EGD News #123 — Fundraising in 2022
Sent on February 25th, 2022.
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💰 Fundraising in 2022
I was recently on Miska Katkoff’s podcast, talking about investing in games and how founders should approach raising money from investors.
We got pretty carried away and ended up recording so much content that we had to leave out some of the questions.
Here are the questions that were left unanswered.
What’s the difference between pitching online vs. F2F?
F2F is more personal and alive. Everything in the pitch reflects to what the founders are thinking.
Like, you are showing a playable prototype. What it looks and feels like will reflect back to investors on how the founder presents and thinks on what matters.
The same goes for where the funds to be raised will be used. How much will the founders spend on their salaries? How big of a team will they hire to go to market. What risks are they willing to take? Is their ego in check? Everything reflects to the founders.
Should you share a playable or gameplay video?
Always. Often, investors are joggling hundreds of deals in a week, and your playable should be super accessible. It’s also great to accompany a gameplay video so that the busy investors, which they all are, can have time to review what you’ve built. It’s also a good indicator of investor interest if they’ve had time to play the playable or not. If they want to do the deal, they will play the playable. If they are unsure, it will take time. It’s just a good signal for the founder to count on.
Silence is usually a NO for now. One key aspect here is that if you don’t get a YES from the investor, you can always keep them in the loop until you have enough traction to make it worth their while to invest.
What stage should the playable be at? How much content and polish?
I don’t think you need more playable content than a few minutes. Polish on UX does matter, great loading times, etc. But not in the assets that much. Unity asset store stuff works just fine. Again, everything reflects back to the founder. When there aren’t KPIs and numbers to look at, the investor reads the team based on everything they see.
And if they aren’t reading the team, they shouldn’t be looking at your company in the pre-numbers stage, and they shouldn’t invest in teams.
Should you include marketing budgets and strategies with your pitch? How much do you expect any game you want to invest in to spend on advertising? The rule of thumb is 18% of net revenue or contribution margin on big publishing games. With new marketing vehicles and platforms…the game has changed. I’m curious by how much? Or do VCs and investors simply want to sell off the game to a publisher and let them worry about it?
Answer: You can put a lot of stuff into your appendix slides. But, fundraising goes in stages: pre-seed is meant to build the team and start developing a game. Seed is for continuing development and soft launching. Series A is for scaling from the soft launch to a global audience.
You want to share items in your pitch that are relevant to the stage you are entering. If you are going to start scaling and have done the calculations, sharing the budget in a deck appendix could be a good thing to add. But you can also leave it out of the deck and share it separately if asked for by investors. I think marketing budgets and strategies are going a bit too much into the details that won’t sway the investor from a no to a yes.
These were the additional questions and answers. If you’d like to check out the entire episode and read my notes for preparing for the episode, you can check them out by going here.
You can listen to the full episode by going here. Or you can also find it on other podcasting apps like Spotify, Apple Podcast, and others.
If you’d like to hear more questions that I’ve answered, you can head on over to my previous Ask Me Anything episodes. Here’s a list of all the AMA episodes I’ve recorded.
- Ask Me Anything #1
- Ask Me Anything #2
- Ask Me Anything #3
- Ask Me Anything #4
- Ask Me Anything #5
- Ask Me Anything #6
- Ask Me Anything #7
- Ask Me Anything #8
I will try to record another AMA episode soon. If you have any questions that you’d like me to answer, you can head on over to this form and fill it out with your question.
Get my book, “Long Term Game: How to build a video games company” from Amazon. Available on Kindle, audiobook, and paperback. Check it out!
Piers Kicks — Investing In Blockchain Gaming
In this podcast episode, I’m talking with Piers Kicks (LinkedIn) (Twitter), an Investor at Delphi Digital and at BITKRAFT Ventures, investing in crypto gaming.
In this discussion, we talk about how the gaming community is embracing blockchain, what are the differences between gaming teams and crypto teams making these games, and how Piers evaluates investments in blockchain gaming.
Listen to the full episode by going here.
Some great templates on EGD
- Investor update template
- Cap table template
- Non-disclosure Agreement
- Teaser deck template
- Shareholders’ Agreement
- Ebook: Advanced Retention Metrics
- Co-founder equity split template
- Stock option allocations calculator
- and more
Articles worth reading
+ VR explosion? Examining Quest 2’s top genres & games — “Meta’s Quest 2 probably has sold about 10 million units since its release in October 2020 – this far outstrips all the other VR headset sales. I believe sales on the Meta VR Store constitutes the vast majority of VR sales in the last 12 months. So I set about synthesizing public data on the Meta VR Store for the benefit of all, thanks to a research commission from Fruity Systems.”
+ A Statistics-Based Approach To Picking A Game Setting — “Have you ever wondered which settings go best with which game genres? The pairing is not always that obvious. Conveniently, however, it looks like some genre-and-setting tandems are statistically indeed much better matches. In this research, we’ll try to help game developers get wiser about selecting settings for their future games. After all, this choice heavily affects the size of one’s target audience and the CPI (cost per install).”
+ Global Gaming Deals Activity Report 2021 — “FY’21 was also another remarkable year for the gaming VC ecosystem, with $891m capital raised by gaming-related funds throughout the year. The top-15 gaming VCs invested $4.3B of the disclosed deal value in FY’21, across 160 deals, showcasing an ever-growing venture interest in the gaming industry. BITKRAFT Ventures yet again led the VC chart with 30 closed deals of $345m total value, followed by a16z and Makers Fund.”
Quote that I’ve been thinking about
“A journey is like marriage. The certain way to be wrong is to think you control it.”
— John Steinbeck
Sponsored by Audiomob
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I hope you have a great weekend!