Despite the highly competitive app market, with over 71,000 app businesses in the United States alone, you can still launch a successful mobile startup. Read this guide to learn how to break into the ever-growing app market and the ins and outs of the different stages you will go through to build an app startup today.
We will discuss the approaches, technologies, tools, and resources required for new app development and answer common questions that arise when starting a mobile app business. Feel free to request a call with us or send us your RFP—we'd love to chat with you!
First, let's begin with the numbers and why it matters to launch a mobile app startup this year.
App Startup Statistics
The global app business industry is constantly growing, bringing up mobile startups and ventures. In 2022, the market size was valued at USD 207 billion, and it is predicted to grow by 13% annually from 2023 to 2030.
The United States, India, the United Kingdom, Canada, and Australia are the major contributors to this growth, hosting more than 98,000 app businesses and ventures in 2022, according to DemandSage.
The app market's growth is attributed to the increasing popularity of smartphones, among other reasons. However, it is challenging for mobile startups to get their share of the pie. Competition is extremely fierce, and only 11% of startups remain operating 18 months after launch, while the rest die primarily due to a lack of product demand.
On average, it takes 18-24 months to grow an app business, and most app companies fail to achieve revenue growth in their first year. Besides, growing app businesses are highly sensitive to market conditions and technology changes, which may negatively affect their success or threaten their existence.
In the content of these statistics, it's crucial to learn what you can do to bring your mobile company to success. So, to answer the question, "How to start a mobile app startup?" you should first keep in mind these considerations:
- The app business market is highly competitive; you need a unique selling proposition (USP) to stand out. Otherwise, don't
- Consider the market's demand before developing your app idea or product.
- Industry trends and changes may severely affect your mobile app business.
- Be patient and give your startup 18 to 24 months before it brings in new capital.
- Be prepared to take financial risks, especially in the early stages.
Now, let's look further at how to start a mobile app business.
Ideation: Identifying the Best App Startup Idea
Ideation, a creative process of generating and evaluating one or more app concepts, aims to refine the best idea for a successful mobile startup.
You begin your startup app journey with an idea. It may be an app you already use or an idea you think a segment of the population needs. You can repeat the existing app services, improve upon the current offerings, or create new functionality that caters to the needs of your target users.
Follow these steps to generate and validate your app startup idea:
1) Identify a problem or opportunity you want to solve using your mobile startup. Focus on a single issue that affects a group of users and has long-term benefits for them.
For example, a problem and solution may sound like this:
- Teenagers' social life is challenging to manage, but they generally rely on friends and family. On the other hand, parents do not have a good way of communicating with their children and worry about an adult lifestyle that their children are exposed to and have no control over.
- Develop a mobile app that communicates between teenagers and their families, which may help them stay connected. The app allows teenagers to organize social events, handle emergencies, and participate in family activities.
2) Do market research to determine how many people are interested in your problem and can benefit from your solution. Also, you want to know the competition and use cases so your mobile app startup idea stays unique.
3) Create a scenario to describe how your app solution solves the problem and what value it brings to the end user.
Remember that you must also provide a clear value proposition and be sure your proposed solution is unique.
Also, to evaluate the usefulness of your new app, ask yourself these questions:
- Why is the problem significant to the end user?
- How can your app make users' lives easier?
- How do you differentiate yourself from competitors?
Brainstorm your app with your team, friends, and family for their best recommendations. Then, test and prioritize your idea's features to avoid unnecessary costs and time-wasting.
4) Validate your concept to ensure it is a high-potential, profitable startup idea and can be delivered at a reasonable cost.
Use the following three criteria:
- Customer viability: check whether your target audience would be willing to use a product like yours. One way is to conduct surveys, online discussions, and interviews.
- Feasibility: figure out if you have enough money and staff to build your app and keep it running.
- Ownership: Know your intellectual property rights and ensure your app startup doesn't violate any regulations.
You can also validate your idea through market research, landing pages, ads, fake door tests, product prototypes and MVPs, surveys, user interviews, feedback forms, and A/B testing.
Stages of Mobile Startup Development
After ideation and validation, you should have an understanding of what you're going to do with your mobile app startup.
Remember that app development isn't a one-time process but an ongoing one, so you will need to revise your mobile app strategy throughout the development process constantly.
Here are four stages of mobile app development:
1. Product Discovery
The discovery stage refers to the previously mentioned ideation and validation process. You define your app's specific features, functionality, and development strategy at this stage.
2. UX/UI Design
At this stage, you come up with a concept design for the user interface. Users will interact with the UI, so it needs to be easy to use and intuitive. You'll also need to build a prototype or MVP that can run on the actual device or emulator.
3. Build and Test
The next stage involves moving your mobile app prototype from a paper or mock-up version to an actual app. At this point, you should have a full-featured mobile app that can do everything you originally planned it to.
At this point, you must ensure your mobile app works on all devices and meets specific security, quality, and performance requirements.
4. App Launch and Marketing
Once you've ensured your app is ready to go live, you can publish it in the app stores. In the launch stage, the real action happens, and the initial users start using your app.
You must iterate your mobile app to improve its features and functionality as you gain traction. Besides, you'll need to continue gathering user feedback and making necessary adjustments.
Choosing the Right Tech Stack
A mobile technology stack combines tools, frameworks, and programming languages to design, code, test, and improve an app. The technologies used in the stack should provide a rich set of features, be highly flexible, require a low learning curve, and have minimal cost.
The right technology stack will help you save time and money and allow your startup to scale up and out without spending much time on app improvement and infrastructure management.
Nowadays, there are several top tech stacks for mobile app startups to choose from:
Native app development (Kotlin, Swift, Java, etc.) is best for creating applications for specific devices and operating systems. It is complicated, time-consuming, and requires highly skilled developers. But, the apps created with this tech stack can offer high performance and customized user experience.
- High-performance apps
- Better security
- Easy to test and maintain
- High development time and cost
- Requires frequent upgrades
- No flexibility
Hybrid app development (Ionic, Cordova) is a halfway solution between native and web app development. It creates universal apps for Android, iOS, Windows, and Mac OS. The hybrid approach is suitable for small and mid-sized companies that don't need full-feature phone compatibility but are concerned about performance.
- Fast development
- Works for most platforms available
- Lack of flexibility
- Limited development capabilities
- Poor UX
Cross-platform development (Xamarin, React Native, Flutter, etc.) is convenient for multiple platforms. This stack allows developers to work on the same code base regardless of their device or operating system. You can also update and improve your apps without changing the code base.
- Easy to code
- Easy to maintain
- Lack of native features
- Slow performance
- Poor UX
Growing Your App Startup: a Business Perspective
Previously we talked about app startup development from two perspectives: concept and technology. Now, let's consider what it takes to keep growing your mobile startup and turn it into a full-fledged app business.
The following business considerations will help you grow your app startup company:
1. Select the Best App Growth Strategy
There are three common app growth strategies: acquisition, virality, and monetization. You can select any of these based on your startup's goals and resources.
The acquisition strategy is the most common mobile app growth strategy. It involves marketing your app to potential customers through social media, retargeting, and paid ads.
This strategy allows you to tap into large audiences at a reasonable expense. First, however, you should keep up with your competitors and consistently invest in your marketing budget to attract new users.
The virality strategy is an app growth tactic for social, gaming, sports, and entertainment startups. It involves word-of-mouth promotion, creating an engaging product or service, and offering discounts and giveaways to customers. Promoting your app by getting people to discuss it is the basic idea.
Virality can effectively acquire new users and improve your retention rate. You grow your app using this strategy by encouraging new users to self-promote or share it with friends.
The monetization strategy is the most profitable mobile app growth strategy. It relies on a straightforward business model: app sales or subscriptions.
You can increase the number of users willing to pay for your product by offering them special features, functions, and other incentives. You can also charge customers for premium features, such as exclusive content or product upgrades.
2. Define Your Startup's KPIs
You must identify the key metrics that will help you measure the growth of your app. KPIs are essential to track over time, as well as to compare with the KPIs of your competitors.
Here are a few app KPIs to consider for your mobile startup:
- Total addressable market (TAM). This KPI represents the total number of customers who could use your app. A higher TAM means more potential revenue. However, it also means you'll need to invest more in marketing and sales to reach it.
- Active users (MAU, DAU). This metric indicates how many people use your app regularly (monthly and daily). The more active users you have, the more revenue you generate. However, this requires significant marketing and promotion efforts to convince users to convert into paying customers.
- Lifetime value (LTV). It shows how much revenue your app will generate over its lifetime. The LTV is calculated by considering the acquisition costs and average revenues.
- Customer acquisition cost (CAC). It estimates how much money you spend to acquire a new customer. It can be measured in in-app actions (e.g., cost per registration, CPR), clicks (cost per click, CPC), impressions (cost per one thousand impressions, CPM), and other metrics.
3. Approach Potential Partners and Investors
If you're ready to take your mobile startup to the next level and build a real business, consider looking for potential partners and investors.
There are some time-proven ways to find investors and venture capitalists for your mobile startup, including the following:
1. Local and regional app business investors. If your app business needs serious investment, approach potential angel investors or venture capitalists in the local and regional communities.
You can find them through startup meetups, community groups, and other networking events in your location. Also, consider these trustworthy resources to narrow your search:
- Angel Investment Network
- Angel Capital Association
2. Crowdfunding. You can raise capital through crowdfunding platforms like Angel List, Kickstarter, MicroVentures, and Indiegogo.
Consider applying to these or other crowdfunding platforms to gain a strong presence and pitch your business. Remember to show off your app and your team credentials.
There are a few rules to follow when running a crowdfunding campaign for your mobile app startup:
- Be realistic. Set your fundraising goal at or around the minimum amount you need to complete your project. Don't set it too high; otherwise, people will think you're a fraud.
- Create a solid pitch video. You only have 30 seconds to show off your mobile app (and yourself) before potential investors dismiss your campaign. Make sure you make the best of this time.
- Communicate with your investors. Keep them updated on the progress of your app development and business operation.
- Decide how you'll use the money. If there is a gap between the amount you need and what your campaign will raise, consider raising additional funds from other sources (such as friends, family members, or angel investors in your local community).
- Remember to thank your donors. You'll have to stay in touch with your investors and update them on the progress of your app. Acknowledge their support at any opportunity.
3. Co-founders. You can pitch your app idea to existing companies for potential investors.
Sometimes, the founders will be interested in acquiring you as an investment. You can also give them a stake in your business while you work on your app. However, this option might be risky if you have relevant business experience or the company shares your long-term vision.
4. Personal connections. Finally, you can approach your friends, family, and acquaintances for investment. The only requirement is to have a solid relationship with your potential investors.
If you choose this strategy, however, keep the lines of communication open and ask for their honest feedback on your app. If they identify any red flags or issues, such as poor design, make changes until you're satisfied with the product. Your relationships can be damaged if you don't improve your app to meet their standards.
A mobile app startup represents an excellent opportunity for entrepreneurs to start their businesses relatively fast—they can get new capital in 18 months if the company is successful.
However, it's essential to design a balanced growth strategy that will allow your app to reach its maximum potential. Also, you should pick up a suitable technology stack, find relevant talent, and choose a sustainable business model.
We at Intersog believe your mobile startup can be a successful and rewarding experience for you, your team, and your investors. With our help, you can ensure that you're building the proper startup for success in the app market. Feel free to contact us to chat about your idea and technology needs. We'd love to be your startup’s tech partner!