Could you raise money for a popular app that has no monetization strategy?


2

Lets say I have an app or site that is quite popular, but there isn't a clear monetization plan, would investors still be willing to take a risk on such a venture?

I would like to believe so looking at some of the startups that get funded these days, but am I over the hill with "traction" or still have to climb it since I'm not generating any revenue?

Funding Venture Capital

asked Feb 18 '14 at 15:37
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Karl Davies
11 points
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2 Answers


2

Here is an excellent post by Andrew Chen - Stop asking "but how they will make money?" who says this question isn't even interesting and "The answers are all obvious."

Here are some questions to ask yourself:

1. How many users do you have now and what is a potential/target user base? In other words, could your growth rate slow down next month and flat line in the next few? Could you grow to 10 million users or 100?

2. How steady is your growth rate and can you explain it without external factors (current events, some controversy that will go away, etc.) and why it will keep at the current level for a while?

3. Do users have to register to use your site/product or is all your traffic anonymous? Do you have demographic data on your users? Do you have their email addresses?

TLDR: If you can grow your user base to 100 million users monetization isn't hard to figure out (according to Andrew Chen).

EDIT: I just read the post by Andrew again and just wanted to post some quotes from it below.

"monetization is now a boring problem to solve because there’s a ton of different options to collect revenue that didn’t exist before"

"if you have the audience, you can find the revenue"

"The thing that makes the business model work is really about getting to the scale where the business model becomes trivial."

answered Feb 18 '14 at 18:55
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Webbie
2,835 points

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Can you name 13* ways you might be able to make money, with an appropriate hypothesis and 5 step test plan, list them in order of ease, order of expense, order of revenue scale, order of risk, and then create an order of preference stating which one you are going to attempt first, second and third?

If so, and the output makes sense, you might be able to convince someone to invest. If not, or, the plans make it sound like you're smoking a crack pipe, well, good luck with that.

*replace with any arbitrary but non trivial number

answered Feb 18 '14 at 15:45
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Nick Stevens
4,436 points
  • Great answer, very to the point. – Webbie 5 years ago

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Funding Venture Capital