The B-team: When are you ready for an investment?
I’m writing this article because I believe that startup teams need to assess what stage they are and be eligible for an investment, be it angel or VC, funding.
Early-stage funding is so much about the team and their abilities, versus the most brilliant idea. That’s why founders should focus on their team, instead of what a cool idea they have.
I believe that any team can level up their attractiveness by following some simple steps and progressing from where they are now. Let’s look at the different levels of gaming startup teams.
The D-team might be one founder with ambition.
The founder believes in the idea for the game that they want to build. At this D level, they don’t yet understand the market well enough. They might have heard about successful companies about success stories. But they don’t know about how their competitions are doing or how their business model will work.
The D team’s biggest hindrance is that they are often solo founders. The founder might have a team with game development expertise, but they might be hobbyists or recently graduated students.
Note the difference between expertise and experience. Having the expertise would qualify the team as a C team. When talking about expertise: they would have needed to have been in a gaming profession, working on a game with a group, in a games company.
How could a D team level up to a C team?
Hire smart co-founders. Map out what the founder(s) know of gaming. Get people on board who know more about a specific area of gaming than you do. If you’re the person selling and pitching the idea, bring on someone who can build the game. Start with a programmer. And give them enough equity.
Play lots of games that are similar to your game. Ask questions from people who know how to build games. Read articles that talk about what it takes to succeed in gaming.
The C-team has enough experience in game development that they can build a game.
But they can’t articulate why their market pick is an ample opportunity—an opportunity to pay salaries and return the investors money with a high multiple.
Often I get this feeling that when I look at a C team, that in the desert, but they’re going around in circles.
How can a C team level up to a B team?
Get to work right now. Usually, a C-team is reluctant to make progress unless an investor gives them a chance. Or they might be stuck in a soft launch with a game that has unimpressive metrics.
Pivot to a better market. First, make sure that everyone on the team is ready to stop working on your first signed up. Educate your team on the choices you are making.
Scope, budget, and progress. You can’t build big games without investor money, and you can’t raise funding without having a stellar resume from working at big successful companies. Stop wining and scope down your project to just the core experience and build that out to get the first metrics.
The B team won’t attract VCs to invest, and they won’t raise much at the Powerpoint/prototype stage, maybe an angel round of $50.000. But they will put that money into fair use.
The B team’s essential characteristic is that they’re good at bootstrapping, not sitting around and waiting for permission to get to work.
They are great at sourcing information from other developers to understand the market. They are developing into learning machines.
The B team has excellent core technical skills (programming, game design, art), which allow them to create a good looking game with all the core elements that a great game needs.
But they won’t have all the relevant experience, and won’t directly hire for product roles, for UA and marketing, for analytics, etc. They’ll need to learn all of this.
They are developing in their ways of articulating why their market pick is an ample opportunity. It’s a learning process, but they’re not shying away from working on their attack plan.
How does a B team level up to an A team?
Finding your why. Why does the gaming audience need your game? The B team lacks the muscle memory from all the failed games that an A team would have launched, so they need to get smart about understanding the characteristics of a successful game.
Rapid development. Since the B team won’t be eligible for million-dollar funding at the early stage, they need to build something small and quick. But they need to be smart about what kind of business they are attacking. One way is to soft launch games quickly, to see early retention numbers.
We’ve all seen the A teams. It’s the people who can raise millions with a Powerpoint or a rough prototype of a game.
These people have been at the big games companies, with VP or Director titles.
They have the highest likelihood of succeeding, at least by shipping a “safe” game. Is there a safe game in gaming startups? Of course, there’s no guaranteed outcome, but the A team will have the best odds at knowing what that would look like.
When the A-team raises their first round, the angel investors won’t be the primary target for the A-team. They can go directly to VCs or super angels who write $200k checks.
General activity that helps in leveling up
Many activities support the level up process, and these are applicable for all levels.
Allow investors to follow your progress. Investor gives feedback, in three or four weeks, what has changed.
Take steps forward. Ask others what should be the steps ahead and act. Send regular investor updates, at least once a month, to the investor who wants to follow your progress.
Lean mentality and resourcefulness. Paying 1,500 euro monthly salary. Don’t take a salary until you’ve raised funding.
Ability to learn. What has changed in the last three months? What early lessons do you now view critically as ones that didn’t work out and were destined to fail?
They are not allowing history and baggage to slow them down. Big company spending, big teams, big games. What is a product strategy for a startup? Learn the traits of great CEOs.
Hard things about startups
Sometimes leveling up is hard.
I believe that going from C to B takes the most significant effort. Game making is such a passionate industry. To make it, you often need to change fundamental beliefs on many levels to get to a point where you are an attractive investment opportunity.
It’s all about perception, what kind of package you have. What you’ve shown as your abilities, what your company is going after, etc.
Here are the most challenging changes you might need to make: Getting everybody on board. And keeping everybody on board. Firing a co-founder who doesn’t want to change.
If a team levels up to B or A, they will have demonstrated much learning abilities. For myself, as an angel investor, it’s often better to bet on the B team who have the qualities that will take them to an A-team.
The team would have shown that they can learn; they are resilient and will keep learning once at the Series A stage. The B team is often starting from a clean slate, without the baggage and feelings of the privilege of immediately qualifying as an A-team.
Mind you that we are still only talking about the early-stage startups in this article. Once the company goes into the range of having a product out and generating revenue, they will become a growth company, which yet again has its own A, B, C, and D teams. That’s another article for another time.
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