One of the biggest hurdles you’ll face if you choose to fund your app with investor funding is actually finding the right types of investors to engage with your proposal and overall business plan. Fortunately, there are many opportunities online to break the ice and make contact with business-minded investors.
Investors bring more than just capital
In the course of designing and planning your mobile app, you’re undoubtedly going to run into a few hurdles. Angel investors (experienced investors with knowledge of the Australian business landscape) can help you negotiate these hurdles by providing expert advice, contacts and experience. According to Capital Pitch, the best kind of investors are:
– Culturally Aligned
The importance of this last point cannot be overstated. If you don’t share similar values and ideals as your investors, there’s a higher risk of conflict and crossed purposes. You want healthy relationships with your investors. So try and find people who share your sentiments. It’s better for your business and theirs.
Equity crowdfunding with Australian Investment Network
The Australian Investment Network is a website that, at first glance, looks like a crowdfunding site. User friendly, with a clean, simple interface and well laid out sections for both investors and fundraisers, it straddles the line between crowdsourcing and investing, letting fundraisers reach a larger pool of potential experiences.
Where the AIN differs from typical crowdfunding is that instead of winning over patrons, you’re targeting investors. That means your rewards come in the form of return on investment, rather than tiered reward programs. Investors also typically invest in the $1,000s to $10,000s, rather than $100,000s.
The Australian Investment Network boasts a broad range of investors, from seasoned professionals, to middle aged family types looking to diversify their investment. While it’s a great option to explore, the ‘crowdsourcing’ aspect means you might not get the same cultural alignment and personal relationship many investors share with entrepreneurs.
While perhaps not as touted in the Australian media as their American counterparts, Angel Investors do exist in Australia, and are a plausible option for mobile app developers and entrepreneurs.
Groups like Melbourne Angels and Sydney Angels boast internationally syndicated portfolios, with skill and knowledge networks to help you both fund your app and support you with decision making and strategy. Angel Investor syndicates do have some pretty strict criteria.
For example, Sydney Angels requires that you:
– Have demonstrated traction
– Are seeking an initial investment of $200-$500k
– Seek a pre-money valuation of $1m-$2m.
They’re also looking for proposals that have the potential to go 10x in growth. Most Angel Investors prefer to make their money via an exit rather than dividends, so you should be aware of the investor’s exit strategy prior to approaching for funding.
Pros and cons of investor funding
The venture capital and startup culture in Australia is still maturing, but with help from the government, opportunities are becoming easier to grasp for a savvy entrepreneur. Seed funding through angel investors is suitable for you if:
– You’re looking for support from knowledgeable business people
– You can meet the criteria for investment
– Your values align with the investors
– You’re comfortable with the investor exit strategy.
You might want to steer clear of this funding strategy if:
– The criteria or exit strategy seem prohibitive
– You like to exercise a high degree of control over your project
– You can’t find investors whose values align with yours.
Market trends that support the need to deliver powerful pitches to an investor
Here are some examples of market trend facts to tout in your sales pitch:
– 75% of industry leaders recently surveyed suggest they plan to double that
department’s budget this year.
– 85% of businesses in your industry already invest in this service and have experienced
20% growth in the past quarter.
So, how do you approach these angel investors?
These are the key points of pitching to investors:
Know your market, business and competition from top to bottom
In other words, make sure you are able to promote your business’s benefits accordingly and explain how your organisation can help solve a specific problem.
Listen to what the investors are saying
Don’t rely exclusively on a prepared presentation, instead listen to their inquiries and answer them in a direct manner.
Watch your body language
Your handshake is what matters here! Be careful about making it not too firm but not too subtle either.
Make sure your outfit matches the meeting your are going to be a part of.
Share your success stories
Talk about your customers so that it shows you are continually operating, even if in a small way.
Contact your network for investors
Chances are you could meet someone who might introduce you to an investor.
An angel investor refers to the person that invests in startups that are not quite ready for venture capitalists. In other words, they represent the detail that could make all the difference, because they believe in your message before it reaches mainstream audiences.
Tips for the perfect pitch meeting
Delivering powerful pitches to investors is something all business owners, and most importantly new entrepreneurs, need to consider in order to start generating competitive profit.
According to Forbes.com, one of the biggest mistakes in trying to pitch an investor is the time you allow yourself to present your idea and deliver your message across. If you are not able to present your idea in about one minute, your chances of losing that potential investor are highest.
Clearly, a flawless pitching process needs plenty of attention to detail and a very clear focus. When presenting to potential investors, think about delivering your pitch as a way to tell your story. If you can present your message in an engaging way and manage to relate your story to the investor, you are halfway there!
Here is an overview for the best way to approach pitching to a potential investor:
Your target market
Think about who you are building your product for, and refer to aspects such as how many people are in each market segment or how much they are currently spending.
Make sure you have an answer to these questions:
– How will you reach your customers?
– How much will it cost?
– How will you measure success?
Even though this segment is often overlooked, describing what makes you different from your competitors ensures that you are building a unique solution to your prospective customers.
Investors invest in people first, and in ideas second… talk about why you and your business partners are the right team to promote and execute the company’s marketing vision.
Your financial summary
The answers that you need to present your investors with correspond with the following inquiries:
– How much money has already been invested in your company?
– Who are the people that have already invested in your company?
– What are your company’s ownership percentages?
– How much more you need to go to the next level?
– Will you need to raise multiple rounds of financing?
EB Pearls can help you create the perfect pitch to attract investors and increase your sales. Get in touch with one of our representatives to polish your investor pitch.
Is prototyping a good method for convincing investors?
Savvy investors want hard proof that their investment won’t be for naught, so any tactic you can use to further your case is welcome. And developing a prototype is one cost effective yet impressive method for doing just that.
A technical prototype, designed and developed by an agency like EB Pearls, will help your potential investors understand exactly what it is they’re being pitched. Rather than relying on your description and the imaginations of the investors to do all the work, having something that can be examined and questioned will foster understanding and the greater likelihood that your pitch will be successful.
Keep in mind, too, that having a prototype in your arsenal is sure to impress your potential investors. Such a tool conveys professionalism and a serious commitment to turning your idea into a success – and investor money into a profitable return. You’re conveying the notion that your idea isn’t a mere whim, and thus worth investing in.
The best part: A prototype is a cost-effective investment that almost anyone can make. When considered in terms of ROI, the money spent having a prototype developed is more than worthwhile. As long as an agency with a solid track record like EB Pearls is brought in on your prototype project, ensuring that your prototype is of the highest quality, your investors will certainly be impressed. And that impressed attitude will translate into investment dollars – which will translate into success for you.
How do I make sure that this investor is right for my business?
It’s never an easy decision to allow another firm to share in the strategic direction and future success of your business. If your company is like your child, as they often are, then choosing the right investment partner can be like a marriage. You need to know what works for you, and ensure that you can hit the ground running and maintain good relations well into the long term, to secure both the longevity and success of your business.
Know your business and its needs
Before seeking out an investment partner, it’s vital you that know what you’re looking for. While investment can provide you with capital, contacts and resources to help your business grow, it ultimately comes down to one person to make the company attractive to investors – you.
That takes more than just some glossy collateral. To start on the right foot, jot down the answers to the following questions:
– Where is your business right now?
– What is the future strategic direction of your company?
– How do you intend to get there?
– Who is the right type of investment partner?
– Why would they want to invest?
– What possible pitfalls are in front of you, both now and in the future?
A realistic and thorough assessment of your business will demonstrate to potential partners that you possess honesty and integrity. It will also give you a clearer picture of exactly where your business is at and what you’re after. From here, you can begin investigating potential candidates for partnership.
Create a shortlist
In some cases, businesses will be approached by investment firms, and in others, it may fall to you to seek out opportunities for the business. In both cases, it’s better to have a shortlist of suitors so you can make an informed decision. A potential candidate should be able to:
– Structure and fund the proposed investment transaction
– Do so in a way that is transparent and honest
– Act with integrity during your partnership
– Are prompt and effective with their approvals process
– Represent a complementary fit with your business
When creating and culling your shortlist, be sure to include other stakeholders in the decision making process. This could be managers, important vendors, mentors and other investors. Their opinions and insight can prove valuable in a collaborative effort to pin down what’s best for the company.
Conduct thorough background checks
You need to know exactly what each potential partner is about. While it’s great if they provide all the information up front, you can’t necessarily rely on every firm or candidate to be 100% honest.
A combination of online research and reaching out to your existing industry networks should help you paint a better picture of each candidate.
Do they have a stock price? High staff turnover? Any scandals or pending lawsuits? Stability is a key metric for successful investment firms, so prioritise stable operators in your shortlist.
History of success:
What are some of the companies they’ve already invested with? How have they fared? Do you see any companies that you admire? While past success isn’t a guarantee of future performance, it is a strong indicator that the firm knows what they are doing.
Has the firm engaged with companies in your industry or adjacent industries before. What expertise can they bring to bear to help your company?
The firm might have provided ROI for investors, but what about the companies?
Think about culture
Profits are only half the picture. You want an investment partner that will help your company flourish, but how they do it is also important. Inc.com uses the example of Dr. Edward Goldman, President and Chairman of MDVIP, a company that provides bespoke medical services to select clientele. In order to ensure his company found the absolute best investment partner, Goldman conducted several interviews with prospective companies to find a firm that could “offer assistance without interference”.
What kind of working relationship do you want with your investment partner?
A firm that is hands on, heavily involved in the day to day operations of the company, or a potential partner who is happy to take a back seat in operations and focus more on the bigger picture and long term strategy?
To answer this, consider conducting interviews of your own to find out exactly what each potential partner sees as their role in the partnership.
Similarity in temperament, variety in strengths
Getting along and possessing shared values is important for any partnership. When it comes to choosing the right investment partner, you’ll want to counterbalance that with a variety in strengths and skills. While it’s good to have some overlap to help find common ground, if the firm operates with a team too similar to the current company leadership group, you’re building extraneous redundancy into your strategy. If you see too much of yourself in a potential investment partner, it might be time to look elsewhere.
Start with a trial
Once you’ve done your due diligence and settled on a candidate, you might consider a trial run before signing contracts. Conduct a C-suite meeting with someone from the investment firm present, or go to them for advice on a particular challenge that meets their skillset. It’s as much about them as it is about you, so be open to the possibilities, and make decisions that will benefit your brand. After all, your company comes first.