For both entrepreneurs and startups, there remains one critically important element of creating your mobile app besides the concept: the funding. Some app creators invest their own capital or the capital of their organization to fund the app’s development. Others might pursue federal or state grants to pay for their idea to be made into software. However, many others will pursue third-party investment. A chief source of investor capital is venture capital firms, also known as VCs within the industry. In this article, we’re going to provide readers with several important guidelines to help them secure VC funding and make their app a reality.
Your App’s Value
Before you ever reach out to VCs or contact potential investors, make sure you possess an ironclad understanding of the space or sector your app will inhabit. Identify possible competitors to the best of your ability. Compare your app’s concept to theirs. If there are many similar apps already in the marketplace, identify how yours will differentiate itself from the others. If your idea hasn’t been discovered or attempted before, find out why. If others tried and failed, understand why. Without a firm understanding of the space your app intends to cover, you will be unable to successfully demonstrate the value of your app when it comes time to pitch it.
Establish a Revenue Model Early On
One thing that must be understood about outside investment into your app concept is that investors expect a return. It isn’t enough to have a good idea for a useful or innovative application. You must have a clear plan of attack to derive a profit from your creation. Knowing how your app will generate income early on in its design will not only please prospective VCs, but can potentially minimize your development budget as well. The more aspects of your app’s design you have in place before the first line of code is written, the less overall work is required later on in the software’s life to add that functionality. It helps to find examples of apps that have succeeded before yours using similar monetization methods.
Familiarize Yourself with Key Technologies
Pitches to VCs don’t have to get down to the atomic level of detail to succeed. Indeed, many apps were funded with barely functioning minimum viable products (MVPs) that provided basic functionality. That said, it’s important to know and understand the kinds of tech your app will be built upon. If your app idea is promising its users secure file protection through encryption, be ready to propose implementing specific kinds of cryptographic APIs or frameworks. If you’re building an augmented reality app, know how you’re going to power it on which devices. Again, you don’t have to get too far into the weeds in your proposal to VCs, but you should know the difference between native and hybrid apps, or ARKit and ARCore for augmented reality apps.
Focus Your Pitch
There are many guides on what to do when you’re in the room with investors. But before you even get to that point, you should have researched what the VC is interested in or looking for in a project. Here are several questions you should be able to answer before your find yourself in a room with VC representatives:
- Are they technology focused?
- Have they backed similar applications or projects before?
- Have their investments in technology provided dividends?
- Do they want to know technical details or the broad overview?
- What are their expectations regarding ROI
Being able to confidently answers these questions without consulting notes can mean the difference between funding your project or not. Be sure to examine the VC firm’s digital presence, familiarize yourself with their representatives, and be ready to answer their questions to the best of your ability.
Have a Prototype Ready
Describing how an app can work, even with the best PowerPoint presentations or whiteboard diagrams, can’t compare to live, working software. A working prototype or MVP, no matter how unpolished or unsightly, can say more than even the most talented pitchman. Being equipped with a working prototype when walking into a VC firm’s offices not only instills confidence in your audience, but allows you to put it in their hands and leave a lasting impression. Prototypes are often a fraction of the cost of a full launch-ready product, but still provide the core functionality of the app itself.
Creating a working prototype of your application is also an excellent way to understand what is involved when using mobile app development services. As a smaller scale project, you’ll be able to go through the production pipeline at an expedited rate, compared to a launch product. You’ll also forge a relationship with the app developers, getting a sense of how they collaborate and how their internal processes work. Zco’s project managers and account executives have a long track record of working with both entrepreneurs and startups to create innovate mobile applications. If you’re considering working with a mobile app developer to create your prototype, make sure to check out our case studies or get in touch with us to find out how we make your app idea a reality.