Imagine…. You’re watching an episode of the very famous show Shark Tank. One of the entrepreneurs on the show gives a very moving pitch, and all the sharks are ready to invest in his business. It’s not only the way he presents but also what he presents. His confidence, in-depth market research, and dedication to his business enable him to fetch mobile app investors to take an interest in his business on his terms.

Let’s face reality – not everyone is making it to the show. So, how to get investors for an app startup in the real business world?

You need funds in both situations – whether it is to build your app project from scratch or to scale an existing app. What you need in your app is growth potential!!

How to Convince Mobile App Investors to Fund your New App Startup?

How do you attract potential investors? By offering them a Foolproof Package!

You will agree with this… We ensure every minute detail of a scheme or insurance policy when subscribing to it. Similarly, investors won’t fall for (won’t buy) a basic app idea with zero or less research. They would want to know every detail possible. The reason behind it? It’s obvious because they are putting in their money for your mobile app funding!!

Rather than convincing, your idea should be compelling enough for an investor to let loose his finance for your business.

What do Investors for Apps Look for While Investing in Tech Startups?

To nail how to get investors for an app, you need to get into the depths of what do investors want while investing in tech startups. While creating sales strategies, salespeople usually get into a buyer’s mind and prepare the strategy. Capturing the pain point and providing them with a solution will enable them to gain trust in your app.

A startup’s motivation drives its growth. As the initiator of a whole business plan, you should understand how to create and maintain a strong market presence. IT will ease your finding investors for startup hustle.

“What makes investors invest in a startup?” – Well-researched app ideas, market competition data, and knowledge of investment tactics can give you a plus – a well-mixed combination of all these will help you to have the rightmost approach towards pitching your business. More below…

Ensure that you have a or are a:

What is the Best Way to Find Investors? Steps to Gain their Trust for App Funding

“Returns matter a lot. It’s our capital.”

(Said by — Abigail Johnson)

Even before the capitalist has given you the funds, they will start looking forward to receiving the returns. Hence, it is more than necessary to gain their faith and wealth. 😉

Being an entrepreneur takes a lot of hardwork + smartwork. You got to wear multiple hats. Have you wondered, “What is the Best Way to Find Investors for app?”

You can get investors for your business by following this process:

  • 1. Validate your Idea – How relevant and viable is your idea? There are two aspects to this. First, it has to be practically possible, and second, it ought to have a unique USP.
  • 2. Find the Right Market – You got to find and hit the right spot in the market. For that, you’ll have to know the market very well.
  • 3. Choose a Reliable App Development Partner – You should get into an app development partnership bond with a company that can help you to build a robust application.
  • 4. Know the Investment Basics – You need to have some investment knowledge. Without knowing the principles/rules, you won’t be able to read their mind.
  • 5. Figure out Revenue Strategy – Show the investor how you will enable them to multiply their money. When you show them a foolproof plan, they will be more rest assured about their money.
  • 6. Create Prototype/MVP – You can plan on keeping the prototype or your most viable product (MVP) ready beforehand. Learn here more about MVP app development.

5 Stages of Startup Funding with Types of Investors Involved

Without money, a human’s survival is also tricky. In such a scenario imagine how a start-up can survive in such a scenario. With no or less capital, chances are less that a start-up will survive.

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

— Paul Samuelson

There is a lot of patience that an investor requires to withhold. Looking forward to the returns of the capital provided is exemplary. However, they cannot expect quick returns. Different stages of funding have varying durations of returns.

This upcoming section will help you explore how to get investors for an app stage-wise. The following are the five stages with types of funding or say the types of investors:

stages of startup funding

Stage 1 | Pre-seed Funding or Idea Stage

In the entrepreneurship realm, pre-seed funding is the earliest form of funding. It lays down the groundwork for the commencement of business. It is often referred to as the zero funding stage that precedes the very first stage.

Quite a money gamble on an idea. Herein, the investor lends the money to an entrepreneur to work on the application concept so that it can take a tangible form if not already done or works on making the prototype.

Adding more to this, in many situations, the pre-seed capital loan turns into equity once specific growth capabilities are accomplished.

  • Bootstrapping – Another source is bootstrapping. This is like Do It Yourself (DIY) / Bring Your Own Finance (BYOF). One uses savings, personal devices, and house/garage space to start and grow a company. Bring in your finance from savings or business funds you kept aside. In case you have exhausted it, your only way out is to undergo the stages of getting your app funded.
  • Personal Relations – (Friends & Family) – Another way to attain pre-seed funding is by borrowing money from relatives, friends, and family members. This also means that personal relations can be handy during such crucial times.

Stage 2 | Seed Funding

‘Seed Funding’ can be considered a part of the seed growing into a plant analogy.

It is called the first official stage of funding for a startup. By this time, your startup has become ‘a thing’.

A fun fact is that most startups don’t grow out of this stage at all. Startup failures are not uncommon to us today. Statistically, 39% of startups fail due to insufficient funds. So, how to get investors for an app?

These are the possible investor for mobile app startup sources in the seed stage:

  • Startup Incubators – A startup incubator helps businesses to grow and succeed in a proper business model. Apart from funds, they also help in building network connections, management training, office working space, and some corporate mentoring.

startup incubator helps businesses to grow and succeed

  • App Angel Investors – The primary purpose of angel investing is to finance those businesses that have the potential but may not have access to traditional finance. They undertake technical due diligence before confirming their investment. Adding more, angel investors provide mentorship, ensure developments, and use investors’ connections.
  • Crowdfunding – Receiving funds in the forms of loans, pre-order, and contributions from not one but multiple investors simultaneously is called crowdfunding. In return, the investors expect gifts or equity from the company.

SEE ALSO – How to Start a Crowdfunding Platform?

Stage 3 | Series A

Many ask, “What is the purpose of Series A funding?” – Following the seeding, there comes first-round funding where you may find startup investors. In this phase, developing a strategy that generates long-term profits is vital. The product’s first version has already been launched in the market.

Depending on the industry and potential investors, there are rounds of funding through which a start-up can raise further capital for itself. During the Series A funding round, the investor looks for something more than just a good start-up idea. He wants the investee to be ready with a strategy to help a business make big money in the market.

Company Valuation & Fundraising in Series A – Startups with a good plan of up to $13m and $16m can raise around $15 million during their Series A financing stage.

  • Angel Groups – When several app angel investors come together and sign a more extensive amount of checks with low-exposed risks, the group can be called an Angel group of app funding companies.
  • Private Equity Firms (PE) – Such a firm aids with leveraged buyouts and growth capital money. The catch here is that this only helps private companies and organizations.
  • Venture Capital Investors – This category of venture capital firms bring in the venture capital in bigger operating companies compared to individual angel investors. They become a part of the investment cycle from Series A and beyond stages.
Table – Angel Investor vs Venture Capitalist 👇
Parameter of Difference Angel Investors Venture Capitalists
Who invests? Own money Collected capital
Stage Pre-seed or Seed Series A, B, C & IPO
Amount $20 – $250,000 $2M – $100M
Expected ROI 20-25% 25-40%
Role in startup Require full control Require a say like the Board of Directors
Is Due Diligence required? Not really Highly required

Stage 4 | Series B

When learning how to get investors for an app, you must know that Series B round take businesses beyond their initial phase. Investment helps entrepreneurs grow the market by increasing their market share. The company that has completed a seed and Series A financing program already has a significant user list and has proven to investors that it’s ready for more extensive scale growth.

Therefore, Series B funding is a way to grow the business to meet the demands of this market. Building the best products for the customer requires quality training. Bulk spending costs a company some pennies. They use the funds received in this round to fulfill the exact requirements.

Company Valuation & Fundraising in Series B – Startups with revenue-generating models between $ 30 million and $ 60 million can raise $30 million during Series D financing.

The source of fund in this stage is Credit Investors.

  • Credit Investments – All kinds of credit investments involve the potential investor putting money into credit or debt instruments like debentures, long-term loans, and bonds.

Stage 5 | Series C and Beyond

This section will guide you through how Series C funding works. Several groups, including hedge funds/investment banks and sizeable secondary market groups, accompany investors listed herein in this series. The reason is that the company has already proven to be the most profitable business model and they come here expecting to spend huge amounts on companies that already thrive.

  • Hedge Funds – The two aspects in which investors get attracted towards entrusting their money are – the fund manager’s reputation and investment in the specific assets. Factually, this is the safest investment category considering the possibility of losses.

What’s Next?
Typically companies end the external financing in Series C. However, some companies may go into funding beyond this stage too. However, these three funding rounds make the company eligible for raising funds through IPO – Initial Public Offering. So, if you need more funds, don’t let the question “how to get investors for an app” baffle you. Go for IPO!

Table – Funding stages, amounts & return 👇
Funding Stage Funding Amount % of Shares Expected in Return
Pre-seed $100,000 10-25%
Seed Fund $150,000 – $1,500,000 10-25%
Series A < $3,000,000 25-50%
Series B < $5,000,000 ~33%
Series C & Beyond > $5,000,000 ~33%

How Much Investment Should You IDEALLY Ask For?

  • Underfunding will make you float in hot water because if you don’t secure the required funds within the stipulated time, you will have problems.
  • On the other hand, overfunding will compel you to surrender more company shares to the investor/s in the early stages of its foundation. Giving away too much of an ownership stake in the beginning phase can be pretty risky.

Conclusively, both are harmful in their ways. Hence, finding balance is of paramount importance. How to find this balance?

There are two fundamentals to master when discovering more on how to get investors for an app:

Fundamentals to know how to get investors for an app

1. Know Whether Your App Idea is Simple OR Complex?

The development of a mobile app can easily cost anywhere between $10,000 and $550,000, which is dependent upon several factors. The functionalities, tech stack used, API integration, design, intricate UI/UX, features, etc.

2. Refine your ‘Elevator Pitch’

Elevator pitches are for more than just candidates wanting to get placed. In fact, the entrepreneurs who look for investors to receive investments should also work on refining their elevator pitches.

When you are seeking money, you should be confident. You will likely spend 30 seconds with whoever you’re attempting to shake up for money. You want to fine-tune your app idea pitch so effectively that your app does everything that your idea should do. App investors are seeking short and compelling pitches.

Conclusion – What to do After Your App is Funded?

In the end, we hope all your questions revolving around how to get investors for your business startup have been answered. For mobile app development or any other services, choose only the best!

Ensure to keep your business valuation figures, ideas, and strategies transparent with your investors. After all, they have made it possible for you to run your business. You should execute the plan right on point, time-effectively! You will

Once your app is funded, place an inquiry with an app development company.

Expert Opinions on How to Get Investors for your App Startup

Still, confused about how to get investors for your mobile app startup? Here is a comprehensive list of expert advice for approaching app investors.

Peep into it to find your gem source!!

Opinion: 1

Tom Miller, Chief Marketing Officer (CMO) at FitnessVolt

Everyone with a mobile app concept wants a piece of the pie. You require big expenditures to establish a scalable, distinctive mobile app. App creation requires expenditures in market research, product development, and marketing. Before pitching the company idea or app concept to investors, do some homework. If you present an MVP with basic functionalities, investors may test your solution in real-time. Investors will be more willing to invest if they perceive you’re serious about your product. The market provides a number of funding options. Depending on your app concept, the amount of funding you need, and your current stage, you will need to hunt for investors in different areas and pitch your ideas in various ways.

Opinion: 2

Krittin Kalra Founder of Writecream

I would recommend working with a business that can help you build a business plan and a prototype. Once you have a prototype, you can start approaching investors.

Approaching investors through referrals. Find people in your industry who have a track record of success and ask them if they know any investors who might be interested. You can also use the investor database of the startup world to find investors who have already invested in your industry.

I believe that the best way to get funding is to build a product that is so good that people will want to use it. You should also build a product that is not just a one-time use, but something that can be used for an extended period of time. You should also be able to demonstrate that your product is going to be used by a lot of people. You should also be able to demonstrate that your product will generate a lot of revenue and that it will be sustainable in the long run.

I would suggest finding an investor who will have a long-term vision for the company. Investors are looking for companies that have a long-term vision and are committed to staying in business.

Opinion: 3

Carter Seuthe, CEO, CreditSummit.

Start with looking for investors and connect with those who can align with your business goals. Create an attractive pitch deck to demonstrate the potential of not only your product but also its current traction. Showcase both the exciting opportunities the application presents and any execution challenges you have already solved. Additionally, make sure you are aware of other competitors so you can highlight why your product or service is superior. Finally, provide concrete numbers on the ROI to boost its appeal — this could include results from user tests or user feedback surveys. With these strategies in place, you should be able to guarantee compelling reasons for potential investors to support your mobile app!

Opinion: 4

Carl Founder of Compare Banks.

*Angel Capitalists*

When a large aspirational software project necessitates a large investment, this may be the fully subsidized route to take. You could indeed consult angel investors and investment firms via 3online platforms, and you must display a well-articulated pitch that includes the fundamental idea, accompanied by a prototype demonstration of the concept.

*Crowdfunding*

It is an effective method for getting funding for a mobile application project. There are numerous channels where individuals can collect modest funding to help tech initiatives get off the ground. To attract more investors, you clearly ought to comply with a truly winning formula of a fine idea, an absolutely impressive demonstration of concept, strong advertiser support, and high-quality content marketing.

*Co-founders*

Another way to attract investment is to invite family and friends with a strong financial background to join you as co-founders. This tends to happen only after they are positive about the app’s revenue-generating potential. Co-founder investments like this can also be observed through your social network.

Opinion: 5

My name is John and I am the Chief Technical Specialist at IBR.

Firstly, it’s important to have a clear and concise pitch deck that can explain your business and its value proposition in a short amount of time. Investors are busy people, so you’ll need to be able to quickly and effectively explain what your app does, how it makes money, and why it’s worth investing in.

Investors want to know that you have the ability to execute your vision and that you have the skills and experience necessary to make your app a success. Investors don’t want to invest in a company that is still in the early stages of development.

Finally, you need to be able to show that there is a market for your app. Investors want to know that there is a demand for your product and that people are willing to pay for it. You can do this by conducting market research and showing that there is a need for your app.

Opinion: 6

Jake Hill, CEO of DebtHamme

Obtaining the necessary funds to develop a successful app can be a daunting task. It pays to use creative strategies to attract potential investors and convince them that your project is worth their money.

The most important factor when pitching an app for funding is being able to clearly express what makes it unique and how it will benefit its users. Such information should be presented in an organized, professional manner to demonstrate your knowledge about the industry landscape. Another critical step for gaining investor interest is sharing engaging metrics related to the app’s progress so far, including any performance tests or trial runs you may have conducted.

Providing detailed financial estimates can also help instill confidence that the funds will be used wisely. Finally, building relationships with potential investors is essential as this will give them an understanding of your level of commitment and trustworthiness with their funds. By following these strategies and implementing them with confidence during outreach, convincing investors to provide funding for your app can become much more achievable.

Opinion: 7

Adeel Founder of TechWafer

It can be difficult to get the money you need to start a new business, especially an app. To make a successful appeal, you need to know what drives investors and how to present your ideas in the best way to increase your chances of getting funding.

When attempting to procure investment for a new app or other venture, it is important for entrepreneurs and developers alike to demonstrate their confidence in the product as well as showcase its potential viability on the market.

There are a few strategies that can be effective in convincing investors to fund your app. Here are a few:

– Please clearly explain the problem that your app is solving and the potential impact it can have.

– Show the potential for financial return.

– Demonstrate traction and momentum.

– Highlight your team’s expertise and experience. Investors want to see that the team behind the app has the skills and experience necessary to bring the idea to fruition.

– Offer investors a compelling equity stake. Investors typically want a share of the company in exchange for their investment.

Overall, the key is to present a compelling case for why your app is worth investing in.

FAQs

Investors see the potential for high Returns on Investment (ROI) and put in their money. They also choose to invest in tech or non-tech startups app because these give higher returns than traditional investments.

It’s another way of asking “how to get investors for an app?” The mobile applications get funded through various investments – personal savings, bootstrapping, corporate connections and networks, private investors, crowdfunding, bank loans, capital and angel investors, etc.

The Most Viable Product (MVP) helps convince the investor that the app idea is practical, not a scam, and they can give their feedback after looking at the MVP.

There is nothing as complicated as rocket science in this answer. If you don’t have funds, it’s natural that you would have to approach investors to start your app development.