Mobile App Development Stages That Parallel Investor Funding Rounds

The early stages of a start up are always the most exhilarating for me.  

A couple weeks after the idea pops into your head and you joke about it with your friends or family…when that nagging is just too much so you have to do something about it…when you’ve researched the market and realized there’s no one solving this problem…when you realize you haven’t worked on anything for the last week because you’ve just been thinking about how you can solve the problem.  

It’s at that stage that you start talking about it seriously to others, and nine out of ten people tell you that the idea will never get it off the ground and the idea sucks…adding energy to your fire.  

I don’t know about you, but this is the fun part for me – identifying a problem, visualizing a solution, and figuring out how to go to market.  

Once you get through that process – which sometimes takes a couple weeks and sometimes a couple months – it’s time to get serious. You’re either going to forget about that problem (somehow) or you’re going to solve it.

The next question is always the same.  “How am I going to fund this?”

How am I going to fund this?

New entrepreneurs often think funding goes like this – Entrepreneur walks into a VC’s office, tells him their elevator pitch, and the VC says, “OMG, you’re a rockstar.  Here’s all of my money.”

That’s not how it actually works.  

Funding a project is a journey – with many steps along the way.  

The purpose of this article is to explain the steps in funding mobile application development, and how they parallel investor funding rounds from your initial idea to your billion dollar exit.

Friends and Family

What It Is

The first goal when developing a mobile app is to prove product market fit.  Product market fit is figuring out whether a product satisfies a market demand.   

In other words, will someone buy this thing?

Product market fit has to be proven before anyone will provide funding for your project.

The friends and family round is meant to help entrepreneurs determine product market fit. This is typically funded by friends and family because they are willing to make an investment in you, and the investment that you require here is typically small.

What To Look For in Product Development

It’s at this stage I like to start with a simple logo and website, and see how many people can sign up. 

Even if you think your idea is a slam dunk, you have to provide out product market fit. There’s a couple ways to prove that out before you spend tens of thousands to hundreds of thousands of dollars on a mobile app.

One great way to do this without building a mobile application is to build a landing page for your project that includes a description of what it will do, and a form to collect emails.  This is super easy with a site like Wix, WordPress, or countless others.  

Then share that with your family, friends, and strangers.  Put it on facebook groups, and post to linkedin until you get 20 people signed up.  

Once you hit 20, run some adds on facebook, reddit, linkedin, or wherever your target customer spends the most time. Try to spend $100 or less, and get 50 sign ups.

If you get 0, it means one of three things – your messaging is off, your target is off, or there’s no market for your product.  If that’s the case, it’s a lot better to figure that out now than it is to find out after investing thousands of dollars.

If you get 50, that’s awesome. Give yourself a pat on the back…it’s not easy. Now you have some proof that your ideas resonate with people, and you can use that proof to get funding.

Angel Investment

What It Is

You can only get so far with no money and no technology.  So once you’ve proven product market fit, and your ability to acquire users, you’ll be in a good place to start building technology and showing that you can acquire more users.

Between friends and family and an angel investment you will build your Minimal Viable Product (MVP).  Your MVP is your product with the least amount of functionality necessary to still solve a problem.

Think about the stage you’re in here – you could spend millions to build your product.  You could, but you don’t have millions…and you don’t really know how well it’s going to work.

It’s likely that at this stage you have tens of thousands, or maybe a couple hundred thousand.  Either way, it’s not enough to build your full featured product AND have enough to sell and grow.

So you want to use your money wisely – thus the MVP.  Build just enough of a product to take your list of 50, and convert them to buyers.  Then grow that list to a few hundred or a few thousand users. Outsourcing mobile app development is common at this stage.

Grow your user base and build a repeatable marketing funnel.  

If you can achieve that growth – you’re on a great path.

What to Look for In Product Development

We work with a lot of companies in this stage and take two routes depending on budget and need.  If there’s a small budget ($20-$30k), we’ll often steer the entrepreneur towards building a high fidelity proof of concept of the mobile app.  It will lack a lot of the features, but it will solve the problem.

If they have a larger budget, we’ll work on building a full functioning app.  It’s still an MVP, but with a few more bells and whistles. The goal here is to build a good enough product that people want it, and spending all of the other money on scaling your business.  

Let me repeat that – the goal here is showing an ability to acquire users.  When an investor is evaluating dozens of companies, they are attracted by the team with the least amount of risk and the most amount of opportunity.

You can minimize risk by proving product market fit and you can maximize opportunity by showing growth.

Series A

What It Is

Your goal through family and friends and your seed round was to provide a product market fit, and you ability to acquire users.

At this point, you’re comfortable that you’re onto something, but you have a laundry list of product features, marketing ideas, and sales strategies that would help you grow exponentially…if only you had the money.

How do you get more money? You go back on tour and raise it.  Only now, a few hundred thousand dollars isn’t going to cut it.  

You have a team, and a payroll.  You have overhead. You have expenses.  So even if you have money coming in, it’s not put towards growth.

Your Series A round will likely be a multi-million dollar round focused on scaling operations and growth.  You’ll need a team to build all of those new features, and you’ll need an A+ sales and marketing team to see exponential growth.

What got you here, won’t get you there.

What to Look for In Product Development

We work with a lot of folks in this stage as well.  Sometimes we’re building onto existing application, or building out a cross-platform mobile application to run on the web, iOS, and Android.  

It’s common for companies to start with an iphone app development company because it’s too costly to build an app to run in both stores. That’s why we specialize in React Native – every app that we build launches on both iOS and Android, with a single code base.  

This minimizes development cost and ongoing support costs.

But sometimes the challenges at this stage are different.  The goal might be bringing a team in house. When our customers are facing this challenge, we help them to scale their technical team.

If you’re looking to scale your engineering team check out our free 5 day course on how to hire great developers.

Whether we’re helping our customers in a Series A round to build their mobile application or scale their software engineering team – the goal is the same.  Build a better, strong product (that contributes to significant growth).

Series B, C, and Beyond

What It Is

With each round the goal is growth.  In the early stages the goal is grow as much as possible to prove your idea and your ability to execute.

Once you enter these later stages of funding you’ve proven yourself, and funding rounds are all about expansion.  Often with a focus on new geographic markets, industries, and applications.

Our work in these stages as a React Native mobile app development company is often bringing a cross-platform mobile app to market for a company without an existing mobile strategy, or helping a company scale their react native expertise through staffing services.

Building Great Mobile Applications That Scale

Parsed is a US based mobile app development company specializing in React Native. We help our customers to launch apps on both iOS and Android. We help entrepreneurs build mobile applications that scale.

We are well suited to help funded companies in their Seed Stage build their first mobile app and attract users.  All of our projects are fixed price – meaning you know what you are going to pay before we engage in a project.

This allows funded teams to build mobile products with confidence, and use the rest of their budget on user acquisition and growth.

If you’re facing a new mobile project that needs to launch on all platforms , we want to hear about it.  Reach out to us here, via our live chat, or just drop an email at hi@parsed.io