If you’ve started building an app (or maybe just brainstorming), one of your biggest questions is probably going to be: how will I pay for it?
The answer? Investors.
Investors can supply you with the capital you need to get your idea off the ground. But finding investors isn’t always easy. Luckily, there are plenty of routes you can take to search for people who might be interested in funding your project.
Where to look for investors
Here are some of the most common places to look for investors:
- Your personal network
- Incubators or accelerators
- Private equity investors
- Startup platforms
- Social media platforms
- Crowdfunding platforms
- Small Business Administration
- Live events
Your personal network
Is there anyone in your personal circle who might be interested in funding your app? Even if not, your friends and family may know other people who could be interested.
One important note as you search for investors among the people closest to you: keep it professional and businesslike. Don’t expect your friends to offer you an interest-free loan and don’t be disappointed if they’re not enthusiastic about your idea. Treat them as business partners, and keep a detailed record of all your transactions. Also, make sure they know what they’re getting into, and be up-front about risks.
Incubators or accelerators
Companies like the National Business Incubation Association (NBIA), 500 Startups, and FAU Tech Runway offer financing for startups, as well as mentoring and workspaces. Just be aware that you’ll have to agree to their terms, which usually include handing over a percentage of your profits.
No, we’re not talking about actual angels. Business angels fund apps that are still in the seed, or idea, stage. These investors expect you to have a solid argument for why your app will succeed, but if you can convince them, you’ll get funding, professional advice, and access to their wider business network.
Sites like Funded.com, Angel Capital Association, and Angel Investment Network are popular platforms on which you can search for angel investors.
Using venture capital to get funding won’t work for everyone. For one thing, most venture capitalists are looking to invest in an app that’s already up and running, so if you’re still in the idea stage, you may not have much luck.
Still, venture capitalism is how many of the most successful startups fund their ideas. If you want to go this route, make sure you have a solid pitch, and be prepared for a little give and take as investors tweak your idea. Finally, be patient. Securing funding from venture capitalists often takes time, and it may not happen until your app has taken off.
Private equity investors
Private equity investors are looking to buy a share in your business, then sell that share in a few years for a large profit. While you’ll want to make sure you’re not ceding too much control of your business away, private equity investors can provide funding in the million-dollar range.
Many websites allow you to find and connect with these types of investors. Some of the most popular are The Equity Directory, CircleUp, and MicroVentures.
If you’re an entrepreneur, you might as well use some of the resources designed especially for people like you. Startup platforms are created to help entrepreneurs network, raise capital, and grow, and many offer free membership options.
Sites like Gust, Startup Nation, and Idea of Entrepreneur can be great places to search for investors. Many of these investors are looking to collaborate with entrepreneurs, and in addition to financial support, are happy to provide coaching and expertise.
Social media platforms
While you may not have much luck finding investors on Facebook or Instagram, platforms geared toward business networks, like LinkedIn or Meetup, can help you connect with investors.
You can even search for investors on LinkedIn by using the appropriate filters (“capital,” “venture,” “holdings,” “investor”). Of course, it goes without saying that if you want to secure funding via LinkedIn, your profile needs to be strong.
Crowdfunding is an attractive option because it allows you to get funding without giving away part of your business. Instead, you can simply give investors a heavy discount or even free access to the product. Giving your app away for free may seem counterintuitive, but you can use your investors’ feedback as free testing to improve the product.
But before you hurry over to Kickstarter and set up a crowdfunding campaign, it’s worth considering the cons. Keep in mind that you’ll pay a commission fee to the platform you’re using, and the more successful your app, the higher that fee will be. You can also only fund up to a certain amount, and you won’t receive mentoring or network support like you would from a private investor.
Popular crowdfunding platforms include Kickstarter, Indiegogo, and RocketHub.
Small Business Administration
Another option if you don’t want to sign over any part of your business is the U.S. Small Business Administration (SBA). Designed to fit small startups, the SBA provides loans and grants to help businesses get up and running.
Is your app a contender? If so, you might want to look into app contests. Usually run by business incubators, these contests offer funding to the winners. Even if you don’t win the grand prize, you can still get your idea in front of key investors and venture capitalists, who often serve as judges.
You can also look for investors at live events like conferences, meetups, and startup showcases. While this can be less convenient—you may have to travel or pay a participation cost—talking with investors face-to-face can help you make a more meaningful impression.
Of course, finding an investor is only one part of the equation. Now it’s time to beef up your marketing materials, fine-tune that pitch, and get your presentation ready. With luck, you’ll soon be rolling out your app to an eager audience!
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By Band of Coders