Mobile, Tips & Triсks, Business
04 Feb 2022
0 min read

How to Invest in Mobile Apps? 🤑

Mobile apps became a common part of business activities, irrespective of their size, location, or market outreach. The number of mobile app downloads increased from 141 billion in 2016 to 218 billion in 2020. It means that the market almost doubled in four years. As it keeps growing, mobile apps investment continues offering opportunities to individuals and companies.

How to invest in mobile apps?

Businesses need to consider the returns on their investment and value generation potential. It is essential to measure the direct or indirect cash flows related to mobile apps. For instance, displaying ads in a mobile app is a direct method used to generate returns.

At the same time, an increase in the number of customers generating higher sales is an indirect method of securing capital inflows. It is why companies looking to invest in a mobile app should investigate what monetization techniques the app uses, as well as other aspects.

If you’re wondering how to make money with mobile apps, there are several ways to do so. Investment approaches differ in the following three ways:

  • By type: internal spin-off project or a project backed by an external investor
  • By size: personal investment or angel investment or venture capital
  • By purpose: marketing or profit generation

Who can invest in mobile apps success

We won’t teach you how to invest in mobile apps ventures but can provide some valuable insight from the mobile apps developers’ perspective.

Angel investors, venture funds, and institutional investors provide capital to companies at various business development stages. Their common trait is that they invest in mobile apps’ success. In particular, they want to see a business model that shows potential for generating returns, either through in-app purchase or subscription. Irrespective of the business model type, each investor accounts for the risk levels and return potential.

Internal investment

Often, game development studios invest in new projects at their risk. There might be 1 in 10 success that will cover other failures. Generally, it is expected that each second project at least returns the development cost. However, an indie game developer can do a personal project, too, using his or her savings. Rarely, a mobile app development company would invest in internal projects for its own needs; even so, not as much for profit as to test ideas.

Angel investors

Angel investors come at the earliest stages of business, usually in the first rounds of funding. They offer the lowest amount of capital funding in exchange for share in the future returns or equity. In exchange, they also offer the expertise, reputation and networking that may support business growth over time.

Venture funds

Venture funds operate pools of funds from several investors, coming at the later funding stages. These investors provide more funding while also offering expertise to improve mobile apps or their functionality. They bet on the most successful mobile applications in the future.

Institutional investors

Institutional investors represent hedge funds and mutual funds that provide funding during the public rounds of equity sale or the initial public offerings (IPOs). They have the most capital and support mobile app companies at the later stages.

Retail investors and mobile apps

Retail investors are the rapidly growing group with the broader availability of investing tools, including mobile apps like Robinhood (read this unbelievable story on GameStop stock). Common people without a background in investment gained access to the markets through mobile apps. They are constantly seeking the best mobile apps to make money.

This group may consider public companies traded on stock exchanges representing the most prominent apps, such as Meta (previously Facebook Inc.). Alternatively, it is possible to invest in exchange-traded funds (ETFs) such as Vanguard Information Technology ETF, which focus solely on the technology companies, including those developing or relying on mobile apps.

Retail investors may also make money by using mobile apps. The market has several apps that reward their users for the time spent using the app, provide cashback, or generate discounts. Each form of return has its nuances, namely the time needed to generate sufficient return or consistency of rewards. The apps based on cryptocurrencies and tokens are also rapidly rising in popularity.

4 ways to monetize mobile apps

  • Display ads in mobile apps
  • Let users buy it once
  • Offer a subscription
  • Include paid features on top of freemium

Any investor should make money from mobile apps to make sense of investing in them. To achieve this, a business has to focus on such aspects as expansion of the target audience and delivery of new features. On the other hand, mobile app developers may earn a living by developing apps directly or holding stock options in the company specializing in app development.

Direct and indirect methods of revenue generation from mobile apps constitute the primary income sources from mobile apps. A business would need to decide whether they want a template-based app or a custom app, and the former is usually cheaper and faster to develop but lacks many custom app features.

Outsourcing an experienced team of developers guarantees quality and post-development support. The decision to create mobile apps requires companies to decide on the app type, business model, and market size. Don’t worry, we’ve got your back: from business analysis and to the actual launch.

Create mobile apps to start making money

Ready to invest in mobile app development? Companies like ours possess the needed experience, knowledge, and skills to deliver a quality mobile app, be it an Uber-like taxi or a custom delivery application. These apps might generate a sufficient return on investment (ROI), or save money for their business owners, or resolve the pain points for managers.

Mobile apps will continue offering investment opportunities in the future, as their role continues increasing for businesses and society in general. Don’t miss out.

 

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CTO at Triare
Anton Malyy

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