mobile-apps, funding, venture-capitalOk, maybe the question is a little bit provocative but I really dont understand why some startups receive millions of dollars despite the fact that
The question came to my mind when I just read about a Tinder clone that received about 15 Million Dollars with currently 1 Million Users… I dont know if these are active users or just downloads, but how come someone thinks this app will ever make more than 15$/user?
This would mean that either
I also know about a geo fencing app where several clones exist in the app store but still the developers received a few million dollars.
I myself have a few apps that have about 300.000 downloads with about active 80.000 Users but make only about 3-4$ a day. What am I doing wrong that I dont dare to ask someone to give me a few million dollars…?
there are already alternatives of the same app in the app store that more successful
Because Google wasn’t the first search engine. Facebook wasn’t the first social network. eBay wasn’t the first online auction site. Amazon wasn’t the first online bookstore. Ford wasn’t the first car company. The iPod wasn’t the first mp3 player. The iPhone wasn’t the first smartphone. And so on…
Tinder wasn’t the first phone based dating app.
Being first, by and large, isn’t a good indicator of how successful a company or product will be.
there current number of user is ridiculously small so they will never ever make some money with ads
Because investment isn’t about how much the company is potentially worth now. It’s a bet on how much the company is worth in the future. You don’t look at the number of users now. You look at the trajectory of new users into the future, the size of the potential market, etc.
Investors don’t give companies money based on where they are now. Investors give companies money because they have a plan to get from where they are now to lots more money, and some evidence that the plan will work based on the company/team history and knowledge.
That is actually a good question. The problem is that you are judging a startup by a summary you read on a blog like TechCrunch. It can make any idea sound boring and also-ran. You were not in the meetings where the CEO pitched the company. They may have an interesting twist on an old idea, but you wouldn’t know that. The CEO might be very charismatic, which matters a lot for a startup success.
You don’t see any of that. Instead, you read a headline on Twitter and think it’s dumb. Keep in mind there is a huge gap between what goes on behind the scenes and what you hear.
The best answer to your question would probably have to come from an investor! That being said, I would still line to give some thoughts. As I understand, investors look for a few things, when they invest.
The most obivius, is the company making money and need investment to grow? If so, the motivation is pretty clear.
As already mentioned. Is the CEO charismatic? But I think there is more to it, than that. I think an investor looks more for talented and skilled people. At the end of the day, people is the real value in any company. From my experience, its never the idea that is interresting. Everybody can get an idea, but it takes a lot to do something with it.
A speciel twist is potentialy worth a lot. I once read that google was search engine nr 99 to be registrated in the us. You even had Yahoo with great succes and not only that, google wanted to remove all commercial, the only resource of income.
If you want to learn more, I recommend to look at youtube for “Shark tank” or “Dragons den”. Here you can learn a lot about investers motivation.
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