How to Sell an App Idea to a Company
Not only Apple, Google, and Facebook purchase apps. Other companies are ready to invest and broaden their business portfolio as well. Don’t be upset if your app idea does not fit the business models or roadmaps of big tech Silicon Valley corporations. There are smaller companies, and there are businesses outside the US who might be willing to purchase your app project.
1. Put Your App Idea on the Paper
Describe what your app will be about, what features it will have, what value it will bring to the users. If you have ideas about the design, app name, marketing and monetization strategies, or anything else related to your app, write it down. It does not have to be very detailed, but it will be very useful when you start creating the business concept.
2. Do the research and analyze information: Know your market and your users
No matter how sure you are about the excellence of your app idea, make sure to do the research and have the relevant data regarding the overall market, your competitors, and your prospective users.
Let’s say you have an idea to build a fitness app with AI algorithms that would pick a workout for a user based on his / her physical training experience, body particular qualities (taking into account possible previous injuries), and goals. Here are some things you’ll need to research:
–Overall market: You will find that the market for fitness apps is quite saturated. Apps for runners, yoga lovers, swimmers, those whose who want to lose weight – there are plenty of them, available in both App Store and Google Play, paid and free, targeted on men and women.
- Are there similar apps to yours?
- Which app stores are they published in?
- How many downloads do they have?
- Which locations are they the most popular in?
–Competitor apps: Although there are so many fitness apps, not all of them will be your direct competitors. Pick the ones that are closest to your app project in terms of idea, features, target audience, and markets and do more detailed research on those products.
- Are they different and similar to your app?
- How many reviews do they get, what’s their rating, and what do users say about them?
- How do they promote their products?
- What monetization strategies do they use?
- How do they retain their users?
-User base: You probably visualize your users as people who are physically active (or plan to become such), who care about their health and body. What other distinctive characteristics do your users have?
- Who are your users?
- Are they male/female/both?
- Are they children/adults/both?
- How old are they?
- What occupation do they have?
- How do they find out about new products?
3. Create a Business Concept
The business concept should be a detailed document based on the previous two steps. This is the presentation where you should refine your app idea and display a comprehensible business plan. It should contain the answers to all the questions your investors might have.
You should clearly understand who the users of your fitness app will be and how they will benefit from it; how your project will be different than all the other numerous fitness solutions; which marketing channels you will utilize to attract people who care about their health and bodies; how you will make money with your idea. (To learn more about interstitial ads, check out our latest blog post!)
Most often, business concept presentation has such topic blocks (but feel free to add other valuable information if you feel it’s important for the investors):
Your app project:
- Brief description of the app and its features
- What problem will it help users solve and how
- Why is it unique
- Analysis of your target audience in terms of age, gender, geography, occupation, etc.
Market and competitors overview:
- Why is this market attractive and its growth perspectives
- Who are your competitors
- How your app is better than competitors
- How are you going to compete with peer apps
- Which promotional channels will you use to launch your app
- How are you going to grow your user base organically
- Which paid acquisition channels will you use
- What countries will you focus on to promote your app
- Expected number of downloads over time;
- Anticipated number of active users – daily, weekly, monthly
- Expected retention rate and how to achieve it
- How do you think your app will make money
4. Develop Your App
Yes, we were talking about how to sell an IDEA for an app. But have a look at the examples above. Google, Facebook, and Apple invested heavily in working products. You can find tons of other cases online when tech companies bought working projects. These are real precedents, and if you want to receive several million or billion US dollars for your app, you’ll need to work hard.
In our previous blog post “I Have an Idea for an App” – Here is Where to Start and What to Do, we described what it takes to develop an app. It’s not only about hiring programmers to write the code. It’s also about protecting your app legally, developing the brand style, and creating a clear marketing strategy.
5. Launch and Grow Your App
The launch of your app should be preceded by thorough testing. Your business concept presentation already includes information about launching activities. So if you have that topic covered, all you need to do is just implement everything you planned.
To attract investors, you’ll need to keep up the good work and grow your app – increase the number of users, introduce new features, improve retention and engagement, interact with your users, etc.
Do the best you can to develop and keep a good reputation of your app: don’t violate the app stores’ rules, be nice to your users, be responsive to the media. It’s also important to lead your business operations properly, follow your country’s laws, pay taxes, and respect your employees. Remember that when you find investors, they will do the due diligence of your company.
6. Find potential investors and pitch them
If Google or Apple hasn’t contacted you yet, it’s a sign you’ll need to look for the relevant investors. Here are several guidelines to help you:
- Create a list of tech companies capable of buying app projects.
If your goal is to sell the app (and not just get some investments to grow your organization), you will need to look for tech companies capable of buying other projects. The simplest way is to search online for tech unicorns, research about recent acquisitions and investments. Don’t limit yourself to your country or region only. Your buyers can live anywhere.
- Pick the companies that are relevant to your business.
Analyze the profile of the company, read about its latest acquisitions, and try to understand if your app fits their business model and development roadmap. Limit your initial list of investors to the companies that are relevant to your app
- Find relevant contacts.
Check the website of the company to see if they have contacts of people responsible for business development or investments. You can also check out LinkedIn and find company representatives who have accounts there. Ideally, you would need to connect and contact a person responsible for business acquisitions. You can also use LinkedIn to find a necessary person through the other contacts that are available.
- Contact and Pitch the Potential Investor
Once you have a list of necessary contacts, you are ready to start with pitching the companies. The channel you decide to use depends on your personal preferences. You can start with LinkedIn messages and emails, and then proceed with phone calls and personal meetings. You can also meet those companies’ representatives at startup events and meetups.
Remember not to disclose too much confidential information about your app. All the information you provide should be disclosed under the mutually signed NDA. There will be due diligence done by your potential buyer. Make sure to get the professional lawyer’s support if you feel you will need legal assistance.
To sum up, knowing that tech giants don’t reward for mere ideas, think again if you still want to offer your app idea to Facebook, Google or Apple. These companies purchase ready solutions that have the potential to strengthen their own products and compete with their rivals. And don’t forget that there are lots of other companies around the world ready to buy high-quality projects. However, don’t hope to get wealthy shortly: getting millions in revenue from selling your app concept will require hard work, including creating the working app itself and making sure it continuously grows.
- Make sure you are solving a need
- Analyze your Competition
- Interview Potential Users
- Identify the Key Features of your app idea
The biggest reason for startup failure is lack of product-market fit, which usually means that nobody needs the solution you are developing. Consequently, the worst startup mistake you can make is to start with a solution instead of a problem.