How To Get Investors For Your Mobile App Startup?

With a staggering 88% of time spent on mobile applications, it’s not surprising to see an increasing number of business owners expressing a strong interest in investing in mobile app development startups. However, having a ground-breaking app idea for your mobile app development company is no longer sufficient. It takes significant time, cash, and resources to turn an idea into a marketable product.

It goes without saying that a significant portion of mobile apps fails to gain traction. CB Insights reports that 38% of startups fail since they lack funding or are unable to secure additional funding. The only option to implement your startup idea and grow your business is to raise money from mobile app investors if you lack a strong financial foundation.

You can pick from various investors to support your app, but what distinguishes them from one another? How to get investors to invest in your idea? This blog will guide you into an in-depth exploration of multiple sorts of investors, various phases of startup funding, and advice on how to get investors to invest in your idea.

5 Typical Investor Types for Your Mobile App Development Startup

There are multiple types of investors looking for app ideas to invest in. The breakdown of five typical investor categories you might approach to secure financing for your application is provided below:

1. Friends and family

Most entrepreneurs find their best chance of securing funding for their mobile app development startup at the seed or early stage is through family and friends. They are the individuals who are already familiar with you and, more significantly, who have faith in you. In addition, a well-known crowdfunding website called Fundable claims that friends and family are the primary funding source for most entrepreneurs.

• Roughly $60 billion is invested in companies each year by family and friends.
• 38% of the total startups receive funding from this source.
• In addition, 5% of surveyed American adults stated that they had given money to someone beginning a business in the previous three years.
• 32% said the money went to a friend/neighbor, 26% to a member of their immediate family, 11% to relatives, & 8% to a colleague.

You can use the funds given to you by family and friends to carry out necessary industry research and create a working model to show other possible investors for the subsequent phases of your mobile app startup funding.

2. Crowdfunding Platforms

It is possible to collect funds from sizable numbers of people through crowdfunding platforms. You must create a solid marketing plan to succeed in your crowdfunding campaign. Crowdfunding comes in various forms, including P2P lending, equity/rewards/donation/debt-based crowdfunding. Throughout the entire world, $34 billion was raised through crowdfunding, of which,

• Equity-based crowdfunding makes up $2.5 billion of the total amount raised.
• Crowdfunding based on donations and rewards accounts for $5.5 billion.
• P2P crowdfunding makes a $25 billion contribution.
• Campaigns for crowdfunding that include videos generate 105% more money compared to those that don’t.

3. Angel Investors

There are about 2.68 lakh active angel investors in America, as per Fundable. Each year, they put about $20 billion into 60,000 businesses. High-net-worth folks, like mobile app angel investors, make investments in a fledgling or promising businesses for shares in the latter.

Therefore, be certain that you have a solid business plan and evidence of the market potential of your idea of a mobile application startup before contacting mobile app angel investors. Unlike most other investors, business angels support businesses’ growth and success through their network of business contacts.

4. Venture Capitalists

Investors who contribute financing to startups and companies with strong growth potential in return for stock are known as venture capitalists. The largest checks are written by venture capitalists who want to see a sizable yield on their cash. It is ideal to seek financing from VCs at the expanding or scaling stage because they deal with big organizations and can offer sufficient funding.

5. Competitions to Fund Apps

Additionally, many app funding competitions are organized worldwide for entrepreneurs to help them with their common challenge, which is ‘How to get investors to invest in your idea?’ However, you must be mindful that to enter these competitions, you must first fulfill some eligibility restrictions. If given a chance, ensure that your mobile application startup has a strong business strategy and an MVP to boost the likelihood that you will be given funding.

Funding Stages for Mobile Apps

Let’s have a look at the various stages of mobile app investors funding now that you’ve better understood the main categories of investors you might approach.

1. Pre-Seed Money

At this point, everything that has been accomplished is the concept for your app. Pre-seed money is typically provided by friends, relatives, or the startup’s founder(s) to help it begin its journey. The pre-seed financing can be used for research, team building, and developing an MVP or prototype.

Prospective Investors of the Pre-Seed Phase

• Friends and Family
• Founder of the Startup

2. Seed Money

Entrepreneurs often begin to look beyond their connections and own money when their business is at the seed phase. Money raised by the entrepreneurs can be used to conduct additional research, grow their team by bringing on seasoned professionals, create and launch a product, or even run tests to see whether their product is a good fit for the market.

Prospective Investors of the Seed Phase

• Angel Investors
• Friends and Family
• Early-stage Venture Capitalists

3. Series A Investment

At this point, traditional VC businesses or super angels enter the scene to aid in the expansion and scaling of a mobile app development company. You now have a good company plan for future expansion and proof that your idea is sound. The funds raised at this stage will be used to scale your services and improve your company.

Prospective Investors of Series A Phase

• Venture Capitalist Businesses
• Super Angels

4. Series B Investment

By reaching this point, your app has amassed sizable user bases, generated a respectable income stream, and shown investors that you’re prepared to expand on a wider scale. Therefore, series B capital is frequently used to carry out advanced market outreach initiatives, grow or create specialized teams for marketing, sales, and support, enhance market dominance, and satisfy consumer requests.

Prospective Investors of Series B Phase

• Venture Capitalist Businesses
• Late-stage Venture Capitalists

5. Series C Investment & Beyond

You are prepared to evolve from a mobile app development company to a mid-size company when you reach the Series C investment level and beyond. The money raised at this phase is typically put to expanding your company’s branding, breaking into growing sectors with ongoing product improvements, business acquisitions, mergers, collaborations, or going to the media.

Prospective Investors of Series C Phase & Beyond

• Late-stage Venture Capitalists
• Banks
• Private Equity

Advice for Finding Investors for Your App

One of the hardest aspects of beginning a new business is how to get investors to invest in your idea. You will require outside assistance if you don’t have substantial financial support. When approaching investors, you must know that they look beyond the best app ideas when deciding whether to fund a firm. An overview of the key factors investors looking for app ideas before investing is provided here to assist you in succeeding in your efforts to raise money from investors.

1. An Unwavering Business Plan

Investors can tell if you’re passionate about your business and have given your idea a lot of thought by just looking at a business plan. Investors want to see several essential components in the business strategy, such as:

• Market Analysis
• Unique Value Proposition
• Marketing and Sales Plan
• Financial Projections
• Operations Plan
• Risk Assessment
• Milestones and Metrics

2. Build a Minimum Viable Product (MVP)

MVP is the initial iteration of a product with the most basic functionality. It assists in various ways, including market growth testing, developing a product that is centered on the needs of the consumer, and reducing time-to-market. An MVP enables you to propose your project to investors confidently. You can demonstrate a working version of your app so investors can see how it functions.

There are multiple successful MVP instances; thus, you will be on the right track with this approach. Just work with a team of qualified specialists to create the ideal MVP, which will boost your chances of getting mobile app investors!

3. Industry Size

The industry size is the overall number of prospective buyers for your goods in a certain market. Investors should carefully examine the industry sizing since it can be used to estimate the maximum profit from your product.

4. Market-Product Fit

CB Insights found that lack of market demand accounts for 35% of startup failures. Therefore, it is not surprising that market fit should be given the top priority when mobile app startup funding.

The following are signs of a good market-product fit:

• Strong customer demand
• Higher customer satisfaction
• Positive word-of-mouth
• Need to hire extra experts to fulfill the demand
• Media coverage

5. An innovative app concept

Do you want to create a ride-sharing app similar to Uber? Yes, but why?

You should know why the planet requires a second Uber. Investors really like to understand how your business differs from the rest of the competition while investing in you, in addition to some sort of proof that your rivals won’t be able to outwit you easily.

Conclusion

It’s critical that you understand the various kinds of investors you might contact and the appropriate stage for raising money for your mobile app development. We gave a summary of a few popular sorts of investors that can fund your mobile app development startup through our blog. Once you are clear on who to pitch to fund your business idea, it all comes down to making the ideal pitch!

Author Bio:

This is Mohit Mittal, Chief Executive Officer at IMG Global Infotech, Top rated multi-award-winning software development company providing a full suite of services and solutions like website development, mobile application development, software development, blockchain development, cryptocurrency development, NFT marketplace development & e-wallet app development to small, medium, big enterprises, product companies & new-age start-ups.

I have extensive experience working for multinational companies and know what it takes to take a company to the next level. I am a versatile tech with vast experience in a wide array of technologies.