If you have an app idea, one of the first questions you will need to answer is when should I apply for startup funding. This truly depends on the type of mobile app you are building and the amount of funds you have to invest yourself. One thing I will note before anything else, building the app is not the hard part. Marketing it so you get downloads and retention; this is where most people/businesses struggle. For this you need a decent budget or in lieu of money, a lot of time you are willing to invest. This is why most people seek investment to launch an app.
Validate your idea before seeking startup funding
Before you even think about startup funding or designing the app you must validate your idea. This ensures you are not wasting your time or the time of potential investors. For this I’d suggest:
- Research your industry and get some stats that prove there is a gap
- Highlight the problem you are trying to solve
- Ensure you have a Unique Selling Point (USP)
- There are some great tools you can use to do the above and more. I suggest completing a lean canvas
- Profile your ideal customer and talk to as many people that fit this profile as possible: friends, family, colleagues and even people off the street
If your idea is met with optimism and/or excitement, you should move onto the next stage(s).
Build the app or seek startup funding
This is one of the toughest questions out there because investors, particularly within the tech industry, see a thousand apps a week and end up investing in very few. So in order to be ready to go to an investor for startup funding, I’d make sure you have ticked all items in this checklist:
Is your idea scalable
Investors are looking for something that is going to spread among a large user base and survive the test of time
Have you defined the business model
Do you have a clear understanding of how this app is going to make money? Investors will only get involved if they see a clear ROI or exit strategy for themselves
Can you illustrate your idea
This can be done through UI designs, prototyping or MVP build. You want to make sure the UI looks good because most investors are not developers. Your UI will be the equivalent of your first impressions. You need to get it right.
Do you have business documentation
I would always advise a startup to do a lean canvas over a business plan because a business plan takes time and often takes attention away from getting started. However things are different when it comes to an investor. You need to check all the boxes and look professional.
Do you know your finances
At minimum I would look at revenue projections.
Do you know your launch strategy
Do your market research and come up with a marketing plan. You can check out my post on marketing your app for free top get some ideas.
I’m sure some people will read and think overkill. I know projects that have been funded with much less but these are in the distinct minority. If you wanna give yourself the highest likelihood of gaining investment to launch an app, you need to get prepared. It shows your potential partner that you are the right person to do business with and will convince them to grant you startup funding.
Moving on without investment
Don’t get me wrong here, a company should always consider funding at some point. The question is all about timing. When you do seek investment, you will always need to complete the checklist above. However having something that is proven in the market in some way shape or form will massively increase your likelihood of success.
I would go for a Beta launch with MVP functionality. The aim here is to pick a small segment of your market, most easily done by picking a local geographic area, and proving your concept. This doesn’t need to be making money, in fact sometimes this can be a barrier to proving your concept. A beta launch is all about proving to an investor that your app will have the ability to make money in the future and thus justify startup funding.
Ideas for a beta launch:
- Choose a small market that shares a good amount of attributes with your greater industry.
- Pick a market that is easily managed and preferably one that is easy for you to access. Local to you is the best because that means you can knock on doors, make calls and so on.
- Setup your app and marketing for this locality. This means ensuring that you nail the App Store Optimisation (ASO).
- Have your KPIs defined in advanced. As I said, its not about changing the world, just proving that people will use your solution. In a Beta launch you will get a load of information that will be key to adapting your app to the market and making it more successful.
- Ensure there are little to no barriers to entry. This means easy signup and if possible giving the product out for free. Put a time limit on it so people know it wont be free forever. This will also likely increase their desire to be an “innovator” with your app.
Pick a time period and document your results. Even if you show only degrees of success, the fact that you are out there in the market, puts you ahead of 99% of entrepreneurs. Most just sit on an idea expecting the work to be done for them and startup funding to fall on their lap.
If you have done all of the above and you really want to get ahead, find an investment broker who is savvy within your industry and who has the right investor contacts for your product.
I should note here, you have to be very careful. There are lots of brokers that take money up front and never do anything. There are also those that take a commission only agreement but tie you into a non compete and again never truly do the work.
However for every dodgy service there is a great one. One that prepares your documentation, gets you ready for pitching and circulates your project to the right people. Just make sure you do your due diligence. Look for success stories, validate them on Google and ask to speak to references.
If you want any further advice, you can always get in touch with us directly. We have built software and then gone on to create all relevant documentation to get our clients investor ready, from projections to custom designed business plans. We also have an array of contacts here in Australia that can help you to get investment to launch an app.