How Startups Can Secure More Investors for Mobile Apps

Strategies to Attract Investors Looking for App Ideas

Getting funding for your app is not a cakewalk. Before hunting for investors, ask yourself why someone should invest in your mobile app idea. Is it just because the idea is fresh? If so, you must know that investors are not confident in putting money on apps that have not made it to the market. They wonder whether the app will deliver customer value as planned and maximize the return on investment.

Even if they cannot deny that your idea is worth taking risk for, investors want to know your understanding of your app concept and targeted market. Therefore, do your homework before pitching investors. 

Stage 1: Do Your Homework

1. Evaluate the Market

Here is a short checklist for market evaluation that every mobile app startup must go through:

• What key problem does your app solve, and how?
• Who exactly are your target users?
• Is there a clear demand for your app's solution in the market?
• What is the size of your target market? (TAM, SAM, SOM analysis)
• Who are the main players in your market, and how do they compare?
• What are the technical, regulatory, or financial barriers to entry?
• What are the most viable revenue streams for your app?
• How will you attract, engage, and retain users? 

These questions are crucial because investors look for startups that have already done the groundwork. 

2. Prepare a Business Plan

Be ready with a clear plan that shows your strategy and roadmap to achieve success. Your plan should have these key sections:

• A Clear Problem: State the problem your mobile app will solve, the urgency of solving it, and its impact on your targeted audience. 
• Market Opportunity: Show that a large portion of the targeted market will benefit from your mobile app. 
• Revenue Model: How will your app generate income? Is it through direct sales, subscriptions, freemium models, etc? Clearly outline your expected cash flow and growth trajectory. 
• Competitive Advantage: Show how your application stands out, whether through technology, a unique value proposition, or market access.

3. Get a PoC or MVP 

Investors should be able to visualize your idea. A minimum viable product (MVP) or proof of concept (PoC) gives that visualization. It shows that your idea is good on both paper and in the real world. Investors are more willing to invest in app ideas validated by real users. Furthermore, it shows your commitment to building a valuable product.

So, what is an MVP or PoC?

These are the first versions of your product, though an incomplete version. An MVP and PoC contain all the basic things your app needs to solve the core problem. How do I get an MVP?

Hire a mobile app development company. In addition to development, they will also help you 

validate the idea, do market analysis, and suggest enhancements, as they have good exposure to the market and end customers' needs. However, many startups fail even with an MVP. Make sure you don't commit the same. 

Read our insights on common MVP mistakes every startup should avoid. 

4. Be Legally Prepared 

Developing a base for your idea or brainstorming marketing strategies is one of many things to focus on. However, investors of your mobile application also want to ensure that your startup is legally sound before they invest money. So, get ready with: 

• Intellectual Property (IP): Ensure you have trademarks, patents, or copyrights where necessary. Protecting your ideas and innovations gives investors confidence in your business.
• Regulatory Compliance: Make sure your business complies with industry regulations, especially if you're in a regulated field (e.g., healthcare, finance).
• Legal Contracts: Have clear contracts in place, such as employment agreements, NDAs, and vendor agreements. It will avoid any legal issues later on.

Stage 2: Understand the Funding Stages and Type of Investors

There are multiple rounds of funding, and each round corresponds to a stage in your business's development. 

1. Bootstrapping or Self-Funding

It's stage zero, where you have to put your own money to fund the business. Friends and family members who believe in your idea and strongly support you can also invest at this stage. Use the funds to build a basic prototype or MVP of your idea. 

2. Seed Funding

The second stage is very important because your business starts growing from here. Investors at this stage are usually angel investors, early-stage venture capitalists, or incubators/accelerators. The funds you gain from seed funding help you in the next stages of development, initial marketing, and fine-tuning the product for the market. 

3. Series A

At this stage, you are ready to scale your operations. Funds raised from series A funding are used for product optimization, team expansion, and customer acquisition. Venture capital firms usually invest in series A rounds.

4. Series B

With a validated product, your growth is visible now. Series B funding further supports your growth with market expansion, hiring more team members, and developing the business model. Larger VCs and private equity firms invest in this round.

5. Series C and Beyond: 

At this stage, already established companies need funds to accelerate their growth further. Funds help them expand into new regions, make acquisitions, or prepare for an IPO. Large VCs, hedge funds, and even institutional investors​ invest in the Series C stage of startup funding. 

Also Read: What is the Cost of Developing a Mobile App?

Stage 3: Go Extra to Secure Investors for Your Mobile Application 

You must have heard success comes to those who go the extra mile. This section is about "Extra" to find the right investor for your app idea. 

1. Network Strategically

Good relationships help you grow so focused on building meaningful and professional relationships rather than finding an investor. Some may not be initially interested in your idea, but they may see you as a valuable partner over time. So, wherever you go, whether at industry events, pitch competitions, or startup meetups, focus on networking.

2. Don't Sell Idea, Sell a Story 

Nobody is interested in hearing how great your product is. What they value is your motivation behind it. A story is the best way to show this motivation. And an engaging one will compel and encourage them to invest. 

However, do not make yourself the hero of the story. Put your audience and their needs first. Tell what problem your app solves, why you choose that particular problem, or why you care about the audience. Anything that connects your idea with a mission will serve the purpose. 

3. Show the Potential Not Features

A great mobile app has great features, but investors want to know why you think it would work. Provide data-backed evidence of market size, visualize the growth potential, and reveal hidden opportunities waiting to be unfolded. This will show you as a visionary rather than another startup eager to enter the market. 

4. Build a Strong Team

Having a capable team increases your chances of getting investors looking for app ideas. So, show that you have an experienced and adaptable team for support. 

5. Leverage Early Success

Highlight your wins, even the small ones to show investors that your business is on the right track.

6. Be Transparent

Be honest about challenges, setbacks, and risks. Investors appreciate founders who are upfront about the realities of the business. This builds trust and credibility.

Common Challenges Startups Face While Fundraising (and How to Solve Them)

1. Overvaluation: It's tempting to inflate your startup's worth and that's where many fail. Investors can tell when numbers don't match the reality of your business's progress. So, be honest about your valuation, and back it up with clear data and reasonable projections.
2. Incomplete Preparation: Don't even show up with a half-baked app idea or pitch deck. Take the time to research potential investors looking for app ideas. Polish your pitch deck and include its strengths.
3. Competition from Other Startups: The startup world is competitive, and you're not the only one looking for funding. What sets you apart? Be crystal clear about what makes your product unique. Demonstrate how you're solving a problem in a way others can't and why your approach is better. This will help you capture the attention of investors constantly comparing opportunities.

Final Thoughts

Raising capital is one of the most crucial challenges every startup faces, regardless of the industry. However, the right preparation, strategy, and understanding of what investors seek increase your chances of success. 

Hope our guide on how to get investors for an app idea has pumped enough confidence in you to get started. Need help with validating your mobile app idea or building minimum viable product? Consult our technology experts or hire our mobile app developers.