I'm currently building a social, location based app with my marketing co-founder.
I'm the iOS developer who has nearly completed the MVP of the idea, we have a milestone of 20,000 users on the app signed up within 2 months. (on the live version on iOS App Store)
With this sort of traction and users ,how much can we sell this platform for and how would I find someone to acquire it?
(we have clear monetisation/ revenue streams)
You will not be able to sell it if you aren't able to show the forecasting. I have helped companies grow and sell and mostly the prospective buyer needs atleast a year's data and you need to show the number of active users you have, your online revenue trends, the increase in number of subscribers and also a forecasting that can be done with simple analysis. You don't just sell your app, you sell all rights related to it and the company investing into such an application must understand how it can get its investment back and make profits.
Hey Jacob. So we can help answer you question, can you clarify whether you said: a) you have already signed up 20,000 users; or b) your plan says you will signup 20,000 users?
And if answer was (a) then is the app free or did they all actually pay (how much)?
Hey Jacob, thanks for the update. So you are bootstrapping an MVP and within 2 months of launching it you are 100% sure you will have signed up 20,000 users. You still don't say how you will prove that there is a revenue model - do you want to let us in on that fairly important part of the secret? ;-)
But as I understand it, the moment you hit that point (so 2 months from launch of the MVP) you want to bale out with a cheque and move onto the next thing.
There are a million missing bits of information as far as the picture you have painted for us on here. So of course you obviously know that nobody can give you an answer without plucking it out of the air - if anyone does then they are just pulling your plonker.
If you approach anyone right now they will just say "call me in 2 months and show me that you have reached that goal". But if indeed you have hit that goal, then you can fully expect your phone to ring off the hook. Although the first question will be "where is the revenue/model".
But you go get 'em - we all love the confidence. Let nobody say you can't do it.
Please keep us all updated over the next 2 months as we want to follow this story...
@stevep This is a bootstrapped startup and our goal is 20k sign ups within 2 months, we will 100% reach this milestone, I'm certain.
All I'm looking to do once we hit that number is liquidate my equity share. I'm a realistic guy . Do you have any advice on how I can go about achieving this?
The app will be free when live.
Jacob, there are a couple of important things here. You haven't shared the monetization model, but the value that anyone would place on this business would come from that.
20k times %x conversion rate% x %revenue per transaction%
The conversion rate on ecommerce in my world is 1-2%, so out of 20k uniques in a month, you would have 400 transactions on the high side a month. Again, in my world (selling hotel rooms) we would make approx $25 per transaction, so that would give $10k/mo in revenue.
If you have a couple of employees and pay rent/hosting/etc., $10k doesn't last long. Oh and if you have to tell anyone about the app (e.g. marketing/pr/advertising), then you have nothing left. So there is no inherent value at that volume. You have to show month over month traction/growth and many times the 20k before anyone is going to be interested in buying you.
But most importantly, if your co-founder doesn't want out, then there really is not much of a market for you selling your "share" of the company to another developer, which is what your co-founder would need if you leave. Technical co-founders that are willing to invest are NOT a commodity, but developers are.
Do you have an Operating Agreement that lays out the rules for how you exit?
You need to read Slicing Pie, as it is the most rational approach to founder equity, including exits.
Perhaps you need a new co-founder --> because that should be his department right??
Just a thought ... When people buy an opportunity (let's say it's a mobile app), it's because THEY believe it's going to be a profitable purchase. This concept usually works better outside the Silicon Valley mind-set. Your 20k peeps will help in that sale but the presentation shouldn't be about signups (but of course that helps), but rather, the presentation on how your business model can be huge and a chance to get in before it becomes to expensive in valuation.
Here's the thing. It doesn't matter how many signups you have if the buyer doesn't believe it's going to be huge. You've seen this a lot on "shark tank." If the shark doesn't see the growth, they're not interested regardless of how many customers.
You need to concentrate on how great your product is (assuming it is), and the potential revenues it can generate. That being said. Of course, everyone touts huge numbers. So here's the deal. If your potential buyer can see those numbers, you're looking good. If THEY can't visualize it, you've lost them.
REMEMBER ... Nobody buys or invests in an opportunity, if THEY don't believe in it.