adapts to the user’s operating system, creating an app design that matches the device’s operating system.Cross-platform development running on one code base. It means that you don’t need to create two apps for different platforms. It is a universal tool with less time required for development.The cost of the second choice will be lower, requiring only one developer. - Find the right team.
To build an app you will need more than one engineer in your team. Although it can be costly, the software development team will cover these costs in the future. According to Forbes, here’s how you can find people for your project: Understand the main goal behind your startup. Do you want to make more money, gain authority, or something else? With a clear purpose, you can find entrepreneurs online. By helping them to overcome their challenges, they can get interested in your project.If you don’t want to waste your time and money — hire a mentor who will take care of everything.
In searching for professionals for your startup, you can turn to several resources:clutchdribbbleupworkbehance etc.Search for freelancers — a simple post on social media or a website can sooner bring the right people to your team. - clutch
- dribbble
- upwork
- behance etc.
- Do estimate for app features.
The final cost of an app varies depending on different features. To estimate them, you will need to consider a variety of app development services. Here you can read about all necessary elements that will play a crucial role in the estimation of your startup: cost to design an app.
App funding: conclusion
Making the right business approach can make sure that the project of your dreams will not only remain in your dreams. First, to get app development funding, you will have to find a perfect idea for an app and get some reviews for your project. Even though you can do it yourself, the process may take years. It is unknown whether your idea will remain trendy and relevant as it is now. To eliminate the risk of failure, many aspiring entrepreneurs are getting help from a trusted collective of professionals.
