A Practical Guide on Getting Investors For Your Mobile App
A useful guide for entrepreneurs and start-up businesses on how to get investment for your mobile app idea and business
A useful guide for entrepreneurs and start-up businesses on how to get investment for your mobile app idea and business
If you’re an entrepreneur, looking for someone to invest in your mobile app idea, there are plenty of “how to” guides out there on the internet. Most are written by business people - you’ll find references to “elevator pitches” and “pitch decks”.
Not much is out there written by the people who’ll be developing your app, and we think we have a few useful contributions to make on the subject.
We’re going to avoid the sales speak and give you some insights, based on years of developing apps for customers. There’s a download link at the bottom of the page as well.
Here’s our non technical, non sales speak, practical guide.
Here’s what the internet tells you
Standard generic wisdom for getting investment for an app goes like this - you’ve probably seen this on the internet -
It’s just like Dragon’s Den, isn’t it? Unfortunately, we’d consider the advice above incredibly simplistic and generic. It makes the entire process seem like a very straightforward “do this and you’ll be successful” affair where a few simple generic steps leads to investors beating a path to your door.
That’s not the case.
Without wanting to put anyone off: getting an app idea into a state where someone will consider investing in it involves a lot of research, work and also money. Luckily, those three factors can be kept to a minimum with the correct approach.
So, let’s go through our experience of creating apps for clients and quote some facts and figures.
The advice below is by no means concrete, but hopefully it’ll give you a bit more insight into what’s actually involved in getting an idea transformed into a working demo app which you can use to gain investment capital with.
There are a few steps in the massively overly simplified “standard guide” above which we’ll deal with in greater detail. It’s beyond our remit to talk about “elevator pitch” and “pitch decks”, so we’ll leave the commercial side to you, but we’re definitely qualified to give you some advice on the technical considerations of building a demo app, and the common mistakes we see on a regular basis.
We’re going to go through the following points.
Hopefully this will give you a detailed insight into how the world of development works. It won’t give you the full picture but it’ll hopefully demystify a lot of the process.
Be aware that whilst all developers work in a similar fashion, there are differences in working methods. There is, after all, more than one way to (metaphorically) skin a cat. However, there are plenty of other articles on our website if you need some more insights, and if there’s something specific you want to know, why not give us a call? Contact details are at the bottom of the page.
So the caveat is, this is specific advice and not generic.
Ready? Off we go.
First Principles - the big idea
We’ll start off from first principles.
First steps - you have an idea.
Mobile phones are so pervasive and integrated into our daily lives that it’s not surprising that you can look at your phone one day and have a good idea. “Wouldn’t it be great if I could do this on my mobile?”
At the same time, you can bet that quite a few other people have had the same idea. Ideas, of course, are worth nothing in themselves, anyone can have an idea, and - as entrepreneurs, you are of course aware that the key is to turn that idea into action.
The problem is that a great many ideas, on further inspection, turn out to be non starters. Let’s have a look at validating ideas.
Validating your idea
Here at Foresight, we get asked (on a regular basis) if we can develop, say, taxi hailing apps (we can) whose unique selling point is that they’re cheaper than “the main competitor”.
Well, yes, we can. If you absolutely insist.
The big problem is that no one will sign up for it. The likelihood is, that with so many taxi booking apps out there, your potential users will merely jump onto the Play or App Store, and choose the most popular app available, which everyone knows about.
Why does everyone know about it? Because the publisher has spent a fortune - and not a small fortune - advertising and popularising it. (We’re going to cover marketing briefly below, but it’s very much a Cinderella subject which no one takes into consideration.)
So whilst the theory of an app which undercuts the market leader is a good idea, it’s unfortunately not a commercially viable or novel idea. It fails on practicality.
Yes, we can develop something like that for you, and - honest broker that we are - we’d advise you firstly that we didn’t think it was a commercial viability. (Your investors will do the same, believe us).
How do you know if you’ve had a good idea? Research.
Researching your idea
We can’t stress this enough. “Research your idea and market”.
If this all sounds self-evident so far, believe me, we get a great many enquiries from people who haven’t done basic market research. It’s essential. Best to find out early that your idea is a non starter, then finding out having put months of work (and money) into it.
There are currently (2020) over five million apps in the App and Play stores. Luckily, if you want to do some serious research about the viability of your app, all your competitor apps are clustered together in a couple of locations.
Let’s suppose you have an idea for a membership app for Colleges and Universities. If you refer to the Play store, for example, you’ll find a lot of membership apps for FE / HE establishments. These will subdivide into two types - ones written by developers for large establishments, which will have custom functionality, every one being slightly different, and generic apps, which offer similar functionality: they’re just re-skinned or re-badged for individual organisations. You can tell which apps are generic by looking at the publisher.
You don’t have to have a completely clear market for your idea, of course. if you have a niche market app, and there are only one or two competitors, you might have enough customers to make your idea viable. Especially if the competitors aren’t very good, of course. Think about “unique selling points”.
With five million apps, it might be a case of whoever comes up first in a search gets downloaded as well. There are companies out there who offer services to improve your search position in app stores, by the way.
Spending some time on the App or Play stores (at the very least) doing some research is an absolute essential. If you determine you have no competitors, or only a tiny number, or you can bring in unique features to make your app better than the competition, well, you have a working idea. (There’s still the question if it’s commercially viable, of course - we’ll get to that later. )
Bear in mind that the large number of apps out there means that marketing your app correctly is also an essential.
Now, here’s four considerations you might forget at this stage.
How will your app make money?
Or “how do I make money from this app”?
Here’s something so many people forget to take into account.
Unless you’re feeling particularly charitable, one of the major questions you should be asking yourself is how you can turn your app into revenue. If you don’t ask it, your potential investors definitely will.
We do get approached by people who have a great idea for an app, but actually haven’t thought about how to monetise it, beyond "getting paid advertising” written into it. Yes, you can make money from paid advertising.
Is the app going to be free? Will your customers pay for enhanced functionality? Will there be paid ads? Are you selling the ad to a third party who will make it free for customers?
We’d suggest you look at all potential ways of developing an income stream, and this might involve talking to third parties who benefit from the app as well. Have a look at Non Disclosure Agreements below before talking to anyone, though.
Your app will need to have a good design
Badly designed apps get deleted very quickly.
You might not, of course, have to worry about your app being badly designed or having non intuitive flow if your potential investor takes one look at the monster which you have produced and decides to keep his money in his pocket. It really is worth investing in a good designer.
Not all developers will offer design services.
Some development companies will offer in-house app design services, some will use trusted designers (and just do the coding in house) or, alternatively, you can go off and find a freelance designer yourself who has worked on apps before.
A good idea is to produce a wireframe. Simply put, a wireframe is a flow diagram which shows interconnectivity within the app. This can be simply drawn out on a sheet of paper (we’ve seen worse) or can be professionally produced by a designer.
Doing some form of wireframe is a good exercise - it’ll highlight functionality the app needs, such as admin screens, pull down menus etc. It’ll also give you ideas about content as well. Working with a designer will give you the best chance of producing an app which doesn’t have huge sign up processes or becomes an unnavigable click fest- both complete turn offs for users.
We also find that people forget to address how the app is going to be popularised as well. How are your potential users going to find out about it?
There’s no two doubts that you need some kind of marketing plan, whether by social media or some other vehicle. Remember, “five million apps “, you can’t rely on users just searching the App or Play stores.
Marketing might be something your investor may prefer to handle, but they’ll probably want to see that it’s been researched and is in the budget as well.
Referring back to the generic list at the top of the page, point 2 was “brand your app”. Luckily, it doesn’t take much to get a Facebook brand page / “coming soon” page together, but it does cost to run Facebook ads. There’s also Google Adwords as well, of course. Really, there are a lot of potential marketing solutions out there but you would be well advised to think “how do I get people to adopt my app?” before having it built and then wondering how to popularise it.
Having a Facebook page with no likes on it will probably not impress an investor, but it’s probably an essential to have a realistic, costed marketing plan together for a business discussion later.
There are any number of digital marketing companies and freelancers out there who will be happy to help you popularise your app. At a cost, of course. Most will run social media campaigns and then report back to you with some analytics, allowing you to do more focused targeting.
Get your users involved. You want your users to buy into your app and interact with it, you don’t just want a boring referential app which churns out interesting and worthy data. Perhaps your idea IS for a boring referential app which just churns out interesting and worthy data: you can still get your clients interested by providing, for example, a feedback page.
A simple feedback page - “How do you rate this app?” or “Talk to us” also gives you valuable feedback for features which users don’t like. Getting feedback which allows you to stop users deleting apps is very important. After all, you’ll have spent a lot of time on this.
So, let’s sum up. You’ve had an idea. You’ve done some realistic research. You think you’ve identified a gap in the market. You’ve got a basic design in mind with (hopefully) some kind of wireframe. You’ve worked out how to make money from the app and how to market it.
All green lights so far? Now we’re going to talk to the outside world, so we need to know about NDA’s.
Non Disclosure Agreements
Working idea? Good. It makes sense to discuss it with family, friends and people you know and trust - an initial “sanity check”.
Refining things further. So far, we’ve arrived at the “good, working idea” stage. The question is now “Is it technically feasible, can it be improved on, are there any potential improvements or drawbacks, what’s it going to cost and how long will this all take?”
Given that your family and friends will probably not be experts in the technical arena, it’s time to talk things through with a developer.
Before you do that, let’s please point out that you need to discuss anything like this under a Non Disclosure Agreement.
We happily discuss app ideas which potential clients have under a mutual Non Disclosure Agreement. Quite frankly, it protects us as well. The NDA is a legal document - you can find sample copies on the internet - which allows for two parties to confidentially discuss ideas together.
We don’t just write code, we’re also happy to give potential customers the benefit of our experience. Any good development company should offer such a service, incidentally. If you’re not being asked for an NDA, treat it as a warning sign, or at least a sign of unprofessionalism.
One caveat about NDA’s. The old saying about legal documents was that any legal document is just a piece of paper, at the end of the day. What really counts is trust that both parties will adhere to the terms and conditions. You’ll find developers all over the world, of course - but if a developer in a foreign country decides to break the terms of the NDA, you then are in a situation where you have to find legal address using a foreign legal system. You might find that a little fiddly and slightly ruinously expensive.
If you want to get some feedback on technical viability, our advice is find a trustworthy local developer - in your own country - sign an NDA with them - discuss your idea. They should be able to give you some feedback, suggest suitable technology, give you ball park costs and point out things you haven’t thought of, like ongoing costs in terms of maintenance and the cost of, say, online transactions.
So, you’re going to find and talk to a developer. What should you be talking about?
Here’s the good news.
As an entrepreneur, you don’t have to pay to have a complete app developed. If you’re looking for investment, we suggest that you talk to a developer about having a “clickable app” developed.
The generic list (which is all over the internet) seems to suggest that an investor is going to listen to an “elevator pitch” and is then going to commit to paying for, or contributing to, a demo app. Unlikely. Conversely, you might not want to have a demo app written for you until you’ve secured interest from an investor, but we’d contend that it’s more likely you’ll get interest if you have something to show them first.
When speaking to a developer, really, you want to have as detailed a conversation as possible. Bounce ideas off them. A good developer will not just sit there and listen and say “yes”, they’ll give you feedback and advise you of the best way of doing things and potential improvements.
Advice on architecture
A good reason for having a technical chat with a developer is that apps contain increasing numbers of APIs. An API - an Application Programming Interface - is an interface which allows a developer to easily include connections to remote programs, such as a payment processing function. This simplifies the amount of code the developer has to write - the app merely uses an interface to send (in this example) payment data off to an external payment application, such as Stripe. As apps have become more complicated, the average mobile phone app can use between 9 and 16 APIs. Why talk to your developer? Because some external programs incur a cost to use them. Some may be trickier to use than others, and there may be some you’ve researched which are just unwise choices.
Also, there’s a question around “which back end you should be using”.
An app will have a front end - which the user sees - an admin section, and also a back end where data is stored and analysed. This may be a database of users, for example. There are several different ways of storing this back end data in the cloud (the most usual being Firebase) but there can be a sliding scale of monthly cost depending on number of users and amount of data.
Costing the clickable app & MVP
Remember, you’re going to be going back to an investor, so you ideally want a price for a clickable app, and also a price for the follow on MVP - the Minimum Viable Product app. Let’s discuss what these terms mean.
What’s a clickable app? Simply put, a clickable app is a design with all the functionality of the finished app, but one which is not fully connected to complete back end systems. As an example, the finished app might need a database of users. The clickable app would be connected to a limited database of ten example users. All the functionality is there, but the complete populated data isn’t. It’s a “proof of concept” app which shows that everything works.
You may see from the generic list we first mentioned that an app demo is fairly low down the list of priorities: we’d contend that having something to show an investor is an absolute essential.
Right, we also mentioned Minimum Viable Product. As you’ve probably worked out, an MVP app is a developed app which is up and running - and published. It works. However, it’s not “feature rich”. It contains the minimum amount of functionality necessary to work and have an audience, but it’s a tester app, which can be built on later.
Usually, investment in your app will come at one of three stages: either (a) prior to building a clickable app (b) after building a clickable app or (c) after building an MVP. As an entrepreneur, you’re going to expect an investor to work on an equity basis, and how much equity they take out depends on a number of factors, one of which is how developed the app already is - how much proof of concept has been done.
The original list way up at the top of the page - the standard internet advice - puts “consider having a demo app made” way down the list. We’d contend that having a clickable app (at least) which an investor can see and use (albeit in a limited way) is much more likely to draw attention to your idea. It shows you’ve put some effort in and it also shows that the app is technically feasible.
There is a lot more detail about our working methods and how we produce software in this article here. Basically, a consultancy and design phase is followed by a process which produces a clickable app very quickly and at minimal cost. This is followed - if the design is approved - by a lengthy development stage, where the MVP is coded up. Be aware that it can take a couple of programmers four months to produce a full MVP, by the way.
All clear? Now to find a developer.
How to find a good mobile app developer
Finding a developer is somewhat akin to finding a plumber. Plumbers are everywhere. some may be more reliable than others.
There are four ways you can have an app developed for you - by using -
Development in your own country
Mixed development (someone in your own country project manages overseas development.)
Your budget will determine which route you take here.
Freelancers can be the cheapest way of getting your app prototyped or even fully developed.
There are plenty of freelancer sites on the internet, where you can post a project with a budget and a timescale. A note of caution here is to only pick freelancers whose recommendations you can check, make sure that you have a good channel of communication with them and don’t work on a cash up front or daily payment basis.
One problem with freelancers is that they are not highly likely to suggest best practice or changes which might benefit your app. In a lot of cases, they merely do what you tell them to. Good ones will give you feedback: good ones cost money. You get what you pay for.
Overseas development The same cautions apply to overseas developers. You may find it’s massively cheaper to have an app developed overseas, where labour costs are much lower than in Europe or the United States. In some cases, this is true and you’ll sail through a design process problem free - in other cases, you may end up with communication difficulties, time zone differences, project timescales slipping or an app design which bears little or no relation to the design you specified.
The one thing you’ll find, when having an app designed for you, is that it is (or rather, should be) a highly collaborative process which requires a lot of time in terms of two way feedback and a high degree of understanding between the client and designer. If your designer has to reach for a dictionary when you ask for a slight change, because he can’t understand what you’re asking for, you will have a design process fraught with difficulties. If you’re 8 timezones apart, trying to resolve even simple communications issues can take up an entire day.
You may have reduced the cost but increased the headache. Another reason for caution here is that developers are very loathe to pick up someone else’s half finished project and tell you that the best way forwards is to start again from first principles.
Development in your own country. We’ll mention “Clutch” below. It’s normally quite easy to find developers local to you if you’re in Europe or the US. You may find yourself paying more for developers in your own country, dependent on labour costs, but, given that app development is a collaborative process, you may find it’s better to stump up the extra cost to get peace of mind and not have to write an app twice.
Mixed development, the last type, involves a local company developing your app but project managing a team based overseas.
Now, this can work, but it’s obviously best to check whether your developer does this or not, and how successful the cooperation has been in the past. Prices should reflect the cheaper labour costs, of course.
So, now we’ve ascertained that developers are very much like plumbers. Where do you find a good one?
Finding a good and reliable developer to work with you on your new app idea
There are a few “software company rating” sites - the one you’ll probably find most useful is Clutch. Clutch allows you to search for local developers and also have “impartial” reviews from people who’ve used their services. The quotes around “impartial” are there as some of the reviews are - shall we say - a little suspect.
Anything written in bad English, referring to the company excessively by name or offering an unconditional five star rating, regard with a baleful eye. The bad reviews (if there are any) should tell you more, but - being honest, occasionally good development companies meet bad clients (and vice versa). Really, it’s like looking on Trip Advisor, just use common sense. And there’s nothing to stop you talking to several developers at once. Except for your time, of course. If you’ve got friends or contacts who’ve had apps developed, use their recommendations.
And also please don’t feel shy about asking potential developers to provide independently verifiable referees - and contact them. Person to person.
One very important caveat. When projects go wrong, developers are extremely loathe to pick up someone else’s failed code and sort it all out. It can take longer to debug a failed project than it does to simply start again from first principles.
It pays to get it right first time.
Mobile App Frameworks
Here comes the science bit.
When choosing a developer, one important question to ask is what tools they’re going to use to develop your app.
You’ll doubtless be happy to know that a lot of the time and cost of writing an app is now avoidable. Using cross platform technology, an app can be written which runs on both Android and iOS - you can read more about it on our article on cross platform app development here.
Unless you have a specific technical reason to develop apps in two separate native formats, we strongly advise you commission a developer who can develop apps using a cross platform framework. However, there are, of course, lots of Android App Development Companies out there.
Be aware that not all developers specialise in cross platform development, however. Let’s pare the technical details back and say that the words you’re expecting to hear are either “Google Flutter” or “React Native”. There may be a technical reason why your app can’t be developed using a cross platform framework, but in some cases, it’s much wiser to change the app - and save 40% on development costs and time, and also a lot of effort along the way.
You might have noticed that we’ve somewhat deviated from the generic bullet pointed advice at the top of the page. We’d say identify the idea, check the market, see if it’s technically possible and get some indications of cost, first.
Talking of cost.
One thing we find that clients overlook is that apps have admin components which the user never gets to see. By way of example - an app may have the ability to block users, check transactions have gone through (and allow you to follow up ones which haven’t) and provide analytics (who’s been on, how often) - you’ll also probably want the ability to send out push notifications to users, so be aware that, like an iceberg, there is a lot of unseen functionality in an app which of course costs money to write.
Having a long, NDA protected chat with potential developers should give you an indication of the commercial feasiblity of your app, what it’s going to cost, how long it’s going to develop, and also, burning question, how you’re going to monetise it.
There’s a link to the design process we use here. Other developers will vary in approach, but all should be able to have a chat with you and then provide you with a proposal and a detailed and costed statement of work.
There are generally two ways to pay developers - fixed fee and time and materials. Both are fairly self explanatory.
Having gone through a lengthy consultation chat with you to see exactly what your requirements are - and hopefully suggesting improvements and enhancements - any reputable developer will issue you with a detailed proposal and a costed statement of work. “What are we precisely doing for you, when and for how much?”
If this doesn’t arrive, proceed with extreme caution, basically. You and your developers should all be very much aware of expectations. Software development is about detail, and you’re paying for the detail. So it’s essential that you get a detailed list of deliverables.
This might sound obvious, but the amount of people out there who proceed on a wing and prayer is surprising.
The Statement of Work you receive should split development phases for the project up into manageable chunks, with either a fee payment on an agreed date afterwards or as a costed number of hours. Basically, with time and materials, you hire out a developer for, say, two weeks a month and they deliver an agreed chunk of work to you.
Development firms can be busy and developers can be working on several projects at once. For small scale projects or if budgets are a bit tight, time and materials payments are a good way to spread the load for an MVP project.
What a mobile app developer should do for you
Now, this is a bit of a moot point.
As I’ve mentioned before, over here at Foresight Mobile, we take a “bespoke” view to creating mobile apps with our customers. Note “with our customers”.
We take the view that what you’re employing us to do is create the best app possible for you, so we give you advice and feedback whilst remembering that, essentially, this is your app. We think other developers should do the same, by the way. Some other developers don’t.
A developer should, we believe, keep up very good communication with clients. We use a collaborative program called “Slack” which means we’re in constant contact with clients. We can chat in real time, send them pictures, videos and files to ensure that everyone has a clear understanding of what’s being done and progress made.
A good developer will also be able to advise you about project marketing and tools which will help your app be successful, such as analytics which will allow you to target your market and identify popular features.
Basically, we think a developer should work in partnership to you to maximise your success. Successful clients come back, so if you win, so do we.
Steps on from a prototype app
Obviously, we’ve somewhat covered this - prototype app leads to MVP. That’s usually funded by exterior investment (although you may find that you have to produce the MVP to gain investment).
Any good developer will have pared back the MVP to reduce your spend whilst producing the best app possible, which doesn’t compromise on functionality. You are, trust me, going to want to add more functionality later.
Obviously, you don’t want to commit to too much spend until the app is proven and working. We tend to suggest a list of later improvements to bring in in stages.
Should your app be looking old or tired, we can refactor or rewrite it for you - there’s an article on the website here. That’s one for the future. We’ll also keep an eye on the technical environment, so if we find a cheaper to use payment system, we can suggest that to you in future.