No matter what the business idea is, it needs a solid foundation to stand on. This solid foundation is called 'investment' in the business world. Investment is the money required to kickstart any brilliant business idea (tech startups or apps) or startup. All that's swell, but no investors are popping out of the sky to offer you the complete capital requirement for your next big tech or app startup, are they? So, you need money, and we want to tell you how to get it. There are a couple of ways any new business or app startup seeks investments from viable investors. If you're reading this article, you already know about investors.
However, the problem is where to find the investors. Opposite to what they say, fortunately, millions of investors in this world are just waiting to invest in the perfect business or app, especially tech startups. You have to know how to get investors to invest in your idea. No investors want to invest in any startups that won't work. So as a business owner, you convince investors that your app or business is worth their investment.
Where can I find tech startup investors?
Being the founder of any startup is challenging. It needs planning, precision, and lots of hard work. According to many business owners, the primary reason for the failure of any startup is the lack of funds. Finding new investors and getting them to invest in your business is one of the most demanding tasks of being a business owner. Even in tech startups, launching that primary app prototype costs money. Without the initial app prototype, you can't reel in more investors. It's a vicious cycle. However, when it comes to investors, what helps is to start small and work your way up. Once you have your initial business idea and model, you can start looking for investors.
Friends or family can make excellent initial investors. They are always easy to approach and trustworthy too. They are the best investors if you are a new tech startup. Family and friends can often provide enough investment to kickstart your business.
Angel investors are also a great way to scale your business. Angel investors can take your small startup and elevate it into the big leagues. Most people prefer to reach out to their local angel investors. However, don't hesitate to reach out to investors outside your local investor pool. It will scale your startup and bring investors exposure. It will also help you build relationships with other business investors (Tech Startup Savants) and people in tech.
Occasionally, instead of one or two major investors, several investors come together to fund a startup. We do this through the internet instead of face-to-face investing and call it crowdfunding. It shows that the general public trusts the business or app. Many investors consider a tech startup that has had crowdfunding to be a good investment. It is a quick and easy way to get your tech startup up and running.
Be sure to look around you! People in your community or the people you have worked with can make good initial investors for your startup. Keep an eye out for investors who can open the business doors of investment for you.
After you have established your business or your app has taken off, you can reach out to banks for investments in the form of loans. Banks don't make good initial investors. Banks are very risk-averse. They usually refrain from lending to unestablished businesses or startups. But after your tech startup or app has taken off, banks are a good option if further investment is required. Bank loans also work against collateral rather than equity. That is also good for business owners who do not want to lose any portion of their business equity. Bank loans can help you scale your business. But these investors work against high-interest rates.
The final process of finding investors is usually Venture Capitalism. Most startup owners don't go for venture capitalist investors outright. They scale their businesses in other ways. But if the need arises to upscale the startups and capital falls short, VC investors are also an option. However, VC investors can cost a big chunk of business (Startups or apps) equity. Finding investors can seem pretty uncomplicated. Finding investors whose visions align with your own is difficult. That is why business owners should decide which investors to pursue very carefully.
How much does a tech startup founder make?
Startup founders tend to make a decent sum of money. As a business (Tech startup or app) takes off, the amount also increases. Just in the United States, Tech startup founders tend to make $130,000 to $150,000 a year. A recent study done by Kruze Consulting looked at the CEO and founder pay at over 250 funded startup operations.
They found out that by 2022, a tech startup founder, on average, was earning about $150,000 a year. This value, however, is not unchangeable. There is potential to go up or down. It depends on the total amount of investment the business has raised. For example, Any app or tech startup can only go so far with just crowdfunding. Investors come with investments. With investment, you get a chance at scalability. The bigger the business (tech startup or app), the more any CEO or founder would make.
According to the data gathered by Kruze, tech founders that gained an investment of less than $2 million for their app or startup made almost $106,000 a year. Those who made $2 million to $5 million made $135,000 on average. And those who managed to get an investment of more than $5 million had an average salary of $171,000 per year. In a general startup, founders can increase or decrease their salaries. And founder CEOs make more than Non-Founder CEOs.
But in certain startups, VC investment is involved. In these startups, CEOs get a fixed salary. And the compensation does not differ if you are a founder or not. However, this does change after many millions of dollars are made by a business. At that point, the CEOs and investors make more than the founders. It's directly proportional. As the investment goes up, so does the salary.
How do you assess a startup founder?
Creating a business is no joke. Startups may seem easy, but only business owners know how grueling the process can be. A common trait among startups is that their founders are often hard workers and passionate about their businesses. Chasing investors for investments is just half the battle. A business owner should prepare for endless obstacles and roadblocks in the way of their precious startups.
Investors do more than merely back concepts. Investors put money into persons. An investor doesn't just look at the business model but also at the founder. Investors believe a business (Tech startups or apps) is only as investable as its owner. Startups are a dime a dozen, but investors look for potential business leaders.
Founders that have previously created businesses are more likely to attract investors, but investors don't just invest in already established business owners. An investor seeks startups that have promising business leaders and builders. According to research published in the Harvard business review, investors do not solely rely on business plans while investing in startups. Instead, an investor looks for some traits in the business owner.
Any investor knows that a business founder who lacks perspective can ruin a good business idea (Startups or apps). Investors are intelligent and look for personality attributes in business (Startups or apps) owners that can make for a good business process. One of the first traits investors search for in any founder is sincerity. If any investor hints at the slightest bit of insincerity or fakeness, they will turn away.
Investors prefer founders who are charismatic and likable. No investor wants to invest in a hermit. Investors know that founders are responsible for driving a team. They cannot do that if they are not likable.
Monotony does not impress any investor. Investors like entrepreneurs who are passionate about what they do. The passion translates with investors well. Investors also prefer that founder has a modicum of humility. An investor knows that it's hard to work with a proud person. These traits are just some that investors prize in their investments.
Final thoughts
We hope you are clear about how to find investors for your app or tech startup. After going through this guide, you are all set to elevate your business graph by pitching your app idea to the right investors. Before finding investors, it's necessary to build a robust app to grab the attention of the investors.
For app development, we recommend you try AppMaster, a no-code tool that helps to create applications that can attract the right investors. The best thing about this app is that it offers drag-and-drop features that help beginners to build apps easily and quickly.
