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Ready to Scale?
What to focus on before pushing the button
21st January 2020
Martin Macmillan - CEO
Ready to Scale? What to focus on before pushing the button
About Pollen VC
Now!
2
We provide lines of credit to developers which enable
them to fund their business better and grow using paid
UA
Our model is a flexible and non-dilutive alternative to
equity financing, allowing developers to retain control
while growing their business
Our mission is to get start-ups to think about capital
efficiency, using the right type of funding for the right
purpose
Ready to Scale? What to focus on before pushing the button
Three Fundamental Questions
3
Do I have a machine?
1.
How do I fund the
machine?
2.
How do I know when
my machine is running
at full capacity?
3.
Ready to Scale? What to focus on before pushing the button
CAC and LTV
Now!
4
Acquisition cost
CPI, CPA, CPE etc.
Whatever makes sense for
your game
LTV
“North Star” metric
How much will you earn from
a player IAP/Ad revenue
Ready to Scale? What to focus on before pushing the button
How to calculate LTV
5
https://ltvcalculator.pollen.vc
Ready to Scale? What to focus on before pushing the button
Your UA Recipe
6
$1.00 invested
results in $1.89 of LTV
after 90 days
Ready to Scale? What to focus on before pushing the button
Focus on ROAS
Now!
7
$0.00
$0.50
$1.00
$1.50
$2.00
April 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89
50%
ROAS
75%
ROAS
Breakeven
100%
ROAS
125%
ROAS
150%
ROAS
175%
ROAS
LTV Cut-off
$1.89
Ready to Scale? What to focus on before pushing the button
Most Expensive $
Least Expensive $Exhaust the least expensive
bucket before moving onto
the next one
How do you fund
the machine?
Now!
8
Credit Line from Ad Network
Cash at Bank (eg from free cashflow of an existing app)
Credit Cards
Lines of Credit secured against accounts receivable (AR)
VC Funding
Factor in the cost of financing
ROAS ROAS
20%
1. Break out ROAS to a
monthly return
Ready to Scale? What to focus on before pushing the button
Factor in the cost of financing
ROAS ROAS
20%
Financing 2%
Break out ROAS to a
monthly return1.
Apply financing cost on
the same basis2.
Ready to Scale? What to focus on before pushing the button
Factor in the cost of financing
ROAS ROAS
20%
Financing 2%
PROFIT
18%
Break out ROAS to a
monthly return
Apply financing cost on
the same basis
Focus on PROFIT!!!
3.
1.
2.
Ready to Scale? What to focus on before pushing the button
Ready to Scale? What to focus on before pushing the button
Focus on investment and return
Now!
12
Increasing Ad Spend - Externally Financed
Monthly
ROI
Monthly
ROI
20% 15%
1
Monthly ROI
Decreases
Ready to Scale? What to focus on before pushing the button
Focus on investment and return
Now!
13
Increasing Ad Spend - Externally Financed
Monthly
ROI
Monthly
ROI
20% 15%
1
Monthly ROI
Decreases
Financing Cost
Decreases
2%
1.5%
Cost to
Finance
Cost to
Finance
2
Ready to Scale? What to focus on before pushing the button
Focus on investment and return
Now!
14
Increasing Ad Spend - Externally Financed
Monthly
ROI
Monthly
ROI
20% 15%
1
Monthly ROI
Decreases
Financing Cost
Decreases
2%
1.5%
Cost to
Finance
Cost to
Finance
2
Still Generating
Healthy Profit
18% 13.5%
Profit
Profit
3
How to know when
your machine is running
at full capacity
Ready to Scale? What to focus on before pushing the button
Now!
16
CPI
Acquisition costs rise over time
Now!
Installs
$
Demand & Supply characteristics of UA
Ready to Scale? What to focus on before pushing the button
Now!
17
LTV
CPI
Now!
Installs
$
Acquisition costs rise over time
LTV falls as you scale
Demand & Supply characteristics of UA
Ready to Scale? What to focus on before pushing the button
Now!
18
LTV
CPI
Acquisition Costs Rise over time
LTV falls as you scale
Model the shape of your curve
Keep buying until min ROI target achieved,
eg X% margin
Each genre has different characteristics
Feed this into your overall strategy of the
games you are building for target audience
Now!
Installs
$
Demand & Supply characteristics of UA
Ready to Scale? What to focus on before pushing the button
Now!
19
Ready to Scale? What to focus on before pushing the button
Takeaways…
20
Get realistic estimates
of CPI and LTV
1.
Figure out how you
are going to finance
your growth
2.
Keep monitoring and
measuring your machine
to keep it working at
full capacity
3.
Thanks!
martin@pollen.vc

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PollenVC Pocket Gamer Connects London 2020

  • 1. Ready to Scale? What to focus on before pushing the button 21st January 2020 Martin Macmillan - CEO
  • 2. Ready to Scale? What to focus on before pushing the button About Pollen VC Now! 2 We provide lines of credit to developers which enable them to fund their business better and grow using paid UA Our model is a flexible and non-dilutive alternative to equity financing, allowing developers to retain control while growing their business Our mission is to get start-ups to think about capital efficiency, using the right type of funding for the right purpose
  • 3. Ready to Scale? What to focus on before pushing the button Three Fundamental Questions 3 Do I have a machine? 1. How do I fund the machine? 2. How do I know when my machine is running at full capacity? 3.
  • 4. Ready to Scale? What to focus on before pushing the button CAC and LTV Now! 4 Acquisition cost CPI, CPA, CPE etc. Whatever makes sense for your game LTV “North Star” metric How much will you earn from a player IAP/Ad revenue
  • 5. Ready to Scale? What to focus on before pushing the button How to calculate LTV 5 https://ltvcalculator.pollen.vc
  • 6. Ready to Scale? What to focus on before pushing the button Your UA Recipe 6 $1.00 invested results in $1.89 of LTV after 90 days
  • 7. Ready to Scale? What to focus on before pushing the button Focus on ROAS Now! 7 $0.00 $0.50 $1.00 $1.50 $2.00 April 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 50% ROAS 75% ROAS Breakeven 100% ROAS 125% ROAS 150% ROAS 175% ROAS LTV Cut-off $1.89
  • 8. Ready to Scale? What to focus on before pushing the button Most Expensive $ Least Expensive $Exhaust the least expensive bucket before moving onto the next one How do you fund the machine? Now! 8 Credit Line from Ad Network Cash at Bank (eg from free cashflow of an existing app) Credit Cards Lines of Credit secured against accounts receivable (AR) VC Funding
  • 9. Factor in the cost of financing ROAS ROAS 20% 1. Break out ROAS to a monthly return Ready to Scale? What to focus on before pushing the button
  • 10. Factor in the cost of financing ROAS ROAS 20% Financing 2% Break out ROAS to a monthly return1. Apply financing cost on the same basis2. Ready to Scale? What to focus on before pushing the button
  • 11. Factor in the cost of financing ROAS ROAS 20% Financing 2% PROFIT 18% Break out ROAS to a monthly return Apply financing cost on the same basis Focus on PROFIT!!! 3. 1. 2. Ready to Scale? What to focus on before pushing the button
  • 12. Ready to Scale? What to focus on before pushing the button Focus on investment and return Now! 12 Increasing Ad Spend - Externally Financed Monthly ROI Monthly ROI 20% 15% 1 Monthly ROI Decreases
  • 13. Ready to Scale? What to focus on before pushing the button Focus on investment and return Now! 13 Increasing Ad Spend - Externally Financed Monthly ROI Monthly ROI 20% 15% 1 Monthly ROI Decreases Financing Cost Decreases 2% 1.5% Cost to Finance Cost to Finance 2
  • 14. Ready to Scale? What to focus on before pushing the button Focus on investment and return Now! 14 Increasing Ad Spend - Externally Financed Monthly ROI Monthly ROI 20% 15% 1 Monthly ROI Decreases Financing Cost Decreases 2% 1.5% Cost to Finance Cost to Finance 2 Still Generating Healthy Profit 18% 13.5% Profit Profit 3
  • 15. How to know when your machine is running at full capacity
  • 16. Ready to Scale? What to focus on before pushing the button Now! 16 CPI Acquisition costs rise over time Now! Installs $ Demand & Supply characteristics of UA
  • 17. Ready to Scale? What to focus on before pushing the button Now! 17 LTV CPI Now! Installs $ Acquisition costs rise over time LTV falls as you scale Demand & Supply characteristics of UA
  • 18. Ready to Scale? What to focus on before pushing the button Now! 18 LTV CPI Acquisition Costs Rise over time LTV falls as you scale Model the shape of your curve Keep buying until min ROI target achieved, eg X% margin Each genre has different characteristics Feed this into your overall strategy of the games you are building for target audience Now! Installs $ Demand & Supply characteristics of UA
  • 19. Ready to Scale? What to focus on before pushing the button Now! 19
  • 20. Ready to Scale? What to focus on before pushing the button Takeaways… 20 Get realistic estimates of CPI and LTV 1. Figure out how you are going to finance your growth 2. Keep monitoring and measuring your machine to keep it working at full capacity 3.