App Masters · Jun 7How to Finance Your App’s Growth with Martin Macmillan
Pollen advances cash against app store receipts, sometimes daily, so earnings go straight back into ads. It has funded close to 100 developers and its free LTV forecaster is used by 300 to 400 people a day.
Tips
- Only spend on paid UA once a dollar in returns more than a dollar▶ 3:55Pollen's free calculator is used by three or four hundred people a day, and for many of them it shows the numbers do not stack up, so they stop spending unprofitably.
- Treat unpaid App Store and ad network earnings as an asset to borrow against▶ 6:23Apple pays up to about 67 days after a sale, Google up to about 45 days, and ad networks range from net 15 to net 60 or even 90.
- Do not fund a short UA payback cycle with equity▶ 1:56Macmillan cites developers who gave away another 25% of their business to a big-name VC when they could have paid a few percent in financing margin.
- Build a lifetime value curve from retention, install cost and organic uplift▶ 7:35In the example, 95% of predicted LTV is reached by day 208, and the curve is almost flat between day 208 and day 330.
- Measure how many days it takes to get each UA dollar back▶ 9:36In the example, spending $1.20 per user on acquisition breaks even at about day 38, meaning a dollar comes back in 38 days.
- Recycle revenue into ad spend as often as daily or weekly▶ 14:48In the model, reinvesting 50% of revenue every seven days beats waiting about 60 days for payout, reaching cash flow positive sooner with steeper growth. Some fast-growing developers recycled daily.
- Know your LTV curve before approaching anyone for UA funding▶ 2:47Macmillan recalls companies that had raised more than $10 million arguing in stand-ups about what the metrics meant for lifetime value.
- Show ad networks your metrics so they back larger budgets▶ 13:17
- Fund growth with revenue-based financing to avoid dilution entirely▶ 17:30The game reached the top 100 grossing games and was acquired by Mail.ru for about $30 million, with no additional dilution for investors or management.
- Start small with revenue financing on a subscription app▶ 19:40It grew to hundreds of thousands of dollars a month in revenue, about 1,400% in a little under two years, with no additional dilution.
- Use subscription-specific parameters when modeling recurring revenue apps▶ 20:35
- Be warier of long-lifetime products when funding with predictable returns▶ 16:19
