Think for a minute, you have this amazing idea at hand, but you know it’s going to cost you to make your dream a reality… So how will you fund it? Well let’s consider your options.
Option 1: Bootstrap it:
Although this is risky it is the most rewarding strategy and most of the time the most realistic. After all, no one will believe in your idea more than yourself and this often requires “putting your money where your mouth is”, before anyone else will take you seriously.
Option 2: Ask friends and family
Ask around, there may be friends and family that are willing and able to invest in your idea. This route shares the risk and most of the time friends and family won’t try pushing you out of your own company in the years to come.
Option 3: Find an Investor:
This option is the most time consuming and frustrating option out of the above, however if you pull it off you will have a greater chance of successfully launching your idea into the market with reduced financial risk to yourself. This option usually requires an upfront investment from yourself to some extent. The reason for this is that Investors never feel comfortable with Investing into a company where the founders are not willing to invest themselves… so bootstrapping the initial design and development phases might be a good idea. Obviously, investors would want their pound of flesh in return, which typically means a share holding agreement.
While chasing Investors, you need to be prepared for four potential phases. We identify them by the WHO, the WHAT, the WHY, the HOW and the WHEN.
1. Be seen or find the people WHO might be willing and able to invest. This is as simple as knowing the right people and being known for having an exciting opportunity at hand.
2. Grab interest by explaining WHAT the app is. We have found this to be the most important part for the whole process of attracting investors. For someone to take the time to listen to your idea you need to grab their attention within 10 Seconds. This is called the Elevator Pitch. This should be the most attractive points regarding your idea and some points about why investing in your company is a great opportunity. The rest of the points will not be used or seen by an investor if you can’t grab their interest in this phase.
3. Prepare a high level presentation that would explain WHAT the idea is and WHY it would be used by the target audience. We suggest keeping this at 30-60 seconds of length. Remembering that you have their interest, but now they want to know why it is useful and what problems it solves before they fall asleep. This phase may lead onto the next phase at the same time if the investor is ready and interested. Most of the time (from our experience), after the elevator pitch we found the best results by emailing a 30-60 second presentation to them to consider in their own time.
4. Take all the above and elaborate into What the app is. Why it is useful? Now start discussing the HOW and WHEN. The How is done by explaining the technical background. How will the app be built? Who is building it and then WHEN will it be ready if you started today? This point is where you explain all the details. It is important to allows the potential investor to ask questions as this is the stage where he or she will consider their options.
Things to consider:
-Investors are clued up and will do their due diligence in research. They are going to ask you questions so make sure you have an answer for every possible question that might come your way. If you can’t answer a question it can create doubt in the investors mind.
-Never forget your marketing strategy. Creating an app is one thing, but getting it out to the market is a whole different ball game, so make sure you have a marketing strategy and budget in place to show to interested parties.
-Financials are vital, show your estimated 3 year projections and be conservative. We highly recommend hiring an accountant for this step or someone with experience.
-Make sure to have wireframes ready for your app, a system design and all the technical stuff. An investor can take 6 months to close or he can take a day, but you will lose the investor if you don’t have all the wrinkles in your system ironed out.
-Talk to someone with experience in the industry by either hiring a consultant or finding a development firm which offers the above as a service.
We here at App Boxer specialise in Smartphone App development, but we have a team in place to manage the route to sourcing funding. We are based in Bella Vista, Sydney and provide out services throughout Australia, including Melbourne, Brisbane, Adelaide, Perth, Canberra and many more.