Hello, my name is Ramil Nizamiev, and today I'm here to share my experience working with revenue-based funding and how it can help you increase profit for your business and attract more users to your mobile app. This article aims to benefit readers who are currently engaged in mobile app marketing or business development.
Essential Steps to Take Immediately After Launching an Application
Typically, once a mobile app is available on the market – on Google Play or the App Store – marketers begin acquiring users through various performance marketing channels or attempt to gain users organically. Analyzing the performance of advertising campaigns is crucial during this process.
From a marketing standpoint, I would usually monitor key metrics such as ROAS (return on ad spend), LTV (lifetime value), and CPT (cost per transaction). It's essential to track these metrics by country, as some countries might yield better ROAS due to low CPT or higher LTV. Monitoring and adjusting these metrics during marketing campaigns can improve overall results.
From a financial perspective, it's also essential to track payback periods – the amount of time needed to recover customer acquisition costs through revenue generated by the customer. A shorter payback period allows for quicker reinvestment in user acquisition, accelerating app growth.
My experience of testing the budget in various countries showed that some countries yielded better results from both marketing and financial perspectives – shorter payback periods, better ROAS, lower CPT & CPI, and higher LTV.
Exploring Financing Options for Application Growth and How Revenue-Based Funding Companies Can Streamline the Process
Through testing the budget and how it performs in different countries, my teammates and I learned about companies that provide revenue without waiting two months for it to come in. This revenue-based financing scheme is a win-win for both the lender and the app company. The lender earns a small commission, and the app company can boost its sales through marketing efforts, provided they know what they're doing.
To illustrate the difference between working with or without revenue-based funding companies, let's compare two options – using performance marketing with your own funding (option 1) or receiving payments from such companies (option 2). In both options, I assume that the first month's advertising spend generates the same amount of revenue, and the second month's revenue equals the previous month's expenditure.
This table demonstrates the difference between both options. While the numbers may be slightly exaggerated, they effectively illustrate the benefits of partnering with a company that can boost your advertising efforts without costing much. The idea is that receiving money earlier can lead to better outcomes if reinvested.
In 2019, my partners and I launched an app in the lifestyle category. The app's business model was subscription-based, which was booming that year, so we decided to apply our knowledge as performance marketing and user acquisition managers across different businesses to build our app. It took us about two months to develop an MVP and another three or four months to gain traction with positive ROAS, a growing user base, revenue, and retention metrics.
We continually improved the app's UI and design, added content, responded to customer emails, and made adjustments based on customer feedback. We tested various creatives, found our unique advertising approach, and eventually sought an investor to increase our marketing budget. However, the investors we encountered demanded unreasonable terms.
That's when we discovered revenue-based funding for mobile apps, and after engaging with two such companies, we ultimately partnered with one. This collaboration helped us triple our marketing budget in less than a quarter and quadruple our revenue and profit within a year. The only limitation we encountered was an increase in CPT as our ad spend grew.
List of Reputable Revenue-Based Financing Companies to Consider When Your Application Exhibits Strong Performance
Here are four companies currently offering revenue-based financing in the market:
- Braavo Capital: A financial technology company that provides flexible, non-dilutive financing solutions for mobile app developers, tailored to their revenue history and performance metrics. Braavo offers two primary financing solutions, Braavo Accelerate and Braavo Extend, with quick access to funds and a data-driven approach.
- Pollen VC: A London-based FinTech company specializing in credit lines for mobile app developers, gaming companies, and digital businesses. Pollen VC offers revenue-based financing, accelerated payment of app store receivables, and flexible credit lines. Their financing solutions enable businesses to retain control of their equity and grow at their pace.
- Uncapped: An equity-free financing solution for early-stage and growth-stage businesses that provides revenue-based financing. Uncapped advances funds based on future revenue projections, with flexible repayment plans as a percentage of actual revenue. The company also employs advanced analytics and machine learning to evaluate potential businesses.
- Pipe Technologies: A FinTech company that helps businesses transform their recurring revenues into upfront capital without debt or equity dilution. Its platform charges a small transaction fee, primarily for subscription-based and SaaS companies. Pipe offers non-dilutive funding, instant access to capital, and scalability for businesses of various sizes and stages.
Final Thoughts
In this article, I summarized my experience of achieving the growth and development of the mobile application and which metrics should be analyzed for this purpose. From my experience, which includes aligning marketing and financial metrics with overall business goals in growing a mobile app business, I can confidently assert the importance of building communication and interaction between marketing and finance departments. If marketing and financial metrics are aligned, it allows better to judge the application performance and accurately analyze them. Doing so can have a positive effect on the business as a whole. However, to grow faster and drive higher performance metrics, it is crucial to know how to acquire financing, and I shared my opinion on emerging trends regarding revenue-based financing.