Once in a dream, you saw the idea of an application for a startup. Having woken up, you still remembered this idea and, with God’s help, decided to try to implement it. But where to start? How to pitch an app idea to investors?
It is not difficult to guess that investors receive over 9,000 proposals for consideration on a daily basis. But then how to break through this crowd and become exactly the one who will receive funding for a successful start-up? What errors should not be allowed?
The first thing to do before you start looking for an investor is to analyze the market and determine the competitiveness of your product. How to do this? There are three best methods for market evaluation:
• Evaluation of the market from above (estimate in total numbers). This is a convenient method of evaluation. At the same time, the figures can be greatly exaggerated or understated, which can adversely affect the future of your start-up and as a result will lead to the inexpediency of financing the development of your application. In the long run, it will deprive you of investors. Clearly, it looks something like this:
1. approximately 5 billion people around the world use the Internet
2. about one-third of them constantly use the Internet with mobile devices
3. about 40% of them complain about the target problem
If the creation of a mobile application solves this problem, then the target audience will be approximately 0.75-1.0 billion people. So, you could pitch a mobile app idea with no fear.
• Evaluation of the market from below (in specific figures). This method of evaluation is based on the compilation of the general from the particular. In other words, we calculate the average price of attracting 1 client. Clearly, it looks something like this:
1. on the target market, 1 user costs $2.
2. the number of users is growing, so the cost of attracting 1 client will not change if we implement our application on the market.
3. for $10,000, we will be able to attract 5,000 customers.
4. based on the data of market volume, we calculate the profit for the month – for example, 3.5% of net profit for our company.
• Evaluation of the market through comparisons with top competitors. A big problem of this method is the search for up-to-date information on the market volume, growth rates and the percentage of profits since the competitors of your start-up will not be large companies with open accounts. Clearly, it looks something like this:
1. 4 companies work in the target market
2. their profit grows by 40% per year
3. each of them receives a profit of at least $100 m
These figures mean that the market is not monopolized and it makes sense to develop an application for the target audience and introduce it to the market.
Read also: How to Create an App for Specific Audience
A small guide to finding relevant information for an adequate assessment of the potential customer base. What can help you is:
• materials of various appraisal agencies;
• information on the Internet search engines. Also, consider the geographical location of the target audience;
• conducting independent surveys of potential customers.
Learn the Potential Investor
Try to learn as much information about the investor as it is possible. The main thing you need to know is how they make their business. Moreover, you really need a subjective assessment of those who have already dealt with this investor. Ask their partners, look through the forums, check the reviews. Learn also about the financed projects, what you should do when talking to the investor, what aspects they are usually interested in. As it is said, if you are informed – you are armed.
A good presentation is a guarantee of successful app idea pitching. It is important to understand that the purpose of your presentation is the sale of your idea, but not an excursion into the world of your fantasies. It is not necessary to blindly follow the generally accepted Аpp pitch template. Let’s consider several important points for a great presentation.
You should be able to tell potential investors why you are worthy of their funding, the reason why your product is radically different from others and what problems it is called upon to solve. Do not flaunt smart words to the right and left, your speech should be extremely simple, concise and accessible for understanding. It’s not a fact that your potential bag of money understands at least something in this area. Next, we will consider the possible sequence of presentation slides.
• The title slide. The first thing investors want to know about is who you are, what your company does and why they are sitting here. Do not throw in customers with tons of information immediately, feed them dosed: a couple of lines about your company, the slogan and what you present.
• Command. Imagine some of the most important people in your company. But do not go deep: people sitting around gathered here not to listen to your memoirs. Tell about the merits and achievements of each of your colleagues briefly. This will give the investors to understand that they are dealing with a well-coordinated team.
• Providing solutions. How do you intend to enter the market? Are you going to force out competitors or take an unfilled niche? Do you offer an innovative solution to a problem or improve existing solutions?
• Benefits. Tell about 3-4 main advantages of your product, who is the target audience and the strategy for entering the market.
• Intellectual property. The investor wants to know that tomorrow they will not be offered to finance an even more progressive project. Note the individual experience of your team.
• Competitiveness. Of course, you are the best, but you should not pay attention to the shortcomings of your competitors. Tell that they are good, but you are even better because you have something that they do not have. Depending on the fullness of the market, you may need a more detailed analysis of your competitive advantages.
• Market strategy. Investors constantly listen to the same points of market strategies. But they need to answer themselves to the question “Why should I invest money in this project?”. To do this, focus on the individual characteristics of your market strategy.
• Business model. How do you collect money? Why don’t you fold up in the early stages? Explain the pricing strategy, as well as the amount of planned profit.
• Forecasts. Give the figures for the projected profit and revenue growth for the next 5 years. Tell about the key factors that will allow you to steadily increase profits.
• Volumes of financing. Actually, your main goal is to get financing. Tell how you will enter money into the project, at what stages and in what quantities. The figures should be as accurate as possible: this will make it clear to the investor that everything has been calculated ahead of them.
• The summary slide. It should consolidate your successful presentation. Imagine that this is the only slide you need to hit the client and get his money.
Sometimes the order of the slides can be changed depending on the investor’s interest in specific points.
Self-Confidence and Confidence in Your Product
Sometimes this is even more important than the presentation itself. If you are confident, then people trust you. You can even put a couple of relevant jokes but do it carefully: you are at a business meeting.
As stated above, investors do not like inaccuracies in numbers. The more specific the numbers, the easier it is to perceive them. And your client will not rack their brains considering chances and interest.
Preparing for a Blitz Poll
As you know, you will be asked questions. A lot of questions, to be precise. And you should be ready to respond to them instantly, clearly, and concisely. Only this way you will have a chance to lasso an investor.
So, following these tips, you can now answer the question “How to pitch my app idea to investors?”, and get worthy funding to develop your applications and promote them on the market.
Read also: You Have an App Idea, What’s Next