5 tips for Startup business founders to secure funding for their app idea
So you have an idea for a startup. Securing funding to help move your idea beyond just that can be difficult. Particularly in Australia. In LaunchVic’s 2020 Startup Ecosystem Mapping Report, they found that smaller deals at the early stages have decreased in both size and number of deals over time. Here are five tips to help you stand out and secure idea-stage funding for your app.
Tip 1 – Do your research
Not all investors invest in idea stage startups. Before you approach an investor, do your research. Identify what types of startups they have invested in and the stage each startup has been. Consider if they invest in technology style businesses, and if so, specifically app businesses. Some investors will invest only in a particular industry, while others will invest in the idea regardless. A good example in Australia is Artesian Venture Partners. This group specialises in seed and early stage VC, focusing on scalable high growth potential startups.
Tip 2 – Investors are investing in you, not your idea
There’s a common mistake startup founders make about their idea and that is that many founders believe that their app idea is unique. Yes, this can happen. But, the more likely scenario is that there is someone in the world who has had the same idea or something very similar. Does this matter? Not really. Because the quality of the idea is not the most important factor for securing funding. Success for startups comes down to how effectively the founder can execute the idea. For investors, this means they are looking for founders with perseverance, drive, commercial acumen, creativity and resilience. Investors are investing in you, not your idea.
Tip 3 – Be prepared
There’s a wealth of information available on the internet about what startup founders can put in their investor pitch. A great example is Blackbird’s Pitch Deck masterclass blog. Make sure that every single slide is thoroughly researched. Give yourself time. Going through the process of creating an investor pitch will almost always force you to go out and ask more questions. According to Blackbird, a great pitch deck will communicate the size of the opportunity, the team and your initial traction, it will be backed by numbers and be based around the three things you want investors to remember. Another thing - be prepared to show or demo your product. For apps, this means engaging an app developer that builds apps for startups to create a professional app prototype.
Tip 4 – Practice your pitch
Once you have done your research and put your deck together, refine it. People are going to be asking you all the time what you do. Get your pitch ready until it roles off the tongue naturally and it becomes second nature. Use family, friends and pitch nights to practice. The more you can do this before you get in front of investors, the better. If you do have the opportunity to pitch to investors and aren’t successful, make sure you ask for feedback. You can then incorporate this into your pitch for the next time.
Tip 5 - Networking
Avoid cold calling your investors. Instead, hang out where they hang out. Remember that investors are looking for deal flow and that they are competing amongst other investors for the hottest ideas in their region. The challenge for investors however is the sheer volume of startups and identifying the best opportunities. Startup events and pitch nights offer investors this insight. An easy way for founders to approach investors is to attend startup focused events and to seek investors out. This gives founders a chance to connect with investors on a more personal level and to build a connection/relationship. It is also a great opportunity to showcase your product if you have a demo or prototype – something you can’t do over LinkedIn.