TECH FUNDAMENTALS: Pollen VC offers a lifeline to emerging app developers by extending debt financing, allowing them to make the most of their initial success. Co-founder and chief executive Martin Macmillan told Toni Sekinah about the benefits of using network connections to secure investment and make financing easier for others.
Pollen VC is fast gaining popularity and at the end of 2014 won a Mobile Entertainment Forum ‘Meffy’ at the ‘monetisation and engagement’ category in San Francisco
Serial entrepreneur Martin Macmillan created Pollen VC to solve the problem of games and apps developers receiving their sales revenue up to two months later.
He experienced this problem himself when he founded an interactive music platform in 2010 and was frustrated by having certified app store sales but not receiving the actual money for up to 60 days.
With a background in both software and fixed income trading with UBS, Macmillan had experience on both sides of the investment coin.
To raise funding to grow the business, the four founders approached friends, family and other people in their network to find investors interested in supporting Pollen VC.
The bulk of Pollen’s funding has come through debt finance. “We’ve raised money for our lending activities through various different debt structures,” Macmillan told us. Through this debt financing, the firm has raised $150m – and it uses this capital to lend to its developers.
Macmillan advised entrepreneurs to choose their investors wisely and make sure both are compatible. “You’ve got to be very selective about your investors because you’re getting into a long term relationship so you’ve got to be very comfortable that you’re going into that relationship on the right footing,” he said.
He also warned entrepreneurs not to take investment from non-strategic investors even if they are offered more money than they initially set out to raise.
“If it is just investors piling in the round but they can’t bring anything else to the business then I’d say probably don’t take it. Equity would just be needlessly diluted,” he said.