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MenuWhat are my options for raising money for a directory App that's 100% free.
The Directory connects people in need with the service(s) that can help.
This is a For-profit business.
Answers
Before you ask money you will need to build something quick and dirty (MVP) and try to get few users to see if your idea can fly. Truth to be told that it’s going to be near to impossible to get funding unless your idea is
A. High-Impact for global change where nonprofits like Chan Zuckerberg Initiative or Gates Foundation can fund it.
B. The data you collect is so valuable that you can sell the data to make money.
C. You can get ridiculous amount of traffic to generate ads revenue.
In all the cases you still will need to build something while keeping things bootstrapped. I highly recommend you to build a desktop/web directory app vs native app to test your idea.
Use open source technology like WordPress. Google “best wordpress directory theme” and you will find something suitable for your need.
Here are some helpful reads
https://brainhub.eu/blog/build-app-non-technical-person
https://listingprowp.com/tips/why-99-percent-of-startup-ideas-fail
Start with why? see Simon Sinek Golden Circle about this.
Why do people need a directory app in this day and age? what inflection has happened in the market place for the time to be NOW? new technology, new culture, new laws?
What unique insight do you believe to be true about the market that others do not believe? What have you observed in the behaviours of your target audience that others have not capitalised upon?
Answer these questions convincingly, and show that a relevant sample of people care enough to spend $x - and that is your pitch
A difficult topic for you, but the only thing I can convey from your experience is that you are building and improving your business through customers, I have a couple of services that I can resell to you, and I think that in your office you can schedule a call with me and in inbox provide me with all the details about make your application and your business have a detailed plan for you I don't think I'll need more than 1 hour
Based on my experience of raising capital and investing myself - If it is truly a for-profit business, you must have a business model already, which means if it is 100% free for (I assume) users, it must be sponsor-based (ads, sponsorships, etc). In order to raise money effectively & quickly, you need to show proof the business model is working. The more you show, the quicker you can raise. It's really important that you also show runway and (conservative) growth projections so investors can see how their money will impact your growth.
Totally open for a call if you have other questions.
Without more information on the app, this is difficult to answer. Is it similar to ask Aunt Bertha? Do you make referrals? There are plenty who've done something similar in different verticals. Directory services for those in the housing insecurity space with work with government agencies for contracts, compete for infrastructural funds, or charge a nominal fee to service organizations they refer to. Keep in mind, inclusive businesses can receive grants and other funding from foundations. To do this, you'd have to be clear on the impact narrative and how your value ties in with the foundations. And there's always impact investing circles, accelerators and investors.
when you say 'raising money' do you mean from investors or from the users (in which case you mean your business model)?
If you're referring to your business model, then here are some common options: advertising, affiliate programs/leads, up-selling of related products or services, etc.
If you meant raising money from investors, then it is very important to them to see a clear business model which can realistically generate profits. Many startups think: I'll get tens/hundreds of thousands of users and then I'll be bought out by a big company. This is rarely the case unless you have millions of users. So, you either need to show investors that you have a clear, realistic business model, or that you have a lot of users, that the number is growing, and that the users are recurring users (there are other stats, but these are the main ones).
If you give me more details I'd be happy to give you more specific advice.
Good luck
I've successfully helped over 350 entrepreneurs, startups and businesses, and I would be happy to help you. After scheduling a call, please send me some background information so that I can prepare in advance - thus giving you maximum value for your money. Take a look at the great reviews I’ve received: https://clarity.fm/assafben-david
Related Questions
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Is it ever a good idea to raise money on the small stock exchanges for a startup company?
No. The ongoing costs are significant, it's very difficult to create liquidity and trading volume, and the valuation is often lower than what that same company could achieve in venture funding. Also, the CEO's time is spent managing investor relations in a very inefficient way.TW
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How do startups figure out their pre-money valuation when when talking to investors before their company is making any money?
I'm both an active angel investor and entrepreneur who has recently raised capital. I'll start with what is standard in Silicon Valley and then apply various multiples and discounts where relevant. For an angel or early seed round, the current going rate is $3m-$5m pre-money via a capped note or priced round. Priced Rounds typically most often use the "Series Seed" docs and Convertible Notes typically are 18-24 month terms with a 15% discount. I don't mean to be argumentative but Marco is incorrect that valuation can be avoided by a capped note. And in general, there is no way to avoid setting a valuation except via an uncapped note, which is almost unheard of. Setting your cap and discount will have a significant impact on your cap structure, the same (and in some cases) worse than a priced round. This $3m - $5m range is what I'd call current market value in the valley for "ideation-stage" capital. This is that there is a team in place, typically some form of MVP and in some cases some very basic market data supporting the general thesis of the raise. In the other market I'm familiar with (Canada), the range for the same stage of capital is $1m - $3 with most being in between $1m and $2m and most preferring priced rounds over notes. These rounds rarely have a real lead since the raise is typically $500k or less, so if you price it reasonably, most (good) angels will accept the terms as is. The low and high end of the ranges are discounted and pushed by the credibility presented most often by the team (done it before, worked for a notable company, had some relevant success) or strong evidence of the thesis being correct. It's also the Founder's option to price the round at the top end of reasonable or provide what you might consider a discount, depending on the kind of investors you are courting. So while this is what I'm seeing as "current market conditions" there is price elasticity in any market. The best way you know if you've priced it right, is if people are buying. Any angel investor should be able to give you a conditional answer after the first meeting (subject to playing with the product, reading terms, meeting the rest of the team). Any angel investor in ideation stage capital who can't give you a yes, no or subject-to yes in the first meeting is not worth pursuing IMO. Any investor who can't close within 3 meetings or conversations won't close (9 times out of 10). Happy to talk to you about the specifics of where you're at, what might help you improve your odds and generally get you closer to the point where you're ready to raise.TW
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