How to Get Funding for your App based Startup?



How to get App Funding

Posted on June 10, 2020 by Apeksha Khanna | Blog | Total Hits:

So, You have an amazing idea for your app, and you are excited to get started with it. That’s awesome!!

You would be looking for app developers by now who with their great experience, build a robust app for you.

I’m sure you’ve discovered with your interactions that hiring an App development team costs big bucks.

Unless you’re independently wealthy, you’re going to need to raise money to launch your app.

So, How do you raise money?

You will need to convince the investors to fund your app.

As undemanding it sounds, it’s not! Many great ideas never turn into reality due to lack of funding. A general misbelief budding entrepreneurs hold is the investor will fund an app after listening to a great idea. The competition in the market is increasing every single day. Showcasing your idea in 30-sec elevator pitch decide you get the funds or not.

This is what makes it even more important to discuss how to get the investors to fund your app.

In this blog, we’ll understand important aspects to get funding for your app. This blog answers a few important aspects:

  1. Evaluating and Pitching the idea
  2. Finding investors
  3. Choosing among the options available for app funding

These domains will give you estimates on what you need to do to get fundings your way. These questions not only addresses funding opportunities but also ways to get the maximum amount of funding for managing operational, maintenance and marketing overheads.

Evaluating and Pitching the idea

Evaluate your idea

Before you ask people for money, evaluate your idea and action plan. To convince investors is to convince yourself first that the idea will hold true in the market place and will solve problems which have not been looked to yet. So, make sure you answer the following:

What exactly is your app and what does it do?

Majority of the apps fail to perform because it does not solve the real problem. A clear examination of your idea will help you sustain in the long run and also attract investors even in the later stages of your business.

Know the Market

You are offering a product to an audience, it is essential to do research that what you are offering meets their requirements. In order for someone to invest in your app, they’re going to need to know if there’s a need. So, interact with your audience set or do quick keyword research to know what you are offering already has been asked by the audience. Don’t limit your search to the target audience, learn about your competitors, and the stakeholders.

Build a Demo App

Build a demo app or MVP that ensures your idea actually works and solves the real problem. The app will physically speak for itself and will add more weightage to your pitch. Mobile App developers can build an MVP for your app that covers necessary features to communicate an idea to investors. The cost to build a Demo or MVP product would be way less, and once you get the funds, you can work on launching the app to the audience.

Perfect your elevator pitch

The ability to make a perfect pitch attract instant engagement of investors. The reason it is called an elevator pitch as you have to communicate your idea from the bottom to top in a matter of 30- 75 seconds. So, keep it simple and concise that sparks interest and get a response from investors. Your pitch should highlight your value, and what problem you are solving. Once you engage them in your idea, you know you have a higher percentage of chances of funding your app.

Pivot till you find the right fit

There is immense competition in the market. Investors meet various people each day. So, as an entrepreneur, you may not receive yes on the first the go and that is okay. Some investors may reject your app as they may not find it a fit for their plan or some may actually don’t see a good opportunity in it. Make sure you note the loopholes they share and you use their suggestions to fix the gaps. Keep meeting new investors to find your right fit.

Finding appropriate investors

The important part of raising the money is to target the right investors for your app. At the initial stage, you may look up to your friends and family to invest in, but when the expenses and overhead cost increases, you connect outside for a bigger investment. By saying that, each investor has their own capital limit to invest in the business. So, once you move to ask for funds, it is important to understand how the investment rounds are structured.

Knowing the amount of investments you need, you need to find investors specific to your stage and the funding timeline.

Rounds of Funding

Seed and Angel Round: The seed round happens when the company is at the initial stage of setting up, or once the founder has proof of App/idea concept. The seed funding comes from friends and family who put initial capital for establishing the business.

Angel Round: Angel round is more formal round. In this founders seek investment outside rather than inside. Angel round occurs when the company is at the launching stage and need investments to cover the everyday cost. They are often outside investors who buy common stock in the company.

Series A: This stage has larger investments than the seed round. The company is still at an initial growth stage. The Series A rounds find investment from Angels or venture capitalist. The Series A rounds generally bring in $2 to $10 million capital for business to develop its product fully to grow.

Series B, C, D, .: These rounds are held on the basis of the capital requirement of the company. By these stages, the company will have a higher valuation than before. The company shows rapid growth and attract shares buyers.

Once you clear your stage of investment, ask for referrals to connect with investors who can fund your app business.

Choosing among the options available for app funding

Angel Funding or Seed Funding

The most common source for funding and raising capital for your app idea is through angel investors or venture capitalist. Angel investors provide a large sum of money and take less control in your operations, while venture capitalist involves in your operations. Venture capitalist guide to managing operations to make sure their investment is more secure and profitable. So, if you seek help outside with operations, look for a venture capitalist.

Bootstrapping – Self Funding Your Mobile App

Bootstrapping is the idea that you’ll put your capital to launch your App startup - from getting it developed to hiring initial members to get started with work. Funding your business at the initial business will give you greater control over when you attract shareholders. If the app is a success, it would be easy to get funds in future with you at no loss.

Bank Loans

You can go for bank business loans to raise money. These days government provide various supportive investment plans for startups to grow and manage the business. You can contact any banker or investment government officials to understand more about the policies.

CrowdFunding

CrowdFunding is the practice of raising funds for a project or venture from a large number of people who each contribute a relatively small amount in the business. The crowdfunding is done via web or online platforms where investors club to contribute to online business. In exchange, you give share of your business.

Going this route can help you find investors for Mobile App. Make sure you have a blueprint of processes, development and business model. The investors fund a business only if they find it profitable. So, when you opt for funds outside you must have evaluated your app idea in depth.