The Application Developers Alliance recently held its second London meetup, sharing tips on raising investment for apps. With 60 attendees, the discussion was led by Remco Smit of Pollen VC. Joining the panel for the evening were YC Ng, Partner at Potential VC, Xavier Louis, CPO of Peak, and Corbyn Munnik, CEO at Sliide.
Here’s three tops tips shared by our expert speakers:
1.) Raising money is a lengthy process, and timing is key
Raising investment can be a very disruptive activity for any early stage app publisher. In spending time away from day-to-day business, negotiating investment can have an extreme effect in slowing an app’s growth as it takes time away from perfecting the product, and taking it to market.
Funding rounds are known to be a lengthy process. Munnik suggests it’s often two and a half times what an entrepreneur might expect, meaning that planning ahead is vital to ensure the money doesn't dry up.
2.) Show traction to investors by utilising the right metrics
Placing the right metrics early on — such as number of downloads, revenue generated per user — can be extremely useful when presenting to investors. This shows traction and also helps show the potential value, which Ng points out is very important for early stage investors.
3.) Prioritize smart money over quick money
There is no “one size fits all” when choosing the type of investment your company needs. A key point raised was that founders should avoid quick money with unfavourable terms, and instead seek smart money, which matches the needs of the company and ensures ownership is not overly diluted.
While smart money is the aim, if it arrives too late, your product and company are at risk of death by lack of cash-flow. Again, highlighting the need to give yourself enough time to raise finance properly.
The panel was in agreement that early stage founders should not seek VC money too early, as they’re often not interested in very early products who have little traction to show. Instead, find alternatives such as self-financing, angel investors, accelerators, or family and friends.
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