Sent on January 20th, 2023.

If you aren’t a subscriber to EGD News, you can subscribe here.

This week I’m sharing a free ebook on pass notes that I’ve sent to gaming founders in the past year. You can go here to download the PDF version.

While working on the ebook, I reached out to several VCs I know of and asked them why they passed on investments. Reasons that feel obvious to VCs but maybe not to founders. Here’s a list of the ones that VCs feel are obvious but might not be understood well enough by founders.

Someone else is doing the fundraising, not the founder

The founder should be the one talking to the VC, no one else. The reason is that VCs want to know what kind of person is running the show and who their partner in crime will be, and they need to hear from the founder directly when they ask questions.

To make things clear, this means that you don’t use a consultant to fundraise, don’t have random team members reach out and talk to VCs, or have your advisors, existing angel investors, or VCs pitch to new VCs. Preferably don’t bring anyone on the call with the VC unless the VC asks for it. It’s just the founder CEO, or if there’s a dynamic duo or co-CEO model, then two founders.

Been around for a while, but nothing has been happening

90% of pitch decks are from founders who thought about an idea; they’ve maybe built a prototype, and then they pitch. They get a NO because it was too early or the market is too competitive.

A year or two later, the team shows up with a pivot where they pitch something new. And still, they are at the same spot, where they don’t have numbers to share that would prove the idea. They get another NO.

Over the years, the cap table gets more people added. A random angel investor here and there. But it is tough for them to show progress for whatever reason. The company isn’t that exciting anymore, the founders aren’t that excited anymore either, and it shows.

There can be turnarounds where the company strikes gold, but that’s the source of excitement you need when go back to investors you’ve already talked to.

Interaction with the founder wasn’t good

Having a good dialogue with the founder is not something that a pitch deck will reveal. You might be good at pitching your idea, but you might come off as diverting the discussion and not listening to what the investor is asking or pointing out.

Situations like these have happened to me quite often, where I’m questioning the team’s abilities to market a mobile game when CPIs have been increasing in most categories. The founders might have skipped past the issue in their presentation, and they will brush the challenging question aside when questioned.

The interaction should come from a place of transparency where the founder should say that they don’t have an answer to your question and acknowledge the challenge that the investor is pointing out.

The founder could turn the tables and ask the investor, “So how would you solve this issue?” or “How would your fund help us secure a marketing manager?” I think founders should play the offense with investors, but they should also take the opportunity to devise a solution together with the investor.

I have so many more examples in the ebook. You should get a copy by going here.