So, you have an idea for an app. Not just any idea. The best app idea EVER. Perhaps you have even worked out how much it’s gonna cost to get it off the ground.
(If you haven’t. You should probably have a chat with your friendly app developer to get an estimate)
That done? Good. Now, you might be sitting on the floor breathing rapidly into a paper bag to calm your nerves. Yes, we’re sorry, but good apps are not cheap!
However, you still believe in the idea and yourself. Your only problem is funding, and when you look at it objectively there’s cash everywhere.
You just need to work out how to get your hands on it….
Now how in the heck do you do that?
In sales, they say that people buy from people.
The same is true in investments. You actually could have the best app idea EVER and still not get funding if you can’t get investors to buy into you. (By the same token, you could have a half-arsed app idea and a bucket load of charisma and find people are excited to get into business with you, which might explain how these terrible apps made it to market.)
In order to convince people they want to be in business with you, you need a great pitch. Pitching is a fine art, but luckily for you we are artistes, so here are a couple of tips to get you started:
- Know your product inside and out. If you can’t explain your app in three sentences or less, it’s probably not a good idea.
- These three sentences are your elevator pitch. Practice it in the mirror. Practice it on camera. Practice it in an actual elevator. Practice it until you’ve nailed everything from the language to your facial expression, to what to do with your hands. You want to be engaging, enthusiastic and educated on your topic without being too in your face.
- As well as your elevator pitch, you need something more substantial to convince investors you have a business case. (More on that in a minute.) This would be your actual pitch to investors, and it could be anywhere from 10 – 30 minutes. Personally, we like Guy Kawasaki’s guide to the perfect start-up pitch, and this article comes with a handy infographic illustrating exactly what you need to include. One of his key points is that the aim of the first meeting is to get a second meeting – so you don’t need to cram every last detail into that initial presentation.
- Always be honest. You can be optimistic, but you should be truthful. If you don’t know the answer to a question, do your research and find it out. Don’t make something up to avoid looking stupid – you’ll only end up looking stupid.
- Finally, if the idea of pitching terrifies you to the point of incontinence, find a partner who can bring that energy to the table. Chances are there will be multiple occasions when you will need them.
Build a business case
This is the part where you justify the money you’re asking for. You need to go to investors with a defined idea of the gap in the market your app fulfills and how that’s going to convert into stunning commercial success.
You need to put some work into this stage if you’re going to win over investors. They will want to know specifics, including things like how you plan to market your app, your business model, profit margins, any plans for future growth, etc. Show them that you are committed to making a viable business out of your idea and arm yourself with the answers to any questions they might have. Remember, they’re looking for reasons to say no. Don’t give them any.
An additional note here: it’s worth being definite about the scope of your app. Investors may throw ideas at you, like ‘oh, does it also do this?’ and for the sake of getting funding you might be tempted to say yes, even if you know in your heart that their idea is lame and doesn’t correlate with what you’re trying to achieve. Yes, you want investment, but you want the right investment for your business.
Give them some visuals
Having a brand in place can be really impactful. It gives investors a taste for your business and also shows them that you’re already making headway. A logo and some simple imaging will go a long way towards telling your brand story and is worth some initial outlay for the benefits it can bring.
With that in mind, it’s also a good idea to prototype your app or create a demo to take to investors. If you can’t afford to build the prototype, don’t do it on the cheap: a glitchy prototype will do more harm than good. Opt instead for some interactive graphics that give investors an idea of the user experience. Think of it like your app’s highlights reel – it just needs to pique their interest!
Whether you have a prototype or a demo, use it to carry out additional market research to bolster your business case and, of course, take that feedback to the development phase.
Choose investors who add value
If you’ve ever watched Dragon’s Den you’ll have seen those moments when the Dragons are pitching what they can offer a business beyond the financial. Be it contacts, experience, an existing network to sell into – look for investors that can add value.
And just like Dragon’s Den, this might mean you have to give up a bigger share of your business. Weigh up your options – what you need vs what they offer – and make the smart choice. It’s better to have a smaller chunk of something than all of nothing.
Talk to the government
Finally, have you considered asking Theresa May for some cash? No? Well it might be something to think about. The government offers various grants for startups and that money has to go somewhere, so why not you? In addition to cold hard cash, there are some great support and development schemes that could help you with some of the other stuff we’ve mentioned – like business plans and pitches. Check out what financial support is available in your area.
Four golden rules for startups
- Venture capitalists know that when they invest in a startup there’s a chance they could lose their money. You need to know that too. Whatever money you or your friends or your family put into your business comes with no guarantees of payback let alone profit. Don’t put in any money that you’re not prepared to lose.
- Don’t ask for too little. Whether you’ve underestimated your costs or you just don’t want to seem greedy, investors with any nous will know how much things cost and they won’t be impressed by your attempts to do things on the cheap. Be realistic, do your maths, and walk in with confidence in your request.
- Don’t ask for too much. The same rules apply here, though if you have a budget range it is probably safer to err on the high side. Better to get all the money in one go than return later, cap in hand.
- Focus on MVP (minimum viable product). Investors are going to be more interested in your product once you have built some traction, so if you can afford to get the bare bones of it out to market first (and people like it!) you are more likely to walk away from that meeting with a ‘yes’.
Ready to go?
Get prepared for that first pitch armed with the figures. Download our free ebook to find out!