🧠 Food for thought

Implications, context, and why it matters.

Financing is tied to app user results, not company assets

• PvX’s “non-dilutive” model uses cohort financing. Funds are repaid from revenue produced by newly acquired app users 1.
• Instead of fixed loan payments, app companies repay the principal plus a fixed capped share of revenue from those user cohorts 2.
• That setup leaves PvX with downside risk. If a user acquisition campaign falls short, its returns fall too 3.
• After PvX reaches the return cap in the contract, the app developer keeps all future cash flow from that cohort 4.

Growth funding is being split from company ownership

• PvX argues founders should avoid selling equity to pay for repeatable growth work such as user acquisition 5.
• The approach answers limits in venture debt. It can include covenants tied to EBITDA. EBITDA means earnings before interest taxes depreciation and amortization. It is a common profitability measure, and those rules can punish companies for raising marketing spend 6.
• With that split, companies can save equity for riskier work such as new game development. They can use performance-based funding to expand marketing channels that already work 5.
• This view also holds that venture capital fits earlier bets with more uncertainty. It is less suited to scaling a business model that already works because equity is expensive 6.