App Makers Get Payday Lender
It’s the downside of participating in the multi-billion dollar mobile app economy.
Apple’s App Store affords developers the ability to reach millions of users in 155 countries. But once app makers ring up a sale, they must wait to collect payment from the store’s proprietor.
The Cupertino company makes payments every month — though a developer may wait until July to collect the money earned in May. For bootstrapped startups, the wait can be painful.
Martin Macmillan said he experienced the cash crunch firsthand as chief executive of Soniqplay, which created interactive music applications. He said he wanted to reinvest the App Store proceeds into promotion, to help fuel growth — but payment lag hurt his business.
Those frustrations led Macmillan, a former director of UBS in London, to launch Pollen, a firm that pays mobile app developers 95 percent of their receivables every seven days, in exchange for a five percent fee.
Macmillan has dubbed this type of financial service “velocity capital,” and he’s got plenty to work with — some $150 million. Pollen is backed by investors including ClalTech (a unit of Access Industries Group), Archimedia and several angel investors, including Alvaro Alvarez del Rio of Initial Capital.
“I’m bridging old-school financial services and the new economy,” said Macmillan, whose company has offices in London and San Francisco.
Simon Lee, chief executive of Locassa, a London firm that creates mobile applications, said he plans to refer Pollen as a resource for some of his smaller, more entrepreneurial clients.
“From the point that you make a sale, it takes around 60 days before you see the revenue,” said Lee. “For some of the smaller software houses, and some of our clients, to try and run a serious [marketing] campaign, and wait 60 days to get a return on investment, is a very difficult thing to do — and would be cost-prohibitive.”
Apple declined comment for this story.