How to Attract Investors for Your Mobile App Startups

The mobile app market is highly lucrative, and many are eager to capitalize on innovative app ideas. However, having a great idea alone isn’t enough. To create a highly scalable and unique mobile app, significant funding is essential. Various stages of app development—such as market research, product development, and marketing—require substantial financial investment.

Securing funding for your app is no easy task, so finding the right investors is crucial. Before pitching your business idea or app concept, it’s important to conduct thorough preliminary research. If your idea appears groundbreaking to investors, they are more likely to invest.

Moreover, presenting a Minimum Viable Product (MVP) with essential features can help investors experience and evaluate your product firsthand. Demonstrating a tangible product shows your commitment and increases the likelihood of securing investment.

Thus, making a strong first impression is critical to persuading an investor. Let’s explore how to attract investors for your app and the types of investors you may encounter.

Types of Investors

The funding landscape offers various options. Depending on your app idea, required funding amount, and stage of development, you will need to seek out different types of investors and tailor your pitch accordingly.

Here are some types of investors to consider:

1. Family and Friends: Family and friends are often the easiest to persuade that your app idea has potential. They can typically support your startup during its early stages. Use their funding to conduct market research and build a prototype to present to other potential investors. For additional funding, explore other avenues.
2. Co-founders: Another option is to invite friends or family members to become co-founders. If someone believes in your idea’s potential, they may be willing to invest. Alternatively, you might find trustworthy individuals outside your network to co-found your business.
3. App Contests: Numerous fundraising app contests occur worldwide. While highly competitive, these contests provide a platform to showcase your idea to investors and potentially secure funding.
4. Crowdfunding: Crowdfunding platforms facilitate raising money through collective efforts online. A successful crowdfunding campaign requires significant time, effort, and possibly financial investment in marketing.
5. Angel Investors and Venture Capitalists: For substantial funding, look towards angel investors and venture capitalists. Angel investors are often individuals, while venture capitalists are usually companies. To attract these investors, you need to present a compelling case demonstrating why your app is worth their investment.

Steps to Gain the Trust of Investors for Mobile App Development

Simply having a basic app idea is not enough to attract investors; they need to see that you have thoroughly thought through your concept. Investors are looking for evidence that you have analyzed the competition and that your product has strong market potential.

Here are key steps to help you earn investor trust and secure funding for your innovative app idea:

1. Validate Your Idea

Coming up with a viable idea can be challenging. You need to brainstorm solutions that address real customer pain points. Start with your interests or passions and then validate your app idea to ensure it holds promise. Investors are reluctant to fund concepts that already exist.

Conduct comprehensive market research to understand the competitive landscape of your app’s sector. Ensure that your idea is original and not merely a replica of existing solutions. Consulting with an app development agency can also help assess the feasibility of your concept.

2. Find the Right Market

Understanding the competitive landscape is crucial. Research existing applications in your niche to identify their unique features and determine how you can offer something better. This knowledge will help you stay ahead of the competition.

3. Define the Market Size

Analyzing the competitive environment will provide insights into the potential market size. Define your target audience and estimate the market share to present accurate figures regarding potential opportunities and risks to your mobile app’s stakeholders.

4. Choose a Reliable App Development Partner

Partnering with a trustworthy app development company can turn your idea into reality. Select a company with a proven track record of successfully delivering similar projects.

A reputable mobile app development firm, such as one based in Los Angeles, brings a team of skilled developers, UI/UX designers, and market specialists. They offer expert advice and keep your vision at the forefront, leveraging the latest industry knowledge and technologies to create an app with cutting-edge features. This can greatly enhance your chances of securing investor funding.

5. Understand the Basics of Investment

To gain investor trust and effectively pitch your idea, you need to grasp the fundamentals of startup management and fundraising. Familiarize yourself with the types of capital available and the various stages of investment.

6. Develop a Revenue Strategy

In addition to understanding investment basics, develop a clear revenue strategy. Presenting a well-defined monetization plan will make investors more inclined to support your mobile app development. Study various monetization methods and be prepared to address questions about your strategy.

7. Create an MVP

A Minimum Viable Product (MVP) is an initial version of your app with essential features. It serves as an effective, cost-efficient way to demonstrate the app’s functionality to potential investors. An MVP allows you to gauge the app’s potential for success before seeking full-scale investment.

Moreover, an MVP provides investors with a tangible product they can interact with. They prefer to see a working model and appreciate when founders have invested both time and personal funds into it. An MVP offers flexibility for further refinements based on feedback. For successful MVP development, contact us. Our team of experts can help create an MVP that appeals to mobile app investors.

Recently, we assisted JobGet in developing an app that simplifies the job search process for blue-collar workers. From initial concept to MVP development, our team played a crucial role in helping them secure $2.1 million in funding and place over 150,000 job seekers.

What Are the Stages of Mobile App Funding?

Having explored how to secure investors for your app, let’s delve into the various stages of startup funding.

1. Pre-Seed: The pre-seed stage is when your app is merely an idea and no significant progress has been made yet. This is considered an informal round of funding, primarily sourced from friends, family, or your own savings. The funds raised at this stage are typically used to assemble a founding team, create demos or a minimum viable product (MVP), conduct research, and gain early traction.
2. Seed Stage: The seed stage is where the focus shifts to the initial growth of your business. At this point, your mobile app startup may still be in development, with efforts concentrated on refining the product. Investments during this stage are sought to fund further research, test product-market fit, and build a team. Common investors at this stage include angel investors, early-stage venture capitalists, and startup incubators.
3. Series A: Reaching Series A signifies that you are making progress. By this stage, you have established market-product fit and defined your brand’s objectives. The focus now shifts to scaling your business and optimizing your product for growth. Series A investors typically include venture capital firms, “super” angel investors, and family offices.
4. Series B, C, D, etc.: Advancing to Series B and beyond indicates that your product has gained user acceptance. This stage focuses on enhancing and adding new features to your product to attract a larger user base. With your brand now established and recognized, funds are used for business expansions, public offerings, partnerships, branding upgrades, and exploring new markets with ongoing product development.

Having discussed how to secure funding for your app, let’s address the question of how much funding you need for your startup.

How Much Funding Do You Need for Your App Startup?

The amount of funding required for an app startup varies and is not fixed. The exact figure depends on factors such as the app’s complexity, the team involved, and other variables. For example, a simple MVP with minimal features may cost between $15,000 and $50,000. In contrast, a more complex cross-platform app with APIs can range from $50,000 to $200,000.

Before approaching investors, collaborate with a full-cycle app development company to estimate the development costs, functionalities, and primary purpose of your app. Without a clear budget, you risk making financial miscalculations that could jeopardize your venture.

Insufficient funding may prevent you from starting the development process, while excessive funding might force you to relinquish a significant portion of ownership or control to investors.

What to Do Once Your App Receives Funding?

After securing funding from investors, the work is far from over. Your app will require ongoing improvements and maintenance. Post-launch, continuously enhance your app based on user and investor feedback. As your business progresses through various funding stages, the funds received should be allocated to adding innovative features, improving design, and scaling the business.

Additionally, with the rapid evolution of technology and operating systems, your app will need to adapt and evolve continuously. Therefore, it’s crucial to partner with a reliable startup app development company that can ensure the long-term success and functionality of your app.

Conclusion

The majority of mobile app startups face failure due to inadequate funding, often stemming from difficulties in securing investors. However, employing effective strategies and timely actions can help attract the right investors for your product. Demonstrating your concept and being prepared to pitch your app idea to key decision-makers is crucial, as they tend to invest only in the most compelling ideas. Keep in mind that app development is an ongoing process; regularly updating your app with new features is essential to maintain user engagement.

Need assistance in creating a flawless MVP to attract investors for your app? Look no further. Etelligens, a top-tier app development partner, has collaborated with numerous global brands to achieve their digital transformation objectives. The company has successfully supported multiple startups in securing significant funding through MVP development. To ensure your app’s future success, reach out to us.