Tag: investments

Considerable focus has been given in this blog to help mobile app developers bootstrap their way to success and to make use of non-equity based crowdfunding. It’s a slower path to success, usually, and less risky. Sometimes, it is worth raising the stakes by raising substantial funds to accelerate growth on time-sensitive opportunities. In this case, you may be looking to get a small business loan from a bank, seek venture capital or angel investors, or possibly go the equity-based crowdfunding route.

In the United States, Angel Capital Association cited 70,000 companies raised more than $24 billion from a pool of about 300,000 angel investors in 2013. Relative to the United States, the JOBS Act components on equity crowdfunding have yet to be fully defined by FINRA (Financial Industry Regulatory Authority) and the SEC (Securities and Exchange Commission). Internationally, equity-based crowdfunding tends to be regulated on a per country basis. Many of the components associated with what you would need in an equity crowdfunding presentation are the same (or very similar) to what you would want to present to more traditional investors.

This is not everyone’s cup of tea, a minority of small businesses go after major investments. But the same components are helpful for getting smaller investors and especially business partners. Sometimes you don’t need the money, you need the technical capabilities, the marketing savvy or a keen eye to help move your business in a profitable, strategic direction. While there are people out there with money to invest, there are also people who have time and skills to invest, too. If your project is viable and appealing enough, you could bring in professionals for a share of your business that would otherwise require salaries exceeding $100,000 annually.

All of this requires extensive consideration, beyond the scope of what is addressed here, but I will try to follow up on these points in the near future. They involve everything from your comfort level in doing business, personalities, trust, due diligence, contract terms, etc. The primary consideration for ambitious developers concerns pie – in simple terms, whether it would be more “fulfilling” to have “100% of a small pie” or “a slice of what could be a much larger pie.”

Your Elevator Pitch – As addressed previously, you want a brief, simple but dynamic explanation of what you are aiming to do – 30 seconds or less. Ideally, you want this to raise the interest of investors and partners who are a good fit for your business, while turning away others who would not be a good fit.

Some will take the position that you want every investor you can reach to be interested in your plan. That’s not necessarily the case.   A substantial amount of time and effort (sometimes expense) is involved in the due diligence and exploratory phases of an investment or possible partnership.   Don’t waste your time, don’t waste their time trying to force a match.

Business Plan – This can be tricky. A full-fledged, traditional business plan can take up to three months to develop, sometimes longer. The primary components you want to include are:

  • Executive summary,
  • Profiles of your founding team,
  • Overview of your products/services,
  • Overview of your target market,
  • Estimated time to market (how long it will take you to be ready to do business once you are funded),
  • Funding target (and possibly key positions you still need to fill),
  • Intended use of funds,
  • Legal and ownership structure,
  • Financial Projections

These are not easy to define. An experienced investor will likely be able to tell in 3 minutes or less if your business plan has substance or if you are winging it. That’s not to say that a business plan with substance is viable, only that that they will spend more time on the details. It is the responsibility of an investor to perform their own due diligence efforts – to make sure that what you are saying is legitimate or not.

If you are new or uncomfortable with how to write a business plan, look for help and make use of the resources widely available on the internet, for free. One place to start, regardless of where you live is the US Small Business Administration simply because it does have extensive materials on developing business plans.

Tips specific to Mobile App Developers

Many of our readers  live and work in developing countries where sometimes there are not a lot of local business development resources.   First, there are a number of “business partner search boards”  – where you can both post a project and look for others matching your interest.

Don’t underestimate what you have.  The simple fact that you reside outside of some mainstream markets can be used to your advantage.   Mobile started in developed countries and in consequence, those markets are becoming saturated.  Conversely, and as should be obvious, developing countries offer much greater potential for growth on a per dollar basis than a market that is already saturated.  Saturation is a relative term when talking about number of apps available per “geographical area” or “language”.

The simple fact of having an international team makes it exponentially easier to go “international”.  An internationally diverse team is likely to be of greater interest to investors than a team where everyone is from the same city or state, or even country.   The more languages your team has full fluency in equates to exponentially greater ease in being able to do business in countries sharing those languages.

We’ve covered purchasing power parity at considerable length on this blog, too.   Functionally speaking, a $10,000 investment in a developing country will apply to much greater “potential effect” than the same $10,000 would in a developed country.   This is a huge point that is frequently missed on both sides of the equation.  This would require discussing the globalization process in greater detail, particularly the negative connotations which are only “negative” because there is little effort to really educate everyone about it.

Fundamentally, it is difficult to understand how a dollar, a ruble or a yuan, a peso or a lira, is not the same in value everywhere.  That’s a complex point, suffice that is something to build into a pitch to investors, too.


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