Navigating Funding: Insights from a Software Development Partner

It can take a lot of work to secure mobile app funding. Many ideas fail because the founders can't effectively pitch them to investors. Even if you have a working idea already, you need money to plan it out, design it, develop it, test it, and launch it, and that's only a portion of what you need financing for.

Read on to learn how to get funding for your app development, what stages you have to go through, the most common financing sources, and the importance of having an MVP. We will also guide you through Mind Studios’ approach to supporting aspiring startup owners and empowering them with a strategic foundation investors look for.

Highlights:

• Because pitching ideas for apps to investors is difficult, it can be challenging to get funding for a mobile app business.
• Startup funding usually comes in stages, with each stage requiring a different amount of funds. The investment levels typically grow as the business expands.
• A strong business plan, a distinct brand identity, and an MVP or prototype with a working idea are all proven strategies to get investors to fund your app.
• Mind Studios has vast experience in helping clients build MVPs and prepare for successful investment rounds — under the scope of our IT consulting services.

Stages of startup funding

Before we get into the various funding methods, it's important to get the basics of the funding stages. After all, you can’t just put your idea out there and expect to get funding, you need a product that works. Moreover, having just one investor pour money into your startup or business is often insufficient. How do you receive funding for an app? It depends on the investment round. Because investors have specific expectations during particular rounds, the product should aim to meet them first. That is why investment processes are typically divided into rounds, each with restrictions.

Over time, funding amounts offered by investors have grown significantly, especially in the last few years. Here’s some data from the Fundz 2024 report as a reference.

Round	Who usually takes part in it	Average investment amount
Pre-seed	Bootstrapping (your own funds or joint investment with co-founders) Family and friends	Any amount available for startup owners without approaching unrelated parties (usually around $30,000–100,000)
Seed	Family and friends (rarely) Incubators Angel investors	$2.2 million
Series A	Angel investors Venture capitalists	$15.6 million
Series B	Venture capitalists	$33 million
Series C and beyond	Venture capitalists	$59+ million
Initial Public Offering (IPO)*	Anyone	Any amount is possible

• IPOs offer company shares to anyone willing to purchase them. The US Securities and Exchange Commission has strict requirements for IPOs.

Pre-seed

At this point, you're most likely looking for your first investments with little more than an idea and certain self-confidence. During this phase, your primary goal is to persuade your first investors (friends, relatives) of this idea. We recommend prioritizing preparatory actions such as market analysis and creating a business plan.

I have to disappoint you right away: you will most likely be unable to start anything without your own funds. In this case, you can always ask for a bank loan. A comprehensive business plan will be extremely helpful there.

Dmitry Dobritskiy, Chief Executive Officer in Mind Studios

Also, practice creating a pitch deck and elevator pitch. Although it's unlikely that you'll need to pitch your idea to professional investors at the pre-seed stage (unless your parents are professional investors, of course), it's never too early to practice for later and get feedback to improve. Plus, you'll be more confident in your pitching when the time comes!

The funds received at this stage should be used for the most important purpose: to demonstrate market fit, which means that people will be willing to buy your service or product when it’s developed.

An investor will be considering investing in a potential business plan during the initial seed round. Therefore, having a functional prototype ready for that stage can be extremely beneficial. It can be as rudimentary as you want – the important thing is that it shows that someone may be interested in it.

Depending on funding, pre-seed can be used to build a prototype. You may attract investors if you have more than just an idea and initial calculations. Are you interested in learning the steps to make your ideas a reality? Schedule a free consultation, and our experts will review your concept and advise on how to turn it into a working product.

Seed

This stage is essential for a startup because it often produces the product's first version.

At the same time, this makes the initial phase more dangerous for entrepreneurs because the cost of developing an MVP is rising, and funding is scarce. The cost of developing the first edition of a product varies substantially and is heavily influenced by a wide range of factors. This greatly raises the likelihood that an entrepreneur can lose everything if they make a mistake.

A working business model is also expected at this stage to help investors decide whether to invest. At Mind Studios, we recommend integrating enough analytics into the first version of the product before releasing it, to understand its current state. Also, it is worth calculating your startup's unit economics to increase the chances of getting funding.

Dmitry Dobritskiy, Chief Executive Officer in Mind Studios

Consequently, it is important to select a team that can assist with market analysis, risk mitigation, and the expert assembly of an MVP.

If you are looking for a team that can execute that, Mind Studios is here to help. We have extensive experience building and releasing MVPs to the market. Book a free consultation, and our experts will schedule a call with you.

Series A

Series A is the beginning of your startup’s active growth. Consequently, this is the stage at which venture capital comes into play. Since Series A is the most risky for investors, securing funding requires a compelling elevator pitch. At the same time, if your app clears this stage, the chances of its success will be significant.

It is important to remember that during this stage, investors are more likely to expect a share in your business in exchange for funding your venture. This is important for investors since they expect returns on investment in scaling your product.

Series B

As you enter Series B seeding, the stakes increase, and the focus shifts to growing your service to handle an increasing number of customers. This phase is crucial for demonstrating that your software can sustain and grow its user base while maintaining high engagement and retention rates. Investors at this stage are looking for more than just potential. They expect your app to develop rapidly and generate substantial returns on investments.

With Series B funding, you can broaden your reach, speed up development, improve your product or service, and strengthen your app's position in a competitive market. It's about demonstrating that your app can thrive on a wider scale while still delivering value and innovation.

Series C and beyond

If your business is still going at this stage, it’s most likely doing well. This means you make enough revenue to cover any regular costs without needing extra funds from third parties. Every funding stage after Series B is targeted at large-scale expansion, major upgrades, and so on.

Sources to get funding for mobile apps

Now, we are getting into how to get funding for app development. Unfortunately, having a great idea for an app is not enough on its own. Building an app requires resources, from hardware and software to a professional team of app developers. Creating a mobile app isn’t a cakewalk.

Each funding option for your app startup has pros and cons, requirements, and certain limitations. Let’s discuss each one individually so you can decide on the best way to get investors for an app.

Funding source	Description
Bootstrapping	Using your own money to fund the app. Pros: Safest option, no debt. Cons: Limited to personal savings.
Co-founders	Borrowing from family and friends. Pros: Reliable, often easier to persuade. Cons: Can potentially strain personal relationships.
Personal network	Sharing revenue with co-founders instead of borrowing money. Pros: Larger sums possible, shared responsibility. Cons: Shared control, bigger potential for conflicts.
Private investors	Local businesses or individuals investing in the app. Pros: Can offer significant funding, industry-specific insights. Cons: Requires solid connections and a convincing pitch.
App funding contests	Competitions and charity events held by industry leaders, angel investors, and companies to fund apps. Pros: Potential for mentorship, exposure, and getting funding or grants for app development. Cons: High competition, no guarantee of winning.
Angel investors	Individuals or businesses investing in early-stage startups in exchange for a share or convertible bond. Pros: Less risky than loans, better potential for large investments. Cons: Loss of equity, shared control.
Venture capital (VC)	Large funds or companies investing in fast-growing businesses for a significant stake. Pros: Large-scale funding, potential for rapid growth. Cons: Significant equity loss, high expectations, potential goal misalignment.
Crowdfunding	Fundraising and gathering small amounts of money from many people via platforms like GoFundMe, IndieGoGo, or Kickstarter. Pros: Wide reach, no need to give up equity. Cons: Requires significant marketing effort, and can be time-consuming.
Bank loans	Borrowing money from a bank, repaid with interest. Pros: Larger sums possible, structured repayment plan. Cons: Risk of debt, requires detailed planning and paperwork.

Mind Studios opinion:

• Bootstrapping: It is best to have enough savings so that development doesn’t put strain on your life (expect to need around $30,000-$100,000 to build a working prototype for your app, depending on complexity).
• Personal network: Good for smaller, cheaper projects and creating a minimum viable product (MVP).
• Co-founders: Consider both existing connections and outside individuals, but be cautious with strangers.
• Private investors: Viable if your app, product, or service fits a particular niche or industry.
• App funding contests: Competing can provide valuable experience and exposure, even if you don't win.
• Angel Investors: Consider the level of equity and control you are comfortable giving up.
• Venture capital: Expect to give up 25%–50% of your business; requires maintaining good communication and realistic milestones.
• Crowdfunding: Invest time in marketing, engage with backers, set realistic funding targets, and plan thoroughly.
• Bank loans: Better suited for expansion rather than initial startup funding, requires specific numbers and a clear repayment plan.

How to get funding for an app? Check-list to prepare a pitch

So now you know how apps get funded, what funding options are available, and how the startup funding process typically goes. Now, let’s talk about how to get investors for an app and getting them interested in your app in the first place. How can you convince people and organizations with money to fund you and not someone else? How can you build a solid elevator pitch and pitch deck?

Some strategies can help you get funding for your app idea. Investors generally have a single aim — to get a return on investment (ROI). Drawing from our experience as software developers, we’ll now delve into the specific elements that can convince investors you have what it takes to deliver that ROI.

You have a working idea

Or at least it's better than existing solutions for a specific problem. Even though many don't like Facebook, no one needs another copy. Your app must solve users' problems in a novel way. Most outsourcing app development companies have project managers to help you find your app's value proposition.

According to Exploding Topics, around 30% of venture-backed startups fail. Given these statistics, investors are wary of new businesses. Similar companies are more likely to fail because luring customers away from a well-known service is difficult.

Even for promising startups, Series A usually sees the biggest drop in “survivors.” Most startups fail because they lack a strategy for prioritizing money.

Therefore, the least you can do to convince investors is perform professional niche research and come up with:

• a unique solution to users' problems that are not addressed properly by existing service providers
• a strategy to address the problem and lure in users with the help of investment

For example, let’s consider dating services. No one will back a Tinder clone, but many find Tinder lacking in several ways and are looking for an alternative. Find out what makes Tinder users unsatisfied and create a dating app that will satisfy them.

You have an elevator pitch

Even when you find investors for an app, snagging a somewhat lengthy appointment with a reputable investor is hard. There are fewer investors than startups seeking their help. This is why the elevator pitch exists.

An elevator pitch is a brief presentation of an idea, typically 30 seconds to one minute, that introduces the concept and its potential benefits. It should state solid facts about the product's unique, competitive, and potentially lucrative nature, highlighting its importance and the need for investment.

Investors in the app ideas often hold special meetings where such project presentations are made. Those who present well receive a longer personal meeting and a pitch deck, which can be a valuable opportunity for investors.

To prepare, create a plan, memorize the pitch, and emphasize the business's purpose, demand for the service, and planned monetization model. It is important to practice your pitch beforehand.

At Mind Studios, we help our clients refine their pitches and provide consulting on delivering them effectively to investors. If you're not sure if your app's elevator pitch is compelling enough to attract investors, the professionals at Mind Studios can help you polish it to perfection.

You have a pitch deck

If your elevator pitch succeeds, you’ll get to meet your possible investor(s) for a longer conversation. During this conversation, you’ll present a fuller report on your business and try to persuade them to fund you. If you are struggling to create a high-quality pitch deck, at Mind Studios, we assist our clients with making pitch decks that are not only captivating but attract significant investors.

A pitch deck is simultaneously easier and harder to present than an elevator pitch. It’s easier because you’ve got more time, and you can carefully arrange all the data to look as good as possible. It’s harder because you’ll need to know what data to present and how, and you’ll have to be ready to answer many questions.

A typical pitch deck is made in a presentation or a slideshow, usually containing nine to twelve slides. You should keep within these limits, as too long a presentation can confuse investors. If they need additional information, they’ll ask.

Getting investors for app development is essentially the same as pitching any other idea. Here are the things we at Mind Studios consider the most important to remember when seeking investors for a business.

• Get your numbers straight. Investors (other than family and friends) give you money for part of your business, expecting profits. They need an estimate to determine profit potential:
  • how much it costs for you to acquire a customer
  • how much you’ve made since launching your business
  • how much money you need from investors
  • how much of the investment you plan to spend on what (development, mobile app marketing, etc.)
  • what your monetization model is (how you’re planning to make money)
  • how much you plan on getting in revenue shortly (half a year to a year)
• Know your niche. You'll inevitably be asked about the competition and your strategy. To get mobile app funding, a startup needs to know its competitors and how to compete with them, many of which have been on the market for years.
• Make a memorable pitch. Most reputable mobile app investors hear dozens of pitches, so yours must stand out. Additionally, investors can postpone decision-making. That doesn't mean you need acrobatics, of course. Make a memorable pitch with:
  • enough visuals in your presentation to share your vision
  • passion about your app idea so investors understand you’re fully committed
  • a branding identity that’s distinct and easy to understand
  • a landing page (preferably with visitor statistics)
• Get real. Unrealistic expectations deter investors. They usually show the lack of planning and analysis. It's also likely that someone else has already come up with your app idea, or will soon. Luckily, being the first to pitch it to investors gives you leverage, but mobile app investors need more than just the best idea. Set achievable goals and know how to achieve them.

Having problems getting the word out about your app to potential backers? We can help companies find investors if they have already completed seeding and created the first version of a product or app with Mind Studios.

Your product fits the market and will be profitable

To get seed funding for app development, you must prove that your idea has demand in the market you’re aiming for. Invest in market research and keep tabs on what’s trending in the mobile market. You need to present your app’s market appeal and its potential for revenue if you want to find investors.

Mind Studios tip: Always remember that having a product that’s proven it satisfies the requirements of your target market greatly improves your chances of successfully securing funding.

Wondering if your product is a good fit for the market? An MVP with a proven concept is a good tool for gathering data and learning about market needs and wants. It's the bare minimum of what you can offer and expect a response to when it comes to securing funding. You'll need one if you seek funding because MVP provides the most basic functionality for validating your app idea and figuring out where to take the project to make it profitable.

You have a business plan

It’s a well-known fact that app investors prefer to give their money to startups whose owners have previous experience, preferably successful. Having a complete development plan shows you know what you’re doing, especially if you’re doing it for the first time. A strong business plan for development, marketing, and expansion is a big yes for many investors.

By offering consultations on market and business analysis and by helping validate their product or service, Mind Studios assists clients who struggle to create a comprehensive business plan. Your chances of getting funding will increase because your plan will be solid and aligned with what investors expect.

You have a team working on the app

When you have good specialists with relevant experience working on your app, it’s a kind of insurance that the resulting app will meet the expectations of users and, hence, investors. This is why, unless you’re a developer and have a team of seasoned professionals, it’s recommended to outsource your app to an app development company. Look for app development companies that have completed projects in your niche.

You have a prototype or an MVP

There are few things that can better convey your dedication to your project and your app’s potential than a working prototype or a minimum viable product. Better yet, if the product is a proven concept and is beyond the MVP stage, meaning it’s already getting some revenue.

Even if you don’t have a prototype, you must explain to your potential investors what stage your product is at and what you plan to do first if or when you get funding.

Have trouble creating an MVP or getting it released to the public? Wondering about how to find investors for an app? If a company has already gone through seeding and built the initial version of a product or app with Mind Studios, we can assist them in finding investors.

Overall, the more information you can provide about yourself, your team, and your product, the better. Keep it professional and to the point, of course. Don’t linger on unnecessary details and focus on what’s important for mobile app investors — the revenue potential. It’s easier to let go of money when you’re convinced you’ll get it back with interest.

Maximizing investor interest with Mind Studios’ expertise

Today, investors need more than a unique app idea. After all, the fact that such an app hasn’t been created doesn’t always mean it will be a success. Someone may have researched it and decided it's not worth investing in. Therefore, before approaching investors or learning how to get investors for an app, you need proof that your app can become a profitable product. It usually takes a lot of time and money.

You may wonder, how do you start the project without funding? The project's initial phase may cost several thousands of dollars. However, having started it before approaching investors improves your chances of getting a bigger investment later.

So, where does Mind Studios step in? Our business development experts can help you prepare to approach mobile app investors. Here is a list of activities we offer for this purpose.

Idea validation

The foundation of your project is ensuring that your idea is worth exploring and investing in. Our experts scrutinize the app concept during this stage, evaluating its viability and market fit. Through a meticulous validation process, we ensure that your product or service is not just novel but that it works and aligns with market demands and user needs, establishing the role of your app in meeting those.

Product vision description

After the idea validation, Mind Studios’ business development team works with your team to articulate a vivid and persuasive product vision. It outlines the future app's goals, purpose, and anticipated impact, portraying its core value proposition and the experience it aims to deliver to the target audience.

Business model compilation

A comprehensive business model should outline revenue streams, cost structures, customer segments, and key value propositions. This step lays the groundwork for a sustainable and profitable app — the only kind investors are interested in.

Competitive landscape research

When conducting market research, we thoroughly examine the competitive landscape to identify and analyze the app’s existing and potential competitors. The process includes evaluating their strengths, weaknesses, market share, and strategies. As a result, we can adjust our own strategy, empower you to make informed decisions, and demonstrate the app’s financial potential to investors.

Creation of UX mockups and UI concept

Visualizing your app's user experience (UX) and user interface (UI) is a powerful move in investor presentations. Therefore, at this point, we engage our UI/UX designers to create UX mockups and UI concepts. As a result, you can then present investors with a tangible preview of the app's look, feel, and functionality, enhancing their understanding of the product and demonstrating your commitment to a user-centric approach.

Unit economics calculations

One of the most compelling arguments for investors is the financial viability of the app. Therefore, conducting unit economics calculations that project the future app's revenue, costs, and profitability is essential. During this process, we thoroughly examine the projected customer acquisition costs, lifetime value, and other financial metrics to estimate the app's profitability and sustainability on a per-unit basis, which is crucial for securing app startup funding.

CEO Quote: Mind Studios uses these metrics as a foundation when presenting an app to potential investors. It is important to assess an app's future revenue, expenditures, and potential profitability. This way, you can show investors important financial metrics to help them understand the products' long-term sustainability and ROI potential.

Scoping and estimation

Before investing in the project, investors must have realistic expectations of its scope and the required resources. For this, we create a detailed breakdown of the development process based on the app’s functionality, timelines, and associated costs. As a result, it’s easier for you to foster confidence in the app's strategic planning and execution when presenting the project to investors.

Pitch deck presentation

The final step in investor meeting preparation is creating a compelling pitch deck. This presentation usually includes problem-solving and financial projections to sell the market opportunity to investors. At this point, Mind Studios can help you create a visually appealing and informative pitch deck that tells a compelling story to increase your funding chances.

Mind Studios tip: This time-consuming process lasts 3–4 weeks and costs somewhere between $5000 and $7000. However, it will show investors your expertise and dedication, increasing your chances of winning.

At Mind Studios, we understand the challenges startups face. Though we don't offer direct funding, we empower our clients with technical and business expertise to ensure their ideas get the app startup funding they need.

Our commitment extends beyond development; we're here to guide you through the intricacies of the startup journey, from shaping a winning idea to meeting the tech expectations of the investors. So, if you’re looking for a partner to build your app for you and support your business on its road to success, contact us to discuss what will prepare you for successful investor meetings.

5