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Mobile App Startups Caught in a Fatal Catch-22

Unless you have a breakthrough app like Instagram, chances are your startup app company will be caught in catch-22. What is catch-22? You can’t raise funding because you don’t have traffic and you don’t have traffic because you can’t raise the funding you need to bring awareness about your app. The skeptical would-be investor would say that there is no catch-22, after all, if your idea truly has legs then your mobile app would attract enough attention so it could break out of this cycle and you can get the funding that you need.

While that may be a fair criticism for apps when the app space just opened in 2007 up to 2010, we’re living in a pretty much mature app environment for mobile devices. In fact, there are several hundred thousand of apps in the app marketplaces for both Android and Apple platforms. As a result, it’s getting harder and harder for mobile apps to truly break out of this competitive haze that they are covered in. You can release all the awesome press releases you want about your breakthrough technology but if you can’t break past this thick forest of competing apps, no one will find you, no one will install you and you won’t get funded. That is the harsh reality of this catch-22 that many mobile app startups face.

It is no wonder that many venture firms are putting their hands up in the air and quitting the game of cherry picking the next breakthrough app. As a result, they would wait for apps gain some sort of traction before they can step in, provide funding and more importantly, provide a network backing. As much as we hate to admit it, in silicon valley and elsewhere, the tech industry is very incestuous. It’s all driven by big names.

Once people hear that certain big names have hopped on a particular tech bandwagon, everybody piles on. The money just doesn’t trickle in, it pours in; we’re talking a flood of money and more importantly a flood of publicity which results in an upward cycle. More money means more publicity, more publicity means more traffic, more installations attracts more money and the cycle upward continues again and again until you have a breakthrough product that gets bought out for a lot of money or goes IPO. This is definitely the case with projects like Uber and Lift.

Unfortunately, for every Uber or Lift, you have hundreds of thousands of other companies that are just floundering. This is the fatal catch-22 of mobile apps. If you’ve had this mobile app dream of a breakthrough technology, pay attention to this catch-22. We don’t mean to demotivate you but we mean to push you forward in your efforts at developing your technology further so you can truly arrive at a breakthrough product.

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