• Gohar Aslam
• App Development
• 19 October, 2023

The mobile app industry is surging with new developments. With scalable, innovative, and user-friendly apps on the horizon now and then, entrepreneurs need to translate their creative app ideas into reality sooner. To accomplish that goal, securing funding from mobile app investors is crucial. 

What constitutes an investment for app development? Investment for an app refers to the capital or funding provided to support a mobile application’s development, marketing, and growth. It can include funding for app development, hiring a team of developers, designing and testing the app, marketing, advertising, and ongoing maintenance and updates. 

Investment in app development can come from various sources, such as venture capitalists, angel investors, crowdfunding, or loans. In exchange for providing funding for mobile apps, investors may receive a percentage of ownership in the app or a share in the app’s future profits. Securing investment for app development can be a critical step for startups looking to launch their apps in the market. It can help ensure the app has the essential resources it needs to succeed in a competitive market.

Funding methods from mobile app investors

 Before beginning to find investors for your business, you need to be aware of the types of investors. The following explains numerous types of investors for apps who can fund your mobile app project.

1. Personal Connections

Family and friends can be excellent funding sources for your startup ventures and are easier to convince than other investors. However, the investments of your family and friends may help you do market research and develop a prototype. It is crucial that you need to look beyond your immediate connections for further investments. 

2. Venture Capitalists

Venture capitalists can offer large sums of money through investment, and acquiring funding from venture capitalists takes work. You should have a solid pitch, clearly present your ideas, and brief investors about fast returns on their investments. If they see value in your app project, they will likely add some modifications before committing investments.

3. Seed Funding

Seed funding is typically provided by venture capital firms or other institutional investors. The funds are invested in the early stages of startup development, such as product development or researching target markets. Seed funding usually ranges from a few hundred thousand to a few million dollars.

4. Crowdfunding

Crowdfunding investment is a way for individuals or businesses to raise funds for a project or venture by soliciting small amounts of money from many people through an online platform. In a crowdfunding investment, the mobile app investors contribute money to a project or experience in exchange for profit sharing or equity in the company. 

Crowdfunding investment can be attractive for startups with difficulty securing funding from traditional sources like banks or venture capitalists. It also allows individuals to invest in new and exciting projects that they believe in, even if they have a small amount of capital to invest. However, as with any investment, risks are involved, and investors should consider the project’s potential before investing.

5. App Contests 

App contests are competitions designed to encourage and reward innovative and creative projects. These contests may offer funding as a prize or as a way to support the development of the winning app. They can provide funding through cash prizes, investment opportunities, grants, and crowdfunding. App contests can be a great way to showcase your app and secure funding to help bring it to market.

How do you Gain the Trust of Mobile App Investors?

Apart from finding app investors and gaining the app’s trust, investors are also crucial if you want to secure funding for your mobile app. Whether you seek mobile app startup funding or enterprise-level financing, remember that gaining investors’ confidence takes time and effort. Here are some vital guidelines that you should pay heed to. 

1. Build a Solid Team.

Build a solid team with the right mix of skills and experience to execute your business plan. Ensure your team has the technical, marketing, and business expertise to make your app successful.

2. Create a Compelling Value Proposition.

Your app should solve a real user problem and have a clear and compelling value proposition. Make sure you articulate your app’s unique selling proposition (USP) and explain why users will choose your app over competitors.

3. Conduct Market Research.

Before they invest in mobile apps, investors want to see that you have conducted in-depth market research to understand your target audience and the competition. Make sure you have data to back up your market assumptions and can show that there is a real need for your app.

4. Demonstrate Traction

If you have already launched your app, be prepared to show traction and user engagement. It can include metrics like downloads, active users, and revenue. If you still need to launch, consider running a beta test to gather feedback and show that you are actively testing and improving your app.

5. Ensure Transparency

Mobile app investors want to work with transparent and honest founders about their business’s risks and challenges. Be upfront about your app’s potential risks and challenges, and be open to feedback and advice.

6. Formulate a Robust Business Plan.

A well-structured and realistic business plan can demonstrate that you have thought through the various aspects of your app’s development, marketing, and financials. You should be prepared to answer questions and provide documentation related to your business plan and financial projections.

7. Keep Mobile App Investors Informed

Once you have secured funding, inform your investors about your progress and milestones. Regular updates can build trust and confidence in executing your plan.

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How Much Investment is Needed for App Development?

The amount required for app development funding by mobile app investors can differ and depend on several factors, such as the app’s complexity, the platform(s) it will be developed for, the features required, the development team’s location, and the time necessary to create the app. If you plan to hire a development team to create your app, the costs can range from a few thousand dollars to several hundred thousand dollars or more. According to some industry estimates, developing an essential app for a single platform can range from $10,000 to $50,000, while a more complex app can cost upwards of $100,000 or more.

The app development cost will depend on the specific requirements of each project. Working closely with a development team to calculate an accurate estimate for your project is essential. Some other factors that can impact the cost of app development include:

1. Design: Requiring a custom design or advanced UI/UX elements can increase the development costs.

2. Functionality: More advanced features and functionality will require more development time and can increase the overall development cost.

3. Platforms: Developing multiple platforms can increase overall development costs.

4. Maintenance: Ongoing maintenance, updates, and support for your app will also increase the overall app development cost.

Why do Mobile App Investors need to Invest? 

1. Huge market potential

Mobile apps have vast market potential, with billions of smartphones and tablets being used worldwide. The market for mobile apps is expected to grow in the coming years, making it a lucrative investment opportunity.

2. Low Entry Barriers

Compared to other businesses, the barrier to entry in the mobile app market is relatively low. Developing an app with a small team is possible, and the cost of developing a mobile app is also relatively low. As such, startups and small companies can quickly enter the market, providing a diverse investment opportunity for investors.

3. Monetization Opportunities

Mobile apps can be monetized in various ways, such as in-app purchases, advertising, and subscription models. Multiple revenue streams can be generated, providing a higher potential return on investment.

4. Versatility

Mobile apps can be developed in various categories, such as gaming, social media, productivity, and entertainment. It means investors can invest in an app that aligns with their interests and preferences.

5. Data Analytics

Mobile apps provide a wealth of data to developers to optimize and improve the user experience. This data can also provide insights into user behavior and preferences, providing a significant competitive advantage.

What is the Standard App Development Process?

The app development process typically involves several stages depending on the development methodology and specific project requirements. You should know these stages to inform a mobile app investor if needed. Generally, the app development process includes the following steps:

1. Planning and Analysis

In this stage, the development team will work with the client to define the project scope, requirements, target audience, and business goals. They will conduct market research and analyze the competition to understand the app’s potential in the market.

2. Design

In this stage, the development team will create wireframes, user interface (UI) designs, and prototypes to represent the app’s user experience (UX) visually. The design team will also make the app’s graphics, logos, and branding elements.

3. Development

In this stage, the development team will write the code for the app, following the requirements and design specifications. The team will also integrate any third-party APIs or SDKs required for the app.

4. Testing

In this stage, the app will undergo various testing procedures to identify and fix any bugs, glitches, or errors. It includes functional testing, usability testing, compatibility testing, and security testing.

5. Deployment

The app is prepared for launch at this stage in the app store(s). The development team will work on App Store Optimization (ASO) and marketing strategies to improve the app’s visibility and user acquisition.

6. Maintenance and Updates 

After the app launch, ongoing maintenance and updates will be required to fix bugs or issues, add new features, and ensure compatibility with new operating systems and devices.

Frequently Asked Questions (FAQs)

What are investors looking for in mobile apps?

If an app offers them these potential benefits, it is likely to gain the traction of investors. Such benefits include revenue potential, customer base, engagement, competitive advantage, user retention, scalability, technology, and innovation.

How can an MVP assist in securing funding for my app development idea?

An MVP (Minimum Viable Product) provides potential investors with a concrete demonstration of your app’s value proposition and potential. An MVP can assist by demonstrating feasibility, showing user interest, reducing risk, and providing a starting point.

Is investing in an app a good idea?

From the perspective of a mobile app investor, investing in an app can be a good idea, but it depends on various factors. These factors include market potential, competition, monetization strategy, and development and maintenance costs. 

What is the timeframe of app development?

The following are some general guidelines for the time it might take to develop an app. Firstly, a simple app with basic features can typically be created in a few weeks or months. Secondly, a moderate app with a more complex app with more features and integrations can take several months to develop. Thirdly, highly complex apps, such as those that require advanced functionalities or complex integrations.