Ways a founder can fund their start-up

Angel investors typically invest smaller amounts in startups with an idea, MVP, or few customers, sometimes also providing business advice. Venture capital investors fund startups and early-stage companies with high potential to scale quickly, investing larger amounts and often taking a higher hand in operations. Equity investors back mature companies with stable returns and lower risk, usually with much larger checks ($100M+), becoming shareholders with a largely passive operational role. The best funding route depends on the company's specific needs, aspirations, and stage of development.

How Pollen VC's funding model differs

Pollen VC invests in mobile game and app developers to help unlock their app store earnings early to fuel growth. Its credit algorithms analyze sales performance, in-app purchase data, unpaid receivables, ad networks, and residual cohort value, enabling funding in as little as 7 days rather than 6 months. It prices risk and lendable credit by digitally ingesting sales and monetization data directly from app stores and ad networks. Unlike single-time funding methods, the loan is a revolving line repaid over six to eight months, recalculated daily based on performance. Pollen VC acts as lender and consultative partner without interfering in user acquisition or revenue generation, letting investees retain full control.

Who can approach Pollen VC and when

Investment choices are based on the return on investment from user acquisition spend, so apps must demonstrate a steady revenue stream from a reliable user base. Martin stated that Pollen VC seeks a minimum monthly revenue of $25K from the onboarding stage, with ideal performance ranging from hundreds of thousands to the low single-digit millions.

Cleanroom accounting

Martin shed light on Clean Room Accounting, an approach that describes early-stage apps reducing the "accounting function noise" in their user acquisition and monetization processes for clarity and simplicity. By isolating UA financial models from regular running costs and growth plans, app studios can have a clear understanding of customer acquisition costs (CAC), break-even periods, and ultimately LTV of their users.

Moving toward subscription apps

Pollen VC used to collaborate with a majority of free-to-play games compared to a minority of subscription apps, but now the distribution is closer to a 50/50 split. Martin sees this as a natural evolution driven by factors including free-to-play user acquisition getting harder with IDFA changes, and app publishers and marketers getting better at pricing subscriptions, identifying consumer niches, and establishing positive economics of ad spend vs. revenue.

More about Martin

Martin Macmillan is Founder and CEO of Pollen VC, with 20 years of experience launching and building technology businesses in financial services and media, and a prior career as an investment banker. Prior to founding Pollen VC, Martin was CEO at Soniqplay, CEO at Level Four (acquired by clear2pay), and a Director of UBS in London and New York.

Episode 18 sneak peek

• On different funding models: "If you're creating something from scratch and it's a high-risk activity, then equity is the best way to fund that. Whereas, later down the track, if you've figured out that you've got a user acquisition machine that really works and you just need to put money into it, it's a much lower risk strategy and you can look at different funding options and debt options to fund that."
• On Pollen VC's funding model: "We look on a daily basis and we figure out what's the total amount of revenue you've earned but is waiting to be paid out and we give you a line of credit for everything that you can borrow again at the next day." "If we can model and see very strong residual value from cohorts and users that keep paying and playing after months or even years, then theoretically the line of credit can extend to four times your monthly revenues."
• On Clean Room Accounting: "All of your monetization and user acquisition goes in and out of one bank account so you can monitor how efficient your UA spend is. All of your day-to-day expenses, your salaries, your office, all known non-UA related spend gets segregated."
• On the shift to subscription apps: "We used to be about 70-30 free-to-play games versus apps and subscription apps. Now it's come to roughly 50-50. I think a lot of people looking to build a business with greater longevity are turning to subscription apps because there's more money to be made over a longer period of time as opposed to the one-hit wonder free-to-play game that's dead in 30 days."