Getting an app funded by venture capital firms – a brief guide

For both startup owners, creators and entrepreneurs, there remains one crucially important element of creating a mobile app other than the idea, the development and the relevant efforts: its the funding.

That’s right, getting app development the needed funding is a problematic situation for some and easy for some. Why? Because nobody wants software that turns into a money devouring monster. Think for instance an app where CAD$ 565,000 were spent for making but turned out to be a dud; the outcome is null. Investors will hence say ‘Sayonara.’

Some app makers invest their own money, or the capital their fund provides so the app’s development can be funded. Others may pursue grants from the Government of Canada or provincial grants to fund their idea to turn into a worthwhile software. However, a lot of other firms will pursue third party investment.

One of the main sources of investor capital are venture capital firms, which are also known as VCs within the mobile app development industry. In this post, we will now read about numerous important guidelines to help app development companies secure funding from venture capital firms to make their app a reality.

What steps are needed to get the app funded?

Here are some key steps that can help an app development company get funding for their app:

  • Understanding the app’s value.
  • Creating a revenue model early on.
  • Familiarizing themselves with the needed and key technologies.
  • Focusing their pitch.
  • Having a prototype prepared for showcasing.

Let us now explore them in some detail:

Understanding the app’s value

Before a company can think of reaching out to a venture capital fund or contacting potential investors, they must ensure they have a robust understanding of the space/sector their app will be occupying i.e. the purpose of their app and the category. They should also identify possible competitors in the best way possible.

Comparing the app’s concept to what others have in store, if there are numerous apps that are similar to what the company is making, it would be wise to identify how the company will differentiate itself from the apps others have.

As per the experience of app developers Toronto, if the app’s idea has not been discovered by others nor any attempt was made earlier to make it again, it should be understood why.

Without a concrete understanding of the category an app intends to serve and even cover, the app development company will not be able to demonstrate the value and potential the app has when the time to pitch it comes.

Establishing a revenue model early on

One thing that must be understood about an external investment in any company’s app concept is that investors expect a return. It is never enough to have a worthwhile idea for an application that is either innovative, creative, useful, helpful, or all. Each app development company should have a clear plan to earn a handsome profit from the app they will make (weather apps).

Understanding how the app can generate income early on in its design and development phases will not only make prospective VC firms happy but also can reduce the budget needed for development, and adds more to the factor of credibility.

The more aspects of the app’s design a company has ready before the first line of code developers write, the less overall work is needed later on in the app’s life to add the needed functionalities. It helps to find examples of apps that succeeded before the company plans to make one, or is in the early stages so that the company can look for other methods of earning and monetization.

Familiarizing oneself with the necessary tech

Pitches to venture capital firms are not the typical sales pitches a typical salesperson would make by a phone call, these pitches are detailed presentations with workable prototypes investors can check using their devices.

It is without a doubt true that a lot of apps were funded with functioning minimal viable products (MVPs) that provided the basic workings and functions. With that being said, it is imperative to understand the kinds of technologies the app will be built upon.

If the app was made on an idea promising users secure file protection via encryption, then companies should be ready to propose implementing specific kinds of APIs that are cryptographic in nature, or complex frameworks that can never be compromised.

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