I'm more of a creative person, not much of a tech person. From this I've gathered that I need a pro type in order to seek an investor. Not sure how to really go about it.
A prototype will not get you an investor, to be honest. This is just a fallacy.
If you can fund the prototype, launch it in the market, get some traction from users. See if your mobile app resonates with your users. You need to track whether your app is able to retain those users so that they keep coming back to it.
If you have a good amount of retention with the first few set of users (100 or 1,000), that's a good pitch to take to an investor.
Investors are not looking at ideas, they're looking at businesses that can get, retain and engage a customer.
Hernan and Rahul both make good points. The reality of it is that you will need a functional prototype for anyone to be interested in investing beyond friends and family.
The angel investors and early-stage seed funds that invest in pre-launch products are heavily (and understandably) product-focused. If you build a magical product experience, and you get in the right hands, you can and *should* raise pre-launch.
My advice to all mobile app companies is to always launch first OUTSIDE of the US app store. Investors will look for data as to when your app became available and if you're not trending towards 100,000 downloads in your first month, seed funds will almost always come back to you with "we'd like to see more traction" which means you have to be trending towards 1,000,000 installs with relevant engagement metrics to your app to get their attention again.
As a mobile-first entrepreneur who has raised capital, I'm happy to talk to you further about this.
3 years ago you could raise on an idea, 2 years ago you could raise on a prototype, today you need at least 5,000 users as a B2C startup or $5,000 in revenue as a B2B startup before you can raise.
Being a mentor at the Berlin founder institute, we see a lot of startups going through these stages. Let me know if you want to chat further about this, I would be happy to tell you all my knowledge.
Investors come on very different levels, there is family and friends, angel investors, angel syndicates, crowdfunding sites, accelerators, government grants, venture capital, private equity, strategic investors and finally public markets.
Based on your experience, product traction and network access you should determine which is the most effecient way to fund it. You may also opt to not raise capital via equity but grow your idea strictly from the revenue it produces or alternate methods of financing such as loans, but that is a personal decision that needs to be made based on your own opportunity
It is actually a great start to show that you are your own investor in an idea by developing first a prototype which you pay for. This is not the norm but most probably after a prototype is built and has gained traction (revenue, visits, subscribers) whatever you consider relevant you seek a 2nd source. The source could be family and friends you could offer them a convertible note if you are unsure on how to yet price the company or give them equity for 2%, 5% or 10%. After this you may follow the angel route or seek an accelerator (500startups, Ycombinator) via a site like angel.co and try to raise $200K to $500K. Again the number is totally dependant on what you achieve and the opportunity. Some game apps finance themselves by launching kickstarter campaings on the future promise that when delivered users will have 1st access to your app, that way you dont give equity, you in essence pre-sell your product.
I described going to later stages on this post https://clarity.fm/questions/1702/answers/5632/share
Happy to hop on call and go through more details :)
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