An App Investors Guide: How to evaluate and select the right projects?

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July 27, 2023 Business

Confused about what app idea to invest in?

Well, we have a short guide to help you out in the same.

For starters, while investing, selecting the right app project is a necessary task. This step ensures that your investments are secure. Moreover, it’s not just about the investments; it’s about all your resources too. And when it comes to results, it’s your economic value that increases along with the app. It’s a win-win situation, isn’t it?

How to Find the Perfect App Idea to Invest In?

While picking the right app may seem like a difficult task, it can be broken down into four simple steps:

Identifying Potential Apps: Before deciding on an app project, you should have a general idea of the type of app you want to invest in, such as healthcare, fitness, or edu-tech. You must conduct extensive research on the achievable market for the product. Observing the features of the app accordingly will give you an idea of how the app will perform after it has been launched. Looking up industry benchmarks and technology provides a direction and standards to which the application should adhere.

Comparison: The next step is to draw parallels between the potential app projects. This comparison shall be done based on their risks, costs, market potential, and other significant factors. This comparison assists you in determining which project is more beneficial to you.

Evaluation: The calculation of the accuracy of the data during the comparison step is referred to as evaluation. Finding patterns, building performance indicators, and developing an action plan based on cost and risk analysis all come under evaluation. It helps you accurately determine the possible outcomes the application will yield. Below are some major criteria that should be considered for a successful evaluation.

Internal Rate of Return: IRR, in simple terms, is the expected return value of any project in terms of percentage.

Net Present Value: NPV is calculated for financial records of how and at what step any capital will be used for the project.

Return Ratios: Return ratios show how much profit, as compared to the investment, the app will generate for the investors.

Final Selection: Following the evaluation step, all results should be noted and compared to find the best fit for you. Applications that have a Return on Investment (ROI) close to or above 7% provide a decent profit. Also, an app with an NPV with a value above zero should be considered while selecting. The goals and features of the app should also be compared to your vision. The selected app should have more benefits than costs and should have fewer risks to make it a safe investment.

Points to Consider While Investing in an App

Now that the steps are out of the way, let us go over some important considerations when investing in apps.

Experienced Team: When investing in a newly established app idea, you must ensure that all of your investments are secure. A strong and experienced team development team provides unspoken assurance for a successful start and problem-solving abilities.

C-suite Executives: The chief executives of a start-up must be well-versed in their respective fields and possess a set of problem-solving skills. Considering these qualities of any C-suite executive is essential, as mobile app development is a meticulously planned process and they are in charge of all the critical operations. So, overlooking any of these aspects might lead to a failed investment.

Market Potential: Generally, app investors look for applications that have high market potential. A product with higher market potential tends to attract a higher user rate, returning larger profits. The potential for expanding a larger target audience over time could also result in a profitable investment.

Reliable Base: Starting with a solid foundation allows you, as an investor, to better understand the plans. A start-up must have a basic layout of the functionalities it will perform as well as a defined development program. Having a basic layout helps app investors understand the app’s capabilities.

USP: The app should have a unique selling point (USP), as there are many similar apps in the market that are already in use. Many new apps fail because they add to the noise. Even if the app is similar to others, it should have a key feature that sets it apart.

Market Hold: It could be the USP or any other feature of the app that holds its users. Market hold comes from having a feature that the users of the app find essential. A firm grasp of the market eventually attracts more customers. The app should have a scalability feature to manage and serve more users.

Conclusion

It is your responsibility to choose the best application that fits your needs as well as your bank account. Therefore, to make a significant profit from your application investment, it should have noticeable key features. It is also advisable to check the capabilities of the potential application to ensure that the project runs without any hassles. Conducting thorough research on your potential project will certainly help you avoid making a poor investment decision.