BACK TO ACADEMY
About 90 percent of startups fail, according to the Small Business Administration (SBA). It’s a sobering statistic for entrepreneurs, developers, and investors alike. But on the flip side, that means a tenth of startups succeed.
Even if you have an amazing app idea, that’s only half the story. You still need to secure investors, and that’s a job in its own right — one that requires research, marketing, and business acumen. And with so many ideas that seem worthwhile failing every day and steep competition, it’s essential to make sure your idea stands out.
Before you begin prototyping or pitching your idea, it’s important to ensure that your app has real potential. That requires market research, finding out whether there’s an audience for your app and how they might use it.
A good starting point is looking at the app store on your phone to see which kinds of apps are highly rated and whether your idea already exists on the market. Some questions to ask yourself are:
To refine your idea and identify your niche, you’ll need to perform more thorough research, such as using competitive analysis, focus groups, social media observations, and so on. Try to cast a narrow net; the more specific your idea, the more likely you are to solve a problem for your audience. You’re not going to be the next Instagram, at least not right away, but if you appeal to a specific subset of users, you could find a solid audience that will embrace your app readily.
Angel investors and venture capitalists can be extraordinarily helpful in funding your app in its early stages, but securing this funding is often competitive. Unless you’re able to fund your app with your own savings and/or those of your business partners, chances are solid that you’ll need this kind of seed money.
How do you find these connections? One tool is networking. While in-person events are off the table during the pandemic, you can still talk to friends, colleagues, business brokers, other entrepreneurs you know, startup recruiters, and corporate attorneys. You can also look around on social media to find names.
If you’re unsuccessful with a more casual approach, there are other methods, such as checking with formal associations like the SBA, or searching for angel investors through databases like AngelList and Crunchbase.
Remember to do your research on sources of funding, too, finding out the general amounts they give, what types of businesses they have in their portfolio of investments, and at which stage in the startup process they usually get involved with the project.
Aside from venture capitalists and angel investors, some entrepreneurs look for other vehicles for funding, such as crowdfunding campaigns à la Kickstarter and partaking in funding contests. Bear in mind that these can be fairly hit or miss — many ideas simply don’t catch the general public’s eye when they’re still coming to fruition, and they require significant marketing at the early stages.
A pitch deck is the bones of your presentation to investors, a visual depiction, and an outline of your ideas. It’s used to appeal to investors and “sell” your app or business idea to them, consisting of slides with information such as:
Keep your pitch deck clear and actionable, with minimal text and plenty of images. Keep it relatively short, too. The text you add should be readable.
The pitch deck is only one piece of your presentation. While it’s an integral piece, you should avoid relying on it too heavily — don’t read it word for word.
Another key part of your presentation is a prototype or MVP. This will help investors have a concrete vision of your app and imagine what it will be. It also shows investors that you’re actively developing your product, rather than just thinking about it as an idea. While it won’t be fully fleshed out with all the bells and whistles you intend to add to the final product, it should have enough that it gives your audience a sense of what it will ultimately become.
Once you have the resources you need for your presentation, it’s time to structure it. You’ve already spent some time researching prospective investors, so now it’s time to use this information to appeal to them, targeting their interests, background, and general business areas in which they operate.
Tell a story to capture your audience and make them interested in and compelled by your app. An engaging narrative will draw them in and encourage them to invest in your idea.
Don’t forget to tailor your pitch to different investor groups. Each presentation should be built around the interests and personalities of the prospective investors and will require modification based on their unique identities. Modify it based on the feedback you receive, too, either from associates or potential investors.
Be honest. While you’re trying to sell your idea to investors, grossly overstating aspects of your product like financing and timelines will raise red flags and will come back to haunt you later on if you can’t deliver. So, without underselling, offer a balanced presentation that outlines the advantages of your product while being realistic.
Confidence is critical, too. In order for others to believe in your idea, you need to believe in it yourself. This shouldn’t be too difficult — you’ve dedicated your career to this product, so show investors why.