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Fundraising for Game Studios

Fundraising for Game Studios. Agenda. Funding Sources for Game Development The Angel/VC appetite for Game Investing Recent VC Activity in Games Active VC Investors VC Investment by Game Type What attracts VCs ? Tips on how to approach VCs. What funding sources exist for game development?.

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Fundraising for Game Studios

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  1. Fundraising for Game Studios

  2. Agenda • Funding Sources for Game Development • The Angel/VC appetite for Game Investing • Recent VC Activity in Games • Active VC Investors • VC Investment by Game Type • What attracts VCs? • Tips on how to approach VCs

  3. What funding sources exist for game development? • Project/Title financing • Game Publishers • Media Companies • Equity Investors • Angels • VC/Private Equity • Alternative Financing • Government/Military • Foreign licensing Equity investors are increasingly looking at the video game sector as it remains one of the few verticals in media & entertainment that continues to grow in the down economy

  4. What is the VC appetite for game investing? • Institutional investing not historically focused on gaming • Funding in the sector is growing* • 2008: 112 companies raised $935MM, up from $613MM in 2007 • 2008 financings* • 4 > $50MM • 6 between $20MM and $50MM • 16 between $10MM and $20MM • 86 < $10MM • Strong early stage focus on Virtual worlds, Casual MMOs, Social games and Casual games (recent increase in Mobile) * “Game and virtual world fundings reach $936.8 million in 2008”, VentureBeat, http://games.venturebeat.com/2009/04/26/second-revision-game-and-virtual-world-fundings-reach-935-million-in-2008/

  5. Active VC Investors in Games * Investments made since 2007

  6. VC Game Investments by Type * “Virtual worlds & social games investments defy downturn in October 2008, peak in July 2008”, JussiLakkonen’s Blog, http://jussilaakkonen.wordpress.com/2008/11/18/virtual-worlds-social-games-investments-defy-downturn-in-october-2008-peak-in-july-2008/

  7. What attracts VCs? • Traditional game studios are generally not attractive to VCs • Games come with big budgets and long development cycles • Content is “hit-driven” with a binary outcome • Many VC’s are uncomfortable investing in content • Prefer to invest in platforms, disruptive technologies or middleware • So why is gaming relevant to VCs now? • Content can be cheaper and faster to develop • Distribution is freed from traditional retail model, is now open via digital channels through new platforms like social networks and mobile application platforms • Video games are now appealing to a much broader demographic; more people are playing games than ever before

  8. Approaching VCs – a few tips • Have your plan/pitch clear and crystallized, especially: • What’s the big idea? • Who will make it happen? • How will it make money? • Have a tight elevator pitch, an executive summary, and a presentation • Great resources: • Sequoia’s Capital’s “Writing a Business Plan” • Dave McClures’ “How to Pitch a VC”

  9. Approaching VCs – a few tips • Identify targets in advance (potential investors) • Pay attention to VC/financing press (Venturebeat/TechCrunch etc) • Research venture funds with experience investing in games • Identify partners with specific board experience • Many VCs have public bios, speaker presence, blog presence, twitter • Go through existing network to find direct or indirect route to key partner • Best if you know someone who directly knows the partner • Otherwise, look for ways to connect with a CEO of a company that partner is a board member of • Line up a roadshow and go!

  10. Brandon Beck bbeck@riotgames.com Useful Links: Venture News Venturebeat.com Techcrunch.com Venture Tips/Resources Venture Hacks - http://venturehacks.com/archives Ask the VC - http://www.askthevc.com/blog/index.php The Lean Startup - http://www.slideshare.net/venturehacks/the-lean-startup-2 Writing Business Plans / Pitching: Sequoia Capital’s Writing a Business Plan - http://www.sequoiacap.com/ideas Dave McClure’s How to Pitch a VC - http://www.slideshare.net/dmc500hats/how-to-pitch-a-vc-aka-startup-viagra-how-to-give-a-vc-a-hardon David Cowen’s How to NOT Write A Business Plan - http://whohastimeforthis.blogspot.com/2005/11/how-to-not-write-business-plan.html

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