A Complete Guide on How to Raise Funds for Mobile Apps

So you have a great idea for a mobile app. You might also believe it to be a breakthrough concept. It is a common misconception among would-be entrepreneurs that thinking of an idea is 90% of their job. They believe that once they have a good idea, investors will happily put money into their concept. Unfortunately, that is not a case. With an ever-increasing competition in the market, there is a dire need to prove the relevancy of your idea to raise funds.

Also, contrary to popular belief it is not always possible to create an app exactly the same way an ideator imagined it to be. Even after advancements in artificial intelligence and data science, there are concepts which cannot be practically implemented. Hence you would need to do a lot of research to make your idea successful.  In this blog, we will cover the basics of fundraising for mobile apps. You will get to know some tips to perfectly pitch your idea to investors and know about the possible sources to fund your app.

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5 Tips to Raise Funds for Mobile Apps:

1. Elevator Pitch:

You get 15-20 mins to present your idea. In this short time, you need to explain your idea, generate interest, showcase financial projections, prove your capabilities and explain market dynamics. It is important that you tailor and practices your pitch to an extent where you can present your idea even without any slides. This will give you confidence and that will be well reflected in your pitch.

Read More: How to Create a Successful Mobile App?

2. Know Your Competition:

It is likely that your app idea isn’t really unique. At one point there can many other people across the globe who have perceived the same idea. Maybe there are also apps that have already solved the problem you are focusing on. You need to define your differentiating factor and make it compelling enough for others to take an interest. Remember that investors not only invest in the idea but in the entrepreneur too. Prove them that you are better than any of your competitors.

Read More: 10 Steps to Market Mobile Apps

3. Make it Presentable:

A real domain name and a landing page go a long way in improving your credibility. If you have any previous experience in something that might prove your skills and authenticity then do use it to your advantage. But buying a domain name isn’t a very challenging task. A prototype or MVP of your app showcase your seriousness towards the project. An actual app and user base that proves your hypothesis will really up your game in the market.

Read More: 10 Key metrics to measure user engagement on mobile

4. Connect the Dots:

It is hard to secure investors and many don’t prefer to entertain strangers. If you want to get your foot in the door then get someone to introduce you. Your family and friends might be able to help you here if they have good connections. You can try social media if your immediate acquaintances couldn’t help you out. LinkedIn and Facebook are the best mediums to manage these introductions. These networks open many possibilities that you might not be aware of.

Read More: 10 tips for successful eCommerce mobile app development

5. Pivot Till You Find the Best Fit:

It is unrealistic to assume that you will hear yes every time. Sometimes the investors will toss off your idea and at times you might have to reject the offer if you don’t get enough value. With every ‘no’ make a note of the underlying reason for rejection. Maybe a point raised by an investor is a real genuine objection. You can pivot your idea to suit the individual investor requirements. This will help fill the loopholes in your plan that could be problematic in future.

Read More: How Much Does it Cost to Develop a Mobile App?

7 Sources to Raise Capital for Mobile Apps:

1. Angel or Seed Funding:

Getting funds from venture capitalists and angel investors is the best way to skyrocket your startup. Angel investors are experienced wealthy people who desire much less control in exchange for money and would try to help you wherever they can. Venture capitalists, on the other hand, will demand comparatively more control but offer more meaningful mentorship in return. Overall these two are the best ways to raise high volume funds for business.

2. Bootstrap:

Bootstrap basically means starting your business from your own savings. You can also work in a job and fuel your startup from your salary. This is extremely beneficial as you can build a prototype product and validate your idea. Once you have a proof of concept and sizeable user base, you can easily raise funds from an investment firm. If you are able to generate revenue initially then you might not need any funding at all. Thus, you can have full control over your business.

3. App Contests:

Many app contests are held all over the world to give chance to young entrepreneurs to present their idea to a large audience of investors and businessmen. They are normally judged by a panel of venture capitalists and business experts. Keep in mind that these contents are extremely competitive. You will be given an approx. time of 10-15 min to make your case. Apart from increased competition and crowd, the pattern of raising funds is similar to that of seed funding.

4. Your Network:

Your network here means your family, friends, and acquaintances. These people would already trust you and it could be much easier to convince them. They won’t usually exercise too much control over your business and would share risk more happily than you might think. If you have a strong network then you can opt for this process although you might not be able to raise huge funds from your network if it is only family and friends.

5. Loans:

Loans from banks and financial institutions can help you raise funds by putting your existing assets as a guarantee. There also various government schemes that offer financial aids to startups like subsidized interest rates, loan without security, tax benefits of loans etc. If you are unable to secure any benefit from government schemes then opting for a loan might not be a good idea. It will put a lot of financial burdens and if your startup fails then you will end up in the financial crisis.

6. Crowdfunding:

Crowdfunding is the practice of raising funds from a large pool of investors each offering a small contribution. This is typically done via internet and social media networks. Kickstarter is one of the popular platforms that allow businessmen to market their idea and raise funds on a large scale. The funds can be raised in the form or donation, in exchange for a reward or for a share in the business.

7. ICO:

Initial Coin Offering (ICO) is the method used for raising funds for blockchain based startups. In case of ICO, you usually create a prototype after raising initial funds. By documenting your plan on a white paper and creating a landing page for credibility you can easily raise funds for your business. This is a very risky process as you will raise capital in form of cryptocurrencies and the future of such fund is highly uncertain.

Whether you choose to bootstrap or raise funds you will need a partner who can bring your idea to life. Creating an in-house team involves a huge investment in human resources, office infrastructure etc. You will also need technically qualified individuals to help you whenever you need guidance on the project. Hiring a company to handle such requirements proves to be a much smarter alternative. You can save yourself from the headache involved in the actual development and concentrate on more important aspects of securing users, managing funds etc.

If you are looking for mobile app developers then we can be an ideal choice. With over 10 years of experience in mobile app development, we have developed deep expertise in this domain. Get in touch with us today for a consultation or POC. Meanwhile feel free to check our case studies.