Meet Pollen, The Lender With A New Idea For Funding App Developers

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Many app producers face a dilemma. They know investment in marketing will drive increased revenues over an extended period as customers pay upfront for their app and then spend money within in it over time. But financing that investment is difficult: platforms such the Apple Store and Google Play take time to pass on upfront payments – often 45 or 60 days – and lifetime revenues, by definition, accrue over an extended period.

Now London- and San Francisco-based Pollen VC claims to be able to square this circle. For some time, it has offered an accounts receivables solution, making advances to app producers on the basis of their app store sales so they do not have to wait for Apple, Google and the rest to pass on customers’ money. Now it has added additional lending headroom with a solution based on its estimates of what app purchasers will spend in the future.

The result is that Pollen now offers app and game producers the opportunity to borrow as much as four times’ their monthly revenues. The lending comprises advances made on the basis of real-time information about upfront sales of the app, combined with Pollen’s data-based estimates of future spending by live users.

“The idea is to give the app producer the borrowing capacity it needs to drive more rapid growth,” explains Pollen founder and CEO Martin Macmillan. “You recycle the capital raised back into user acquisition where you know there will be a positive return on investment.”

It is an innovative idea built on the back of the data Pollen has built up from its accounts receivables lending. Having tracked thousands of borrowers where it has provided advances on app store sales, Pollen now has sufficiently robust data to be confident in its predictions about how developers will be able to monetise a particular app on an ongoing basis.

“Developer revenue is not just realised at the point of sale; monetisation occurs over their consumers’ lifetime usage of the app or game,” argues Macmillan. “Our ability to base our lending decisions not just on accounts receivable, but also now in a developer’s existing user base is unique and will be a game changer for the industry.”


Importantly, Pollen’s solution provides a means for app developers to make significant investment in marketing for further customer acquisition without having to take on equity finance. While equity has been the traditional source of growth capital for many app businesses, the disadvantage of funding this way is that owners dilute their ownership of the business. In some markets, moreover, equity finance may simply be unavailable.

Pollen began lending to app and gaming developers in 2014, enabling it to amass a treasure trove of data on the level of revenues that a particular app is likely to generate over its full lifetime. More recently, the company has also been able to take advantage of open banking reforms in many markets, giving it even greater visibility of the performance of customers and would-be borrowers.

Armed with this data, Pollen is able to make a very scientific assessment of what revenue an app will generate over time, allowing it to assess what level of lending might be appropriate. Borrowers, meanwhile, have their own data on how marketing spend will drive customer acquisition, enabling them to make a quick decision about whether to take on lending; if the cost of that borrowing is outweighed by the likely revenue gains from investing it in acquisition, it makes sense to pursue the financing.

Macmillan believes the global market for Pollen’s capital is huge, as app sales continue to boom. More than $120bn is now spent on apps and games each year around the world, providing almost infinite growth potential for developers able to fund investment in marketing.

Developers will need to get accustomed to the idea, he concedes, which is why Pollen has also invested in online resources to boost financial literacy in its user base. “App stores have democratised the process of bringing apps and games to market, because anyone can now self-publish,” he says. “But not all developers have the financial understanding to maximise their capital efficiency.”

Haystack’s advances are made via a revolving credit facility, rather than on a fixed term basis. Borrowers repay their finance as revenues come in from the app stores – and crucially, the facility can increase or decrease in size according to the business’s ongoing trading, with Pollen able to reassess the position on a daily basis, as the live data suggests.

“Our new lending approach provides a breath of fresh air to the industry which will enable gaming and app founders to really understand their numbers and enable faster growth and the ability to scale in a capital efficient way,” Macmillan insists. “We will provide developers with greater access to capital and financial knowledge to really transform the industry”