Appfigures podcast with Ariel Michaeli: Turning revenue into growth
Traditionally, if game developers or app studios discovered they have a ROAS positive ads machine, they could go to their investors, give away equity, and get a chunk of cash to put into their ads machine.
The VC landscape has changed drastically since then, and it’s not as easy to get VC funding for user acquisition. Nor is it always a good decision for founders to give away large chunks of their business for UA growth.
The Pollen VC revolving credit lending model allows studios with ROAS positive ads machines to continue to invest in their profitable UA formula without having to give away any equity.
Below we’ve pulled out some notable moments from the conversation.
Hair on fire
If the reason a studio isn’t investing more in paid user acquisition has anything to do with waiting to raise more money from investors or needing a bigger credit line from Google or waiting to be paid before they can start reinvesting… If it’s anything to do with capital or credit you know that’s absolutely when you should reach out to Pollen VC. When you know it’s working, but you know you just can’t spend enough.
Sometimes we get the panicked call saying “Hey! This app is going crazy and every day we’re not working with you we’re leaving money on the table. How quickly can we get funded?” I like to use the slot machine analogy. If you and I were to end up in Las Vegas and we found the slot machine that paid out two bucks every time we put in one… Question: do we wait 30 to 60 days before we go back to that machine? Of course not! We want to put as much money in that machine as quickly as possible.
What happens if I decide to take money from Pollen VC but then I can’t deliver a positive return on ad spend (ROAS) as I thought?
What we’re doing mechanically is we verify all of the receivables, the AR, the unpaid platform revenues every day, and then we are giving you access to that. So we deposit money in your account and then we collect this money at the other end.
It’s really important to note this is money you’ve already earned. So it’s going to come, it just is going to come in 30, 40, 60 days time.
So this is how a revolving credit facility works over any other products in the market. If you are investing into ROAS/ROI positive ads, then depending on how quickly you monetize that, your amount of available credit and revenues are just going to go up and up and up over time. If the ROI however is not there, and you keep investing in ads that are not profitable, your amount of available credit will come down and down and down.
Obviously I would say this, but I really like our model because it stops you getting over your skis and investing in something that’s not profitable. There’s some guardrails there. It’s not one of these models where we say “here’s a hundred thousand bucks, you’re going to put it into a bunch of ads, we’ll take a revenue share from these ads, and we hope you’re successful…” That to me is like giving someone a bunch of casino chips and then waiting outside the front door praying they’re lucky, right?
Watch the full video for more insights, and be sure to subscribe to Ariel from Appfigures on YouTube for more really useful industry tips and tricks.
This article was originally posted on pollen.vc/blog