Questions

What is the right time to try to raise funding if you are developing an app that will be capital intensive to go to Market with?

I am planning to enter the mobile dating and entertainment arena with yet another app, but with a twist to it. I feel confident that I can secure a piece of the market, but I am afraid it might be capital intensive. From many responses I have read, angels and VC tend to like investing in proven businesses. But what is considered "proven"? I am able to conceptualize the app, design and deploy it as a MVP product for launch. Since it's a user based app in the dating field, it will require a critical mass to make it successful. Thus, even if I go into a micro-niche, there is a chance It will require funds for marketing, which is beyond where I can take it. When is the right time to try to raise funding for this? Are there any recommendations that I can look at? How can I prove the demand or concept without having to take it to market so that I can fundraise? Any thoughts are appreciated. Thanks!

3answers

You're facing an uphill battle. Angels and Seed Funds see a new app every hour of the day. Same goes for incubators and accelerators. No one will invest cold because there is no way to protect it. There's nothing patentable. You'll have to show rapid user adoption. If you can hit 10-20k users within a few months after launch, you might have a chance. Even then, it will be tough because so many that have a quick adoption rate see their monthly user rate fall through the floor. You'll also need to live in a major hub - San Fran, Austin, NY or Boston.

If you still want to pursue your idea, start small and test each feature before investing a significant amount of money. Research the Agile method of software development and follow it. If you want to talk, I'd be happy to talk you out of pursuing this idea. Ha. Just kidding - sorta.


Answered 4 years ago

I've been running an app development company for the last 6 years and come across this question frequently.
"Proven" means you have put your MVP out there, spent a little bit on advertising and marketing (I'd go with Facebook Ads to start) and can "prove" there is market. In other words, your metrics can support a demand for your product - people respond to the ad, download the app and you can show app retention/growth. I would not rely on app store reviews and ratings as proof as those can easily be fabricated. However, real app metrics that you get from analytics and Flurry have meaning as they are based on data.
You dont need critical mass to show your concept is marketable and there is an audience, but you do need to take it to market first.
IMO, the only entrepreneurs who can secure funding based on a pitch deck without an MVP are ones that have a track record of starting and exiting other successful companies. Good luck!


Answered 4 years ago

If you have a business that is likely to be capital intensive, I would raise seed capital as early as possible. Sure, some VCs want this and some Angels want that, but that's a generalization and you could certainly find the right investor with enough diligence to seek them out.

Before you seek funding you need to ensure you're buttoned up with your business plan and proof of concept. If you're app is new, but carries some similarities to others, then use that competitive knowledge to frame up the opportunity for an investor. A savvy and aggressive investor doesn't need to see every nut and bolt to evaluate an opportunity, but they do need to gain an understanding of where you fit into the market place in order to have a perspective on market potential. Good luck.


Answered 3 years ago

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