What Are Angel Investors Looking for in App Startups?

A photography app startup recently secured £250,000 from three angel investors after showing them something quite simple... they had 12,000 active users who were editing photos daily and 800 of those users had already paid for premium filters. The pitch deck was modest, the team was small (just three people), but the evidence was clear and that's what made the difference.

Angel investors want to see proof that people will actually use your app before it becomes the next big thing, not just an idea that sounds good in a meeting room

I've worked with probably 40 or 50 startups over the years trying to secure funding for their mobile apps, and the gap between what founders think investors want to hear and what actually gets cheques written is quite large. The app startups that succeed in raising money tend to focus on evidence rather than vision, which feels counterintuitive (took me ages to realise this), but angel investors have usually seen dozens of pitches that month alone and they're looking for specific signals that your app won't be another waste of their capital.

Getting angel investment for an app startup means understanding that these investors are risking their own money, not managing a fund with other people's cash, which changes everything about how they make decisions. They want returns but they also want to sleep well at night knowing their investment was sensible, and that means you need to show them you've done the hard work of validating your idea with real users in the real market.

Understanding the Angel Investment Mindset

Angel investors typically put in anywhere from £10,000 to £150,000 into early stage app startups, and they expect that nine out of ten of their investments might fail completely. This means they're hunting for that one company that could return ten times or even fifty times their initial investment, which explains why they focus so heavily on growth potential rather than steady, predictable returns.

The thing most founders get wrong is thinking that angels invest in ideas... they don't really, they invest in execution capability. I've watched brilliant app concepts get rejected whilst fairly ordinary ideas with strong teams and early user data get funded within weeks. Angels want to know that you can actually build what you're promising, that you understand your users deeply, and that you have a realistic plan to acquire customers without burning through cash too quickly. Before approaching investors, it's worth considering whether you should raise investment for your app at all, as funding isn't right for every startup.

Most angels have made their money in business already, which means they've seen problems before and they can spot inexperience quite quickly. When you're in a pitch meeting, they're watching how you handle tough questions, whether you admit what you don't know, and if you've thought through the boring bits like customer support costs and server expenses as your user base grows.

They're also thinking about exits... how will they eventually get their money back plus a healthy return? This usually means acquisition by a larger company or in rare cases a public offering, but mostly acquisition. Your app needs to be building something that a bigger player might want to buy in three to five years, whether that's the technology itself, the user base, or the market position you've established.

Proving Your App Has Real Market Demand

I've probably seen this mistake more than any other... founders who've spent six months building an app before talking to a single potential user. Angels want to see that you've validated demand before asking for their money, which means you need actual evidence that people have the problem you're solving and they're willing to pay for your solution.

The best validation is paying customers, but even if you haven't charged yet, you need numbers. How many people have downloaded your beta? What's the daily active user rate? Are people opening the app multiple times per day or does it sit unused after the first week? I worked with a fitness app startup that had 3,000 downloads but only 200 people who'd used it more than twice... that's not validation, that's a problem with either the concept or the execution.

• Beta user numbers with clear engagement metrics (daily active users, session length, return rate)
• Customer interviews recorded and analysed showing consistent pain points
• Competitor analysis proving market size and growth trends
• Pre-orders or waitlist signups with real email addresses
• Early revenue even if it's small (£2,000 per month beats zero every time)

Build a simple landing page that explains your app and asks people to join a waitlist before you write a single line of code. If you can't get 500 email signups after spending £300 on Facebook ads, you probably don't have a viable product. Learn more about building an email list before your app launches to validate demand early.

Market size matters but not in the way most founders think. Saying "if we capture just one percent of a billion pound market" sounds good but it's meaningless to angels. They want to understand your actual addressable market, which is the number of people who have the specific problem you solve, can access your app, and can afford to pay what you're charging. That number is always much smaller than the total market size. Before pitching, make sure your app idea doesn't already exist in a form that would make investment risky.

Building a Team That Investors Trust

I've lost count of how many times I've seen great app ideas fail to get funded because the founder couldn't convince investors they had the right team. Angels invest in people more than anything else, and they're looking for a combination of technical ability, business sense, and domain expertise that convinces them you can actually execute on your plan.

Technical Capability Matters

You need someone on the founding team who can actually build the app, not just hire developers to do it. If you're non-technical and you're the sole founder, that's a red flag for most angels (learned that the hard way watching pitches get rejected). Having a technical co-founder or being technical yourself shows you can iterate quickly, fix problems without burning cash, and understand what's actually possible versus what's just wishful thinking.

Domain Knowledge Builds Confidence

If you're building a healthcare app, having someone on the team who's worked in healthcare for years makes a massive difference to how investors perceive you. The same goes for fintech, education, or any specialised vertical. That domain expertise means you understand the regulations, the user needs, and the business relationships you'll need to grow, which reduces risk in the investor's mind.

Your advisory board counts too... if you can show that experienced people in your industry are willing to attach their names to your startup, that carries weight. Just make sure they're actually involved and not just names on a slide deck, because angels will often check.

Creating Financial Projections That Make Sense

Every founder thinks their app will grow like the hockey stick charts they've seen in tech blogs, but angels have seen hundreds of financial projections and they can spot nonsense quite quickly. Your numbers need to be ambitious enough to show big potential returns but grounded enough in reality that investors don't think you're making things up. Revenue forecasting to attract app investors requires specific methodologies that demonstrate thorough market understanding.

The best financial projections show three scenarios: conservative, moderate, and optimistic, with clear assumptions listed for each number so investors can see your thinking

I usually tell founders to build their projections bottom-up rather than top-down. Instead of saying "we'll capture 2% of the market which equals £5 million in revenue," start with "we can acquire users at £4 each through Instagram ads, convert 3% of them to paying customers at £9.99 per month, and retain them for an average of eight months." That shows you understand your economics, and angels can then question your assumptions and see if the numbers hold up.

User Acquisition Costs Need to Be Realistic

I've watched startups crash because they assumed users would just magically find their app... they won't. You need to model how much it costs to acquire each user across different channels (paid ads, content marketing, partnerships, app store optimisation), and those costs need to be based on actual testing or at least industry benchmarks. If competitors are paying £8 per install, you're not going to get yours for £1 unless you have something truly different.

Your lifetime value needs to be at least three times your acquisition cost for the economics to work long-term, which means if it costs you £6 to get a user, they need to generate at least £18 in revenue over their lifetime with your app. Most consumer apps struggle with this which is why angels often prefer B2B app models where the revenue per customer is much higher. For financial apps specifically, understanding how much a money saving app costs to build helps create realistic budget projections.

Showing Traction and User Growth

Traction is the single biggest factor that makes angels comfortable writing cheques. If you can show genuine momentum with real users and real growth, you're 80% of the way there because it proves that your assumptions about market demand weren't just hopeful thinking.

The growth rate matters more than the absolute numbers at this early stage. Would you rather have 1,000 users growing at 5% per week or 10,000 users staying flat? Angels want the smaller number with growth because it suggests you've found something that works and you just need capital to pour fuel on the fire (that's literally how they think about it). Understanding what happens after you launch your app MVP helps you prepare for the growth phase that investors want to see.

What Counts as Real Traction

Downloads alone don't mean much anymore... I've seen apps with 50,000 downloads that had basically zero engagement and died within six months. Angels want to see active usage patterns that prove people are getting value from your app.

1. Daily active users as a percentage of monthly active users (aim for 20% or higher)
2. Session length and frequency showing people actually use the app regularly
3. Retention curves that show users sticking around past the first week
4. Revenue growth even if it's small amounts (going from £400 to £1,200 monthly is good)
5. App store ratings above 4.0 with actual written reviews mentioning specific features
6. Organic growth percentage showing word-of-mouth is happening

The apps I've worked on that secured funding fastest were the ones that could show a clear inflection point where growth started accelerating. Maybe you launched a new feature and retention doubled, or you tried a new marketing channel and acquisition costs dropped by 60%. Those moments prove you're learning and iterating effectively.

Protecting Your Intellectual Property

Most app startups don't need patents, which surprises a lot of founders who think IP protection is crucial to getting funded. Angels care more about your execution speed and market position than whether you've filed patents, because in the app world being first to market and building a strong brand usually matters more than legal protection. However, understanding which IP rights you should secure before app launch can help you make informed decisions about protection.

That said, there are some basics you absolutely must get right. You need to own all the code and designs for your app, which means if you hired contractors to build it, you need written agreements that assign all intellectual property rights to your company. I've seen funding deals fall apart because a founder couldn't prove they actually owned what they were trying to sell to investors.

Get a solicitor to draft a simple IP assignment template that every contractor or employee signs before they write any code. It costs maybe £600 upfront but saves massive headaches later when investors do their due diligence.

Your data handling practices matter more now than ever with GDPR and similar regulations worldwide. Angels want to know that you're collecting user data responsibly, storing it securely, and have clear policies about what you do with it. A data breach or regulatory fine can kill an early stage startup, so showing you've thought about this reduces perceived risk. Many founders wonder whether terms of service can protect them from being sued - it's worth understanding the limitations.

Planning Your Path to Profitability

Angels want to see that you understand how your app eventually makes more money than it spends, even if that's a couple years away. The path to profitability doesn't need to be next quarter, but it needs to be visible and logical based on your business model and growth assumptions.

Freemium models work well for consumer apps if your conversion rate from free to paid is at least 2-4% and your paid features provide enough value that people stick around. I've worked on apps where the conversion rate was under 1% and the economics just never worked... you end up spending £5 to acquire a user who generates 50p in lifetime value, which is a fast path to running out of money.

Subscription models are attractive to investors because they provide predictable recurring revenue and higher lifetime values. If you can get someone to subscribe at £6.99 per month and keep them for an average of 11 months, that's over £75 in revenue per user, which gives you room to spend money acquiring them profitably.

The Unit Economics Need to Work

Break down your economics on a per-user basis and show when you break even on each customer. If it costs £7 to acquire a user and they generate £3 in their first month, £2.50 in month two, and £2 per month after that, you can show that you break even at month four and everything after that is profit (before accounting for fixed costs like salaries and servers).

Fixed costs are where a lot of founders trip up in their projections. Your team salaries, office space if you have it, server costs, insurance, legal fees, and all the other overhead needs to be covered by the margin between your revenue and your variable costs. Angels want to see that you've thought through these numbers realistically rather than just focusing on the exciting growth metrics.

Preparing for the Pitch Meeting

I've sat through probably 30 or 40 pitch meetings with founders trying to secure funding, and the difference between a good pitch and a bad one often comes down to preparation and clarity. Angels are busy people who see multiple pitches every month, so you need to respect their time by getting to the point quickly and backing up your claims with evidence.

The best pitches I've seen were under 15 minutes for the presentation itself, leaving plenty of time for questions where the real conversation happens

Your pitch deck should cover the problem, your solution, why now is the right time, your business model, the market opportunity, your team, your traction so far, what you're raising and what you'll use it for, and your ask. That's maybe 12 slides maximum, with most slides having more visuals than text because you'll be talking through the details anyway.

Practice the Questions You'll Get

Every angel will ask about your user acquisition strategy, your unit economics, why users will switch from existing solutions, what happens if a bigger company copies your app, and how you'll use their money. Having clear, confident answers ready makes a huge difference to how investors perceive you (learned this watching founders stumble through obvious questions they should have prepared for).

Bring your laptop with the actual app installed so you can show it working if they ask, which they usually do. Nothing kills confidence faster than a demo that crashes or a founder who can't actually show how their own app works. I always tell founders to have the app loaded and ready on a stable version, not the development build with half-finished features that might break during the meeting.

Know your numbers cold... your monthly burn rate, your current runway, your conversion rates, your churn percentage, your customer acquisition cost across each channel. If you have to keep checking your notes or you give vague answers, angels assume you don't have a handle on your business, which is a massive red flag when they're deciding whether to trust you with their money.

Conclusion

Getting angel investment for your app startup comes down to reducing perceived risk in the investor's mind... you do that by showing real traction with actual users, building a capable team that can execute, understanding your economics down to the per-user level, and presenting everything clearly with evidence to back up your claims. The apps that get funded are rarely the ones with the flashiest ideas or the most polished pitch decks... they're the ones where founders have done the hard work of proving their concept works before asking for money.

Angels are betting on you as much as they're betting on your app, so focus on demonstrating that you're someone who understands your market, learns quickly from mistakes, and can stretch their investment to reach the milestones that will make follow-on funding easier to secure. The technical details of your app matter less than your ability to acquire users profitably and keep them engaged over time, which is what ultimately determines whether your startup succeeds or becomes another statistic.

If you're working on an app startup and need help thinking through your development roadmap or building your minimum viable product, get in touch with us and we'll talk through your specific situation.

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