We are sure that the world has lost many cool ideas because their inventors did not have sufficient capital to develop a particular technology or simply did not think of looking for additional investments.
If you have a promising concept for an application, but you have no idea how to get funding for an app, this article is for you.
We will discuss the following steps:
- Statistical insights of app funding
- App ideas that receive funding in 2020
- 6-step process to get investors for your app
- 7 proven options for app funding
Let’s get straight to the point :)
App Funding: Statistical Insights
Today, at the end of 2020, applications on our phones replace friends, coaches, teachers, and so on. The pandemic has changed our lives as well as made apps a significant place where we spend our time.
According to Apptica Intelligence, the largest growth was shown by programs from the categories “Business” and “Education” – 109.6% and 68.1%. This statistic is due to the desire of the business to continue working even during the period of serious restrictions: 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 using special software.
The same source predicts that this tendency will develop even after the pandemic.
Type of App Ideas that Get Funding in 2020
2020 is the year of high technologies.
And the popularity of software developing companies, like MLSDev, that allocates a dedicated development team that builds complex apps has increased.
This year showed that the demand for blockchain, fintech, health tech, and cybersecurity apps is rising.
This investing area contains many different apps, like the best Ethereum wallets, price calculators, news aggregators, etc.
Blockchain technology provides the benefits of high-security, trustworthiness, and reduced costs. This technology can be applied in many industries like healthcare, banking and finance, etc and apps in these fields can attract investors.
At the beginning of 2019, this industry saw more than $400 billion for around 800 deals.
You may say, “We are talking about 2020 here!”
Yes, here I want to tell you that attention to fintech has increased in 2020 and is going to be even higher in 2021.
You will agree when I say that we need more hours in our day and night, right?
Because of this busy life, people are glad to have an appointment with their doctor online! Of course, it’s not about surgery – I am talking about nutritionists, psychologists, etc.
The pandemic created a big demand for booking appointments with a doctor online, which brought new apps to the market.
The more websites and solutions appear on the market, the more important the role of cybersecurity is.
Just note: since 2013, the investments in cybersecurity apps has 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 way more time to check the prospects of your application.
But don’t worry, we will help you 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 they will definitely appreciate. Plus, it will form in their minds a final product that is easier to evaluate. The chances of a positive assessment will definitely increase.
2. Get to Your Early Adopters
You’ve probably seen how different platforms or apps offer beta subscriptions at a good discount.
Such offers are often in great demand, especially if your application is relevant and the potential audience liked it.
3. Establish a Brand
The brand attracts people and allows them to remember your service by the slogan, colors, or features of the application.
Why is your product unique?
What does it give 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. Create a List of Potential Investors
Now we’re not talking about large app funding companies or investors yet. Here we will talk about your environment, which is ready to invest in your product’s initial stages.
Family, friends, ex-colleagues, acquaintances who could potentially be interested in your application and its development – make a list of such people.
5. Prepare the Elevator Pitch
The name ‘elevator pitch’ is coming from the that it will take about 30 seconds sto take a lift from the 1st to the 21st. In other words, an elevator pitch is basically a 30-second-or-less presentation that you should do in order to get the point across to a potential investor perfectly – and convince them along the way.
But what is the point of such a presentation?
As we told you, investors are busy people. The most effective presentation, win. Therefore, you collect all the most important and interesting things, make a juicy short presentation out of this, and look for the nearest elevator. Until you are done in 30 seconds, don’t leave it (just kidding).
6. Present Deck to Investors
When you have already interested investors with your elevator pitch of an app startup, it’s time to give them a complete picture of the product.
Prepare a pitch deck. Show them the future layout of the product, statistics, forecasts, industry conditions, so they can see that you are prepared and have analyzed the market.
7 Proven Options for App Funding
Now you are definitely prepared for the meeting. But how can you actually find investors for an app?
Don’t wait for them near business centers. Below we will provide you six options where you can reach the investors.
1. Start Your Business with Co-founders
It often happens that several smart people decide to launch their product, and, accordingly, do everything on their own. This is a good option to find a co-founder for your app startup, share risks and investments.
It is important to calculate in advance (well, at least approximately) your costs in order to assess the available opportunities.
2. Launch a Crowdfunding Campaign
Crowdfunding is a way to attract funds for a project or your business using special Internet platforms like Indiegogo, Patreon, GoFundMe, etc.
Money can be borrowed or exchanged for a share of your future profits. In all cases, they are issued not by the bank or the state, but by other people or companies.
3. Personal network
Let’s recall that it was advised to create a list of mobile app investors from your environment. If possible, getting investment from your personal network is a perfect way out.
Firstly, these investors have every possible reason to trust you, and secondly, it is, actually, easier to negotiate with them.
4. Collect Donation
Most emerging projects usually have a button “Donate” or similar.
Let’s assume that you launched a beta version of your project with a 70% discount on the subscription price. People don’t spend much on your product but they really like it because it is unique and modern.
To support future app development, users may donate some money once they like its idea.
The better the project, the more money you will be able to collect from donations.
5. Reach out to Angel Investors & Partners
Angel investors are individuals who wish to support prominent startups. These investors are looking for app ideas, and, in return, to get a % from your profit or any other compensations.
So what is the difference between a common investor and an angel investor?
The thing is that in the case your idea will not be profitable (let’s hope it will), you will not be obliged 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 offer mentoring, education, knowledge, and experience support, and, in the end, grants for app development to accelerate the new idea.
Of course, not all the participants receive mobile app funding – only the best ones. But this is a very good chance to receive money to develop your project and get knowledge and support from experts.
7. Get a Bank Loan
This option on how to get funding for an app is the last one. If you don’t succeed with the ones mentioned above, then you can consider a bank loan.
If you take a loan, you need to understand that you will have a specified time and amount to give back. And if your idea will fail, you will need to give this money anyway.
That is why startups usually don’t use this option and try to check other sources of funding.
How You Get an App Funding for an App: Bottom Line
You must be prepared for the fact that the process of finding app investors will be long and difficult.
But we want to put the examples of Coinbase and Snapchat. These projects received huge investments for development and recouped their projects as soon as possible, giving you strength and making 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 on finding investors for an app, you will succeed.