It is ever so common for entrepreneurs to pitch their startup ideas to investors, which paves way to the question – if I have an idea for an app, what would I need to do before asking for investment?
The answer could depend on the following factors:
- What resources you have at your disposal for developing the idea into a tangible product;
- If you have checked the market feasibility of your idea;
- How far along are you in the development of your product with what you have
The answer to each of these questions can be a source of pessimism for many. However, not having enough funds and other technical resources, not having moved beyond the ideation stage, or not being able to accurately check the market feasibility for your idea should not discourage you from pursuing your dreams further.
This is because every good idea for an app starts off without a ready-made platform to exhibit it, and must navigate many hurdles to turn into a successful enterprise.
Table of contents
- Introduction
- Step 1: Validate Your Idea through Market Research
- Step 2: Build an App Monetisation Strategy
3.1. Advertising
3.2. In-app Purchases
3.3. Subscription-based Model
3.4. Affiliate Marketing
3.5. Sponsored Content
- Step 3: Hire A Development Team
- Step 4: Develop a Minimum Viable Product
- Step 5: Network and Build Your Team
- Step 6: Find Investors/Business Partners
7.1. Loans
7.2. Angel investors
7.3. Venture capital firms
7.4. Crowdfunding
- Conclusion
Introduction
An unproven idea for application-building can become the basis for a successful business, but not without a whole lot of effort going in. Not just from the person behind it, but also many external parties that can help ensure a systematic approach is taken for minimizing the risk of failure.
This is what the creators of several apps have done, with the likes of property discovery app Crowdhaüs also using Siya Tech Ventures Ltd. for product design and development. Crowdhaüs have gone on to raise £200,000 in the pre-seed funding round for fuelling further growth.
Having given this example, the focus should be back to what an entrepreneur should do prior to involving external parties as partners. It is quite important for entrepreneurs who have an idea for an app to be aware of the following steps.
Image source: http://43.205.237.94/
Step 1: Validate Your Idea through Market Research
In order for an entrepreneur to feasibly devote all of their resources into developing a product, one needs to first validate the idea behind it. This involves conducting a thorough market research to determine if your idea solves a real problem and has the potential to attract users, while also studying any competitors that might be providing a similar service.
A prime example of this is the conception of SmallPDF, whose founders began offering PDF compression services in 2013 after perceiving a market need for it with no real competitors. With time, the company has grown to provide more similar services after identifying features that their consumers can find useful through continued analysis, and now, have a strong presence.
Image source: https://www.pcworld.com/
Once you’ve identified a real problem that your app can solve, develop a value proposition that clearly explains how your app can help users. This will be the basis for your pitch to investors, so it’s essential to make it clear, concise, and compelling.
Step 2: Build an App Monetisation Strategy
The importance of monetizing your creation is key for maintaining the viability of your efforts. Here are a few types of monetizing strategies that you can consider adopting.
- Advertising
One of the most common ways to monetize an app is through in-app advertising. This involves displaying ads within your app and getting paid each time a user clicks on them. While this can be a lucrative option, it can also be annoying to users if not executed properly. To make this strategy effective, it’s important to ensure that the ads are relevant to your audience and don’t interfere with the user experience. You can also offer users the option to remove ads for a small fee.
- In-app Purchases
Offering features, products or services within the app that users can purchase works particularly well for apps that offer a service that people can buy from home, such as food delivery or shopping apps.
- Subscription-based Model
Subscription-based models are also gaining popularity. This involves offering users access to your app for a recurring fee. This strategy works particularly well for apps that offer ongoing value, such as podcasts or music streaming services. It’s important to ensure that the subscription price is reasonable and that the user experience justifies the cost. You can also offer users a free trial to entice them to make a purchase.
- Affiliate Marketing
Promoting other products or services within your app and earning a commission each time a user makes a purchase through your referral link. This strategy works particularly well for apps that are related to a specific niche or industry.
- Sponsored Content
Partnering with brands or companies to create content that is relevant to your audience. This can include sponsored articles, videos, or even sponsored events within your app. It’s important to ensure that the sponsored content is clearly labeled and that it aligns with the values and interests of your audience.
With a combination of the right strategies and a bit of creativity, there are many ways to generate revenue from your app, even if you are just starting out and have limited resources or funds.
Step 3: Hire A Development Team
If the task of creating an app and all associated technological infrastructures are a step too far, hiring a team of developers can be a major boost for your enterprise. Though it is not the least expensive approach to take, this can be worth it as not only will they help in refining your idea as per the industry trends, they can also help you with settling on the perfect app-monetisation strategy for you.
Unless you are particularly good at coding, you can only create simple wireframes of the proposed UI. But by hiring a development team, such as a startup studio, you can really get down to figuring out what your app looks like and how it operates.
To find such an agency, one can go through developer forums such as CoFoundersLab, Wellfound, and Indie Hackers. Check out their portfolio once you have narrowed down your options and communicate well so as to be on the same page in terms of the vision you have.
It is worth reminding that having a productive relationship with the startup studio you have partnered with is key to everything that follows. The wrong startup studio, or a misalignment with your vision can prove to be a stumbling block at every step.
Step 4: Develop a Minimum Viable Product
Once your startup idea has been validated and refined, and you have outlined a plan to monetize your app, it’s time to start developing your app. Having taken a startup studio on board, you don’t need to build a fully-featured app right away. Instead, focus on developing a minimum viable product (MVP) that demonstrates the core features and functionality of your app.
An MVP is the simplest version of your app that can still provide some value to users. It allows you to test your idea in the market, gather feedback from users, and refine your product before investing significant time and resources into building a fully-featured app.
Apart from allowing you to gather data on where your app can improve, an MVP can also be an answer for many an entrepreneur’s questions about how to sell an idea for an app to investors.
Step 5: Network and Build Your Team
As you develop your app idea and MVP, it’s essential to build your network and connect with potential co-founders, mentors, and investors. It is a good idea to attend startup events, join online communities, and connect with other entrepreneurs who can provide valuable feedback and support.
Networking can also help you find potential co-founders who can bring complementary skills and experience to your team. Look for people who share your passion and vision for your app idea and who can help you develop and market your product.
Appointing a technical co-founder, or a CTO can also be a step towards building a network of competent professionals. What’s more, a CTO can assist in streamlining the technical facets of your operations as well.
Step 6: Find Investors/Business Partners
Small businesses may need additional finance at key points in their development, so this step does not necessarily come at the end. It should be more of an ongoing pursuit while all of the other steps are being undertaken, or it could come before you hire a development agency as they are likely to charge you. Though one cannot expect funding when they have not started at all, knowing these potential sources of funding can be a good place to start off with.
- Loans
When you’re seeking funding, a small business loan can be a viable option to start with. This is also helped by the fact that governments of several developing nations as well as those of developed countries encourage the rise of startups by creating schemes that enable lesser interest rates. This option requires a careful examination of your business’s ability to pay back the loan.
- Angel investors
Private investors, also called angel investors, often take on passion projects that they really connect with. As long as your idea is profitable and you know your numbers, you can hope to find
- Venture capital firms
Venture capital firms are another option for getting funded. They seek equity investment in businesses with the potential for huge, quick growth. Venture capitalists’ ultimate aim is to get your business to the point where it’s big enough to be bought by a bigger corporation.
- Crowdfunding
This is a relatively new way to find investors that provide the initial funding to kick-start your new company. People that are enthusiastic about a new product or service can donate money to startup funds.
When looking for investors, one should understand that what investors want to see in startups is a clear value proposition, a solid business model, a scalable product, and a strong team. They also want to see evidence that your app can attract and retain users and generate revenue. If you have taken a systematic approach to building your startup, you stand a better chance of showcasing these capabilities to investors.
Conclusion
Working on app idea development and attracting investment can be a challenging process, especially if you lack funds and resources. However, by validating your idea, developing an MVP, building your team, and pitching your idea to potential investors, you can increase your chances of success. We have also seen how a startup studio can turn a great idea for an app into a reality by providing their expertise in each of the above steps.
Remember, many successful startups began with humble beginnings, and having limited funds and resources can necessitate creativity and resourcefulness. Don’t let your current circumstances discourage you from pursuing your entrepreneurial dreams. Instead, focus on taking small, incremental steps to move your idea for app development forward and attract the investment you need to bring it to life.
FAQs
Q1. I have an app idea where do I start?
Start by checking for the feasibility of your idea and analysing if there is a need for what your value proposition is. You can then choose to have a startup studio on board for developing the MVP and building networks amongst fellow entrepreneurs, co-founders and investors. Once you have developed the app enough, you can start looking for investment.
Q2. What is a startup studio?
A startup studio is a business that helps entrepreneurs and their startups refine their ideas to be used as a basis for a product that can find its use in the market. Besides idea refinement, they also help in MVP development and upscaling through DevOps. They do so with the aim of helping the startup receive funding or get a significant user base.
Q3. What is the value proposition of a good idea for app?
The value proposition of a product or app is the benefits or economic value which it promises to deliver to its market segment. In other words, it is the reason why the company states customers should avail or buy their services.
Q4. How to start an app business with no money?
A startup can benefit a lot by hiring a technical co-founder or a Chief Technology Officer (CTO) for streamlining the development part of the startup’s growth. They can also help improve the networks you form a part of and this will bring you in contact with a lot of industry professionals who would be willing to contribute to your success without asking for too much money.
Q5. Should I get professionals to develop app idea?
Hiring an agency means a higher degree of reliability and a shorter turnaround time for the development of an MVP and the subsequent final product. They will charge you a fee but you will be getting a higher degree of professionalism, insights and an outside perspective too. Not to mention the expertise in dealing with potential roadblocks.
