So, you are an imaginative kind of person – you conceive fresh ideas, discover new things, and overall you have a creative set of mind. And one day you come up with an app idea. The future product has a strong value proposition, very useful features, and you are sure the users will love the app. What is also important, it has good perspectives to monetize.
“Well, that’s a success!”, you think to yourself. “App industry is thriving, there are tons of startups building new apps, big tech companies paying for good ideas. I will just go ahead, sell my idea, and make my first million or two!”
There is a lot of information about how to sell an app idea scattered on different websites. In this blog post, we will tell you about which companies you can sell it to and describe specific steps to help you make money from your app idea.
How to Sell an App Idea to Apple
Of course, your app idea is so outstanding that even Apple would be willing to buy it and make a successful product out of it. But how do you reach out to them? You don’t know anybody who works at the company. You decide to go to Apple’s website and hit the “Contact Apple” button. At first, you are lost because there are so many topics for which you can contact Apple. Finally, you find an option to leave the feedback, and you start describing your idea.
The bad news is that Apple does not accept any ideas. They officially declare it in their Unsolicited Idea Submission Policy and ask not to submit any proposals, materials or works to Apple’s employees or contractors.
There is also one more interesting paragraph in the Policy saying that if you submitted your idea, Apple will treat it as its own, and you will receive no compensation and reward in return. So if your idea is indeed revolutionary and you submit it to Apple, they can develop it and make it successful, but nobody will ever find out who is the real hero.
Nevertheless, Apple does buy successful working apps such as the voice assistant Siri, which was purchased in 2010. There were rumors that Siri’s investors received up to $200 million from Apple. So, if you think that your app has the potential to fit into Apple’s roadmap, you will need to build high quality and popular product and maybe you’ll get lucky to sell it to Apple.
How to Sell an App Idea to Google
Android’s Google Play has about 2.5 million apps. This is the largest app store in terms of the number of apps published. If you say “i have an idea for an app” and it is unique, it might be a good idea to check the Google Play Store to see if there is anything similar.
Google does not state they don’t accept ideas. They do accept them, however, just like Apple, they don’t pay for your submitted proposals, but treat them as their own.
So, if you feel altruistic, you can submit your idea through an online form, but don’t expect money in return.
If you want to make money and sell your app to Google, you will firstly need to develop your high-quality app, market it, and make sure Google notices it.
Very often, you see the news that big corporations like Google, Apple or Facebook buy smaller companies to help them compete against each other. Recently, it was reported that Google was planning to acquire “Firework” – an app similar to TikTok. TikTok with its format of short 30-second videos became a favorite platform for younger video creators, potentially threatening Youtube dominance. Facebook is also building a similar app for short videos called “Lasso”.
For Google (or any of the big tech guys), to notice your app, the product needs to have the quality to help the corporation fight and outperform its rivals. Another option is to develop a solution that would help the company improve its own products. In 2016, Google purchased the Israeli startup, Waze. It was a navigation app having 50 million users. One of the advantageous features Waze had was a possibility for users to interact and report on the road and traffic situation in real-time.
How to Sell an App Idea to Facebook
It may come as a surprise, but Facebook does not buy app ideas either. Facebook does not pay for any type of ideas – whether it is an app, or a feature, or some kind of technology. Although they are very open to suggestions from the community, they will not give any money to people who submit their offers.
Like Google and Apple, Facebook also buys ready products, and they don’t necessarily have to be profitable. When Facebook acquired Instagram in 2012, the latter was not generating revenue. But in 2018, Instagram was estimated to be worth over $100 billion. Former Facebook employees revealed that the acquisition was for fighting Twitter and Google+.
Another famous Facebook acquisition was the messaging app, Whatsapp. Facebook paid $19 billion – an enormous amount taking into consideration that Whatsapp was famous mostly outside the US and didn’t make a lot of money. Confidential charts revealed by the United Kingdom’s Digital, Culture, Media, and Sport (DCMS) parliamentary committee show that in 2014, Whatsapp was getting more popular and potentially had all the chances not only to compete but to successfully win the battle over Facebook Messenger.
To be purchased by Facebook, your app does not necessarily have to be related to social networking. Facebook has a very diverse portfolio. For example, in 2014, Facebook bought a virtual reality product called Oculus VR. They also bought a company called Ascenta which made drones. Other acquisitions covered companies within industries like video software, fitness, and health monitoring, and team messaging.
How to Sell an App Idea to a Company
Not only Apple, Google, and Facebook purchase apps. Other companies are ready to invest and broaden their business portfolio as well. Don’t be upset if your app idea does not fit the business models or roadmaps of big tech Silicon Valley corporations. There are smaller companies, and there are businesses outside the US who might be willing to purchase your app project.
In 2018, 97 unicorns started operating in China. Unicorns are startups valued not less than $1 billion. The presence of Chinese apps and investments is hard to underestimate. TikTok – the eighth most downloaded app in the US in 2019 – was created by ByteDance, a tech company from China. PUBG mobile game was developed by Tencent. It turns out that Chinese app publishers learn very fast how to market their apps to the US and European users.
Another strategy of Chinese companies to grow their global presence is to acquire smaller companies from Europe and the US. For instance, Tencent failed to make WeChat successful in the US. So they purchased or invested in other firms locally to get their gaming products into the western markets.
As of January 2019, over 300 tech unicorns were operating in various countries, such as the US, China, Singapore, UK, South Korea, India, Indonesia, Brazil, Germany, Switzerland, Malta, Sweden, Israel, etc.
And while you are looking for somebody to purchase your app, there might be some tech company interested in acquiring promising app projects and ideas. If you browse through the list of employees of these organizations on LinkedIn, you might notice the users with a title similar to “Investment manager” – these are the people responsible for investments and acquires.
So what should you do to sell your idea for an app idea to a company? These steps will help you succeed in getting $million in revenue for selling your project:
1. Put Your App Idea on the Paper
Describe what your app will be about, what features it will have, what value it will bring to the users. If you have ideas about the design, app name, marketing and monetization strategies, or anything else related to your app, write it down. It does not have to be very detailed, but it will be very useful when you start creating the business concept.
2. Do the research and analyze information: Know your market and your users
No matter how sure you are about the excellence of your app idea, make sure to do the research and have the relevant data regarding the overall market, your competitors, and your prospective users. Let’s say you have an idea to build a fitness app with AI algorithms that would pick a workout for a user based on his / her physical training experience, body particular qualities (taking into account possible previous injuries), and goals. Here are some things you’ll need to research:
–Overall market: You will find that the market for fitness apps is quite saturated. Apps for runners, yoga lovers, swimmers, those whose who want to lose weight – there are plenty of them, available in both App Store and Google Play, paid and free, targeted on men and women.
- Are there similar apps to yours?
- Which app stores are they published in?
- How many downloads do they have?
- Which locations are they the most popular in?
–Competitor apps: Although there are so many fitness apps, not all of them will be your direct competitors. Pick the ones that are closest to your app project in terms of idea, features, target audience, and markets and do more detailed research on those products.
- Are they different and similar to your app?
- How many reviews do they get, what’s their rating, and what do users say about them?
- How do they promote their products?
- What monetization strategies do they use?
- How do they retain their users?
-User base: You probably visualize your users as people who are physically active (or plan to become such), who care about their health and body. What other distinctive characteristics do your users have?
- Who are your users?
- Are they male/female/both?
- Are they children/adults/both?
- How old are they?
- What occupation do they have?
- How do they find out about new products?
3. Create a Business Concept
The business concept should be a detailed document based on the previous two steps. This is the presentation where you should refine your app idea and display a comprehensible business plan. It should contain the answers to all the questions your investors might have. You should clearly understand who the users of your fitness app will be and how they will benefit from it; how your project will be different than all the other numerous fitness solutions; which marketing channels you will utilize to attract people who care about their health and bodies; how you will make money with your idea.
Most often, business concept presentation has such topic blocks (but feel free to add other valuable information if you feel it’s important for the investors):
Your app project:
- Brief description of the app and its features
- What problem will it help users solve and how
- Why is it unique
- Analysis of your target audience in terms of age, gender, geography, occupation, etc.
Market and competitors overview:
- Why is this market attractive and its growth perspectives
- Who are your competitors
- How your app is better than competitors
- How are you going to compete with peer apps
- Which promotional channels will you use to launch your app
- How are you going to grow your user base organically
- Which paid acquisition channels will you use
- What countries will you focus on to promote your app
- Expected number of downloads over time;
- Anticipated number of active users – daily, weekly, monthly
- Expected retention rate and how to achieve it
- How do you think your app will make money
4. Develop Your App
Yes, we were talking about how to sell an IDEA for an app. But have a look at the examples above. Google, Facebook, and Apple invested heavily in working products. You can find tons of other cases online when tech companies bought working projects. These are real precedents, and if you want to receive several million or billion US dollars for your app, you’ll need to work hard.
In our previous blog post “I Have an Idea for an App” – Here is Where to Start and What to Do, we described what it takes to develop an app. It’s not only about hiring programmers to write the code. It’s also about protecting your app legally, developing the brand style, and creating a clear marketing strategy.
5. Launch and Grow Your App
The launch of your app should be preceded by thorough testing. Your business concept presentation already includes information about launching activities. So if you have that topic covered, all you need to do is just implement everything you planned.
To attract investors, you’ll need to keep up the good work and grow your app – increase the number of users, introduce new features, improve retention and engagement, interact with your users, etc.
Do the best you can to develop and keep a good reputation of your app: don’t violate the app stores’ rules, be nice to your users, be responsive to the media. It’s also important to lead your business operations properly, follow your country’s laws, pay taxes, and respect your employees. Remember that when you find investors, they will do the due diligence of your company.
6. Find potential investors and pitch them
If Google or Apple hasn’t contacted you yet, it’s a sign you’ll need to look for the relevant investors. Here are several guidelines to help you:
- Create a list of tech companies capable of buying app projects.
If your goal is to sell the app (and not just get some investments to grow your organization), you will need to look for tech companies capable of buying other projects. The simplest way is to search online for tech unicorns, research about recent acquisitions and investments. Don’t limit yourself to your country or region only. Your buyers can live anywhere.
- Pick the companies that are relevant to your business.
Analyze the profile of the company, read about its latest acquisitions, and try to understand if your app fits their business model and development roadmap. Limit your initial list of investors to the companies that are relevant to your app
- Find relevant contacts.
Check the website of the company to see if they have contacts of people responsible for business development or investments. You can also check out LinkedIn and find company representatives who have accounts there. Ideally, you would need to connect and contact a person responsible for business acquisitions. You can also use LinkedIn to find a necessary person through the other contacts that are available.
- Contact and Pitch the Potential Investor
Once you have a list of necessary contacts, you are ready to start with pitching the companies. The channel you decide to use depends on your personal preferences. You can start with LinkedIn messages and emails, and then proceed with phone calls and personal meetings. You can also meet those companies’ representatives at startup events and meetups.
Remember not to disclose too much confidential information about your app. All the information you provide should be disclosed under the mutually signed NDA. There will be due diligence done by your potential buyer. Make sure to get the professional lawyer’s support if you feel you will need legal assistance.
To sum up, knowing that tech giants don’t reward for mere ideas, think again if you still want to offer your app idea to Facebook, Google or Apple. These companies purchase ready solutions that have the potential to strengthen their own products and compete with their rivals. And don’t forget that there are lots of other companies around the world ready to buy high-quality projects. However, don’t hope to get wealthy shortly: getting millions in revenue from selling your app concept will require hard work, including creating the working app itself and making sure it continuously grows.
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