You have the greatest idea for this new killer app. All you need is a somebody who can develop it and some funding to market it. Maybe you talked to a few people to get funding. But it is harder than you thought it was going to be. If this sounds familiar, you are not alone. Here are some reasons why your app is not getting funded, as well as some ways in which you might be able to change your idea or your approach is able to find funding. Your Idea Is Too Small If you have an idea that is totally unique, it could be that the market is too small. This is likely the case if your idea is very specific or solves a very specific problem. Investors invest in ideas that are meaningful to them, but they also invest in ideas that will make money. For an idea to make money, it needs to have a market large enough to make money. If your idea is too specific it doesn’t mean that it isn’t a good idea. It might just mean that investors are afraid that your market won’t be big enough to repay their investment. That doesn’t mean that your idea is dead. Try looking for ways to make your idea applicable to more people. Alternatively, try looking for smaller-scale investors. Smaller investments mean that your app can pay off while making less money. That, in turn, means that it can have a smaller market. You Do Not Have An Unfair Advantage If you’ve been hearing the term “unfair advantage,” it doesn’t mean that you have to lie, cheat, and steal to get your app funded. It just means that maybe your potential investors don’t see you as the best person to make your app. If you want funding for your app, consider expanding your resources. Maybe you aren’t the best person to bring your app to market. That doesn’t mean that you can’t become the best person. Consider talking to local community foundations, chambers of commerce, and business incubators to find out what resources might be available to you. Your Team Is Weak When your investors invest – or don’t — they aren’t just betting on your idea; they’re betting on your team. Your idea can be great but if you don’t have the right team to put it together, finding funding will be hard. If your team isn’t impressing investors, it doesn’t mean that you need to get rid of them. Instead, look for team members or cofounders that can add to the expertise and skills of your current team. If you don’t have a team, you’ll likely need to put one together to attract funders. No Traction Gaining traction can be something of a Catch-22. You have an idea for a product or service, but it needs funding. Some investors might not be interested without knowing that it will move. How do you prove that it will move if it doesn’t exist yet? Consider telling your potential investors about the success of services that approach solving your problem. Then make them understand that your proposed solution will take at least a share from these markets. Illustrating a need is an important part of promoting your solution. Early user-testing with prototypes or minimum viable product (MVP) can also be significant. If you can prove that people want to see your idea in action, that might win over potential investors even if you don’t yet have a working model. It is very unlikely to find a professional investor for pre-product, especially if you are an unproven team. The initial investment for developing an MVP or even complete mobile app is low to warrant an external investment. Normally external investment is earmarked for customer acquisition and expanding the tech team. If you have finished MVP development or the app, look for app developers for equity. You’re Not Sure How to Get Customers Getting customers is harder than it sounds for a new startup. Don’t assume your customers will find you once you create a great app. If you want to attract investors, you’ll need to be able to explain your marketing plan. Dropping vague ideas like “SEO” and “Social Media” probably won’t be enough. Every business that anyone is talking about is using SEO and Social Media. If you have an experienced SEO team working on your content, that’s one thing. If you have a plan on how you will target your adds to get the most out of social media, that’s different. But you have to have a plan. You’re Working Part Time Investors are serious. If they’re going to fund you, they need to know that you’re serious too. It’s hard to look like you’re serious about something if you’re only doing it part-time. You might not be able to quit your job right now, and that’s fine. Maybe it just means that you’re not ready to be looking for serious investors yet. Consider ironing out some more things and looking for big money when you can afford to give your idea your full attention. Alternatively, try to get some full-time co-founders and full-time members of your e-board. They can handle the day-to-day and add legitimacy to your project while you keep working with other things. Whatever you do, don’t give your investors a business card with your employer’s logo on it. You Don’t Understand Your Competition Another reason that you might not be finding funds for your app is that you might not understand your competition. The app market is huge. If your app is going to succeed, you need to know exactly where your app fits into that space. Before you begin looking for funders, be sure that you understand what similar solutions may already exist. It can help to know what companies produce them and how much they cost. Your Product Need Isn’t Validated It could be that you see a need for your app. Maybe you know some people who agree with you. That’s not the same as seeing a marketable need. For your app to make money, it has to have a large enough market to pay for itself. Just like you need to research potential competitors, you need to research the size of your potential market before you begin looking for funding. Your Financial Projections Are Unrealistic Finally, your potential investors may simply not believe that your app is profitable. It could be that they are right. Once again, it can be hard to separate your passion from the cold facts of existing in a market. What to Do Next Investors want to invest. They’re not out to criticize your idea, but they need to believe in it. That means that you need to do your homework and put in some real work on your own before even looking for investors. If you can’t find investors, that doesn’t mean your idea has no hope. You can always consider taking out small business loans or looking into crowd-funding.
Startups can be financially and personally rewarding. They are also a lot of work and may not pay off in the end. Most entrepreneurs, get so many good ideas regularly. So how do you know if a startup idea is worth pursuing? Here we will give a sort of checklist that you can run through. If your idea checks out in these areas, it might well be worth the work to pursue. If it doesn’t check out, it may just need some tweaking, or it may not be worth the effort. Your Startup Should Address A Pain Point Your startup idea should address a pain point. That is to say; it should help people to do something that people want to do. You heard this before – you want to build a startup selling painkiller, not the vitamin. Most people like the idea of vitamins, but there is no urgency. Many people think that this means that their startup needs to solve a problem that no one else has solved before. This isn’t necessarily the case. Sometimes there are already solutions to a problem, but those solutions have their drawbacks. These drawbacks can be the pain points that your idea addresses. Your Startup Should Have A Specific Audience Your startup idea should also have a fairly specific audience in mind. Naturally, this audience will be people dealing with the pain point that your idea addresses. The pain point that your idea addresses and the audience may be closely linked. Perhaps your audience is a subset of the audience of another tool or industry that has a unique problem that existing solutions don’t consider. Maybe there’s a way to solve the problem that your idea solves, but your idea does something better or includes more people. Maybe your idea would approach things in another way, or offer different affordances. Maybe your idea helps to solve a problem that people experience with the current solution because they are disabled, or from a specific background or ethnic group, &c. Identifying this group can help you define your audience for research and marketing purposes. It can also help to keep this group in mind as you set up your company and design your product or services. We’ll talk more about the importance of this group again later.
App development isn’t a one-person job. To make a quality product, you will need to work with partners who can help to fund the project and guide it through all of the steps between idea conception and market success. You will also need developers who can help to make your idea into a functioning and practical reality. The problem that keeps many people up at night is how to get potential partners and developers on board without telling them all of the information that they would need to steal your idea and take it to market without you. This is a sticky problem with lots of room for doubt and lots of potential legal solutions that many people spend. This article will discuss some of the protections that you probably don’t need to spend time and energy chasing, as well as a few key things that you can and should be doing to protect your idea. The Problem with NDAs We don’t want to say that your idea isn’t special, but it can be very difficult to prove that someone stole your idea, even if they turn out the same product, as long as they do simple things like changing the name. Legally, having an idea that is very similar to someone else’s even if you haven’t met, is called “independent invention” and it’s hard to disprove. To win a legal battle, you’d have to prove that the other individual intended to take your idea. This can mean a lot of holding onto emails, recording conversations, and other paranoid behavior that is difficult to maintain, especially if you want other people to sign onto your project. A lot of people opt for an NDA, or “Non-disclosure Agreement” to protect their ideas. It can be hard to word these documents in a way that protects your content, and hard to have them filled out in a way that makes them binding. As you get further along in the development process, and NDA might be a good idea, but while you’re in the early phases of putting a team together, it’s probably more trouble than it’s worth. Finally, there’s the pesky fact that you can’t protect your idea forever. Even if you have a unique idea, you only work with people you trust, and you cover all of the bases to protect your idea legally, it will eventually go public. After an idea has gone public, it becomes even more difficult to prevent competitors from using your idea against you to try to make money for themselves. If you truly feel your invention is unique and it needs legal protection, apply for a patent or even a provisional patent. Provisional patents are an inexpensive way to reserve the option to file a patent within one year. I am not suggesting you file for a provisional patent before sharing your idea. If you are paranoid and is preventing you from proceeding with developing it, it is an option. Your Spirit should be Crucial The fact that nothing stays private forever and that it can be expensive and challenging to protect your idea anyway doesn’t mean that there aren’t aspects of your project that you should try to keep safe. Your idea might be unique or it might not be, but the fact that you are pursuing it and are dedicated to its protection means that your idea must have some special element that would make your app the best of its kind. Whatever element this is is the thing that you most need to protect. Of course, you will still need to share some information on your product with your potential teammates for them to be interested in helping you make your idea a marketable tool. There still should be some element of uniqueness such that the project will not succeed without you. If there is such an element, no one will be able to compete with your product even if they do try to steal your idea. If there is no element of your project that requires you to work, you should be rethinking whether or not your idea would really be a worthy addition to the market in the first place. Protect your Codes and Data In addition to your own experiences and entrepreneurial spirit, there is some hard-copy content that you should keep safe to protect your idea. If there are any algorithms or codes that you have written or any data that you have collected, that is the kind of content that you should pursue legal protection for and keep to yourself for as long as possible. It helps that not all content of this kind should need to go to the same place. While data that you have collected may be an important talking point to get partners to sign up, the partners shouldn’t need to see any code or algorithms that you have written. Similarly, while developers will inevitably have access to codes or algorithms at some point, they shouldn’t need access to any data that you have collected. In this way, you can ensure yourself as necessary to the survival of the product because you will be the only one with all of the necessary pieces to make it competitive on the open market. That doesn’t mean that you have to take any secrets with you to your grave, however. The farther along your project is, the easier it becomes to prove that any proprietary content is yours and the less likely any competitors will be to try to steal anything directly from you. In the end, if you’re losing sleep over your intellectual property rights and how you need to keep them safe from your partners and developers, you’ve probably been watching too many movies. There are always fantastic ways that people could conceivably get at your content and steal your idea and there will always be one more thing that you can do to try to prevent that from happening. In the end, however, sweating over whether your content is secure enough from partners who may betray you or developers who may run off in the night with your information is only going to prevent you from getting people to work with you. What’s more important than having faith in the security of your idea is having confidence in yourself as the only person who is capable of pulling it off. If you have a winning idea that you are truly passionate about and if you bring something unique to the table that can turn that idea into something that will become popular and make a difference in the world, no one will be able to take that away from you.
Recently, Inc magazine published an article predicting the best industry opportunities for entrepreneurs in the coming year. The recommended suggestions are as follows: Biometric Scanning Software, Fraud Detection Software, Corporate Wellness, Sustainable Building Materials, Drone Manufacturing, Virtual Reality, Artificial Intelligence and Food Analytics and Tech. This means that out of the 9 industries believed to be the perfect place for entrepreneurs to invest in for the near future, 6 of them were directly tied to software development. It seems that the author was onto something. After all, the tech industry certainly isn’t going away anytime soon. According to Forbe’s 2016 Global 2000 list of the world’s “largest and most powerful public companies”, 9 of the top 50 were tech companies. No wonder entrepreneurs are scrambling to build startups in the tech field. It is statistics like those shown above that attracts many budding entrepreneurs to choose the tech industry as a career path. However, most business school graduates spent their formative years studying how to build a startup or manage a company, not how to program code. The entrepreneur may have an incredible talent for marketing, managing and maintaining a business, but know next to nothing about how to create the technologies that their new company will rely on. This leaves many potentially successful startups becoming entirely dependent on the ability of the developers they hire, without knowing much about the process. How can someone with an MBA, and minimal knowledge of computers, monitor the progress of software development if they can’t recognize the code? All you can rely on is the result of the final product, which usually isn’t ready to test until after a lot of investments have been made in the individual hired for the project. A lot of entrepreneurs find themselves crossing their fingers and hoping that the months of time and truckloads of investor’s cash won’t be wasted. When a nontechnical entrepreneur ventures into building an app, website or software program, the main challenge can be hiring a good programmer. Hiring the Wrong Programmer Can Have Disastrous Consequences for Startups Most startup founders put a lot on the line when developing software products. There’s usually tens of thousands (and sometimes millions) of dollars on the table. That can add up to a lot of pressure to succeed right away. In today’s fast-paced, highly competitive world, it can feel like all new companies are judged on the grand opening. If it falters during that time, it can be very difficult to pick up the pieces. Imagine having everything on the line, mere weeks from launching the product, only to discover that though the UI looks great, there are numerous issues with the code. At that point, you’ve got zero time and often, no more money left to invest in paying another programmer to fix the problem in time. With such fierce competitors vying for the attention of technology users worldwide, there’s likely to be several companies attempting to create a product like yours. One wrong move, and the other startups will quickly swoop in to take your place. A good example of this is failed startup Wesabe. The online personal finance tool launched in 2007 with almost $5 million in funding. Unfortunately, the startup Mint also launched soon after, with software that was easier to use and better designed. Wesabe didn’t get very far after that and officially closed its doors in 2010. Meanwhile, rival Mint sold their company to Intuit for $170 million. While the reason for Wesabe’s demise is still hotly debated, and likely the result of multiple factors, it’s hard to deny that if Wesabe’s programming and design had been better, there might have been a different outcome. Some Try to Test Out a Programmer’s Skills or Ask Friends for Advice Non-technical entrepreneurs often use many different techniques to avoid hiring bad programmers. Some people will hire other programmers and developers to recruit good candidates for them and may even temporarily employ them for the interviewing and hiring process. Other times, startups will hunt for talented programmers by searching through open source communities to find the “experts” who have already proven their ability to write outstanding code. These are all excellent strategies that can yield good results. Unfortunately, there’s one big piece of the puzzle that many entrepreneurs miss when trying to find a programmer to bring on board. Creating Great Software Takes a Team of Professionals As with most large endeavors, one person can’t do it all. When a single individual takes on too much responsibility, they can become overwhelmed, which creates a lack of focus and helps to develop an environment that isn’t conducive to a high level of achievement. Not to say that a freelance programmer can’t do an incredible job at an assignment or task, but to expect for one person to be responsible for the creation of an entire development project is a dangerous gamble. In normal technology companies, you have product managers, system architects, systems engineers, UI developers, designers, software engineers, project managers and more. In my ten-year tenure at Motorola, I had the chance to work in two of these functions. If you had hired me at that time, I could successfully perform two of these roles. My point is that very few single engineers can do these jobs. To qualify as a full stack developer, you often need to be experienced in only 2-3 of these important functions. Once they begin to develop more skills than that, they are likely to either be very expensive to hire or they will have created their own startup. Often, if a startup fails due to technical incompetence, it isn’t because they hired a bad programmer, it’s because they didn’t hire enough people to cover all the aspects needed to develop a successful product. Therefore, the best way to avoid hiring a bad programmer for your startup is by hiring a development agency. A professional organization will likely employ several individual architects, engineers, designers and developers who are experts in their respective specialties. Rather than relying on one person to wear ten different hats, you can invest in a team that will work collectively to produce a product that your startup can be proud to launch.
We live in a world of rapid growth and continuous innovation. Depending on what side of the fence you stand on – this can be a good or bad thing. However, for today’s entrepreneurs, there’s one indisputable fact. Self-education and lifelong learning are absolutely essential to success in the new economy. Abraham Lincoln once famously declared, “All I have learned, I learned from books.” If you want to stay ahead of the curve and grow in mind and in practice – do it the old-fashioned way and download these ebooks onto your Kindle cloud as soon as possible. Here are some of the books I found useful from both tactical and strategic perspective as an entrepreneur. In your startup journey, you will have tough days when you question everything. I hope these can help you traverse them. The Lean Startup by Eric Reis If you are starting without external funding you should read this book before you start recruiting developers and finding cofounders for building your product. Starting a business in a world that is constantly shifting takes creativity and innovation. The old model of production makes it difficult to keep up. New entrepreneurs need to pivot, adapt and execute with efficiency in order to thrive in the modern marketplace. This is the playbook for doing exactly that. The 4 Hour Work Week by Tim Ferriss Most people wouldn’t mind being millionaires. However, is it the money that people really want, or the lifestyle? This book will show you ways to be part of the New Rich, and help you design a life of true freedom. One primary tool you get from this book is testing and iterating. Without mastering that concept, please don’t waste your time. Good to Great by James Collins There are a lot of good companies that exist in the world, but few can be called great. Many settle into the comfort of goodness and never make the leap forward to true excellence. In Good to Great, James Collins analyses how successful businesses have risen from the dredges of mediocrity and became remarkable. The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers by Ben Horowitz There are many aspects of owning a company that business school usually skims over. Running day to day operations as a founder, CEO or manager involves many unpleasantries that don’t get talked about in many lecture halls. The Hard Thing About Hard Things is the textbook for the real-life hurdles you might come across along the way. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail by Clayton M. Christensen Henry Ford once declared, “If I had asked my customers what they wanted, they would have said a faster horse.” Success in business depends on satisfying consumers. In most industries, advancements are happening at breakneck speed. Failing to incorporate new technologies can mean the death of your company. Clayton M. Christensen has great advice on when to stay committed to popular models, systems, and technologies – and when to move forward. The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup by Noam Wasserman Countless successful startups have ended in failure. Noam Wasserman explains how common missteps in the creation of a new venture can lead to its eventual demise. The Founder’s Dilemmas will help you make wiser choices at the very beginning so your business can flourish for the long haul. This is not exactly a book for entrepreneurs. But if you are going to disrupt the Trillion dollar market and wondering why nobody else is doing it, you might see some pearls in it. Slicing Pie: Fund Your Company Without Funds by Mike Moyer Startup equity division among founders is a difficult decision. Slicing Pie gives you a framework to use to address this uncomfortable task. Mike Moyer gives advice on how to get cash flow for your business by leveraging equity and how to divide that equity among business partners and investors at various stages of a company’s lifecycle. Founders at Work: Stories of Startup’s Early Days by Jessica Livingston Jessica Livingston tells the stories of legendary founders. Find out what it was like to create a company like Apple and Paypal in the earliest stages, from the people who made it happen. The Startup Owner’s Manual: The Step-by-Step Guide for Building a Great Company by Steve Blank The Startup Owner’s Manual has been used by ivy league schools and international organizations to help create successful businesses. Steve Blank takes you step by step through the process of building a profitable company. Startup CEO by Matt Blumberg Matt Blumberg has been a CEO for over a decade. He wrote this book to help other first time CEO’s run their businesses successfully. The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything by Guy Kawasaki One of the most trusted names in entrepreneurship wrote The Art of the Start to help anyone put big ideas into practical action. The Tipping Point: How Little Things Can Make a Big Difference by Malcolm Gladwell What makes a business or idea leap from the sea of obscurity and into the public spotlight? Malcolm Gladwell explains the phenomenon of the tipping point, and how small actions can push a message in front of the masses. Delivering Happiness: A Path to Profits, Passion, and Purpose by Tony Hsieh Tony Hsieh is the founder of Zappos. In Delivering Happiness he shares how he built his billion dollar business around the concept of creating a great “Company Culture”. Generating money is important to a company’s prosperity – but making a positive impact on the lives of millions is the truest definition of success. Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition by Guy Kawasaki A lot of entrepreneurs get wrapped up in industry fads and build businesses on principles that won’t last long. This book tells founders how to avoid the bandwagons and gravy trains of passing trends and build an innovative business on solid ground. This book list will help entrepreneurs at any stage in their career. Whether you’re just beginning or have started several businesses, it’s important to keep reading and learning to stay ahead and continue to grow. If you feel there should be other books in this list, let me know.