This email was sent to the EGD mailing list on the 22nd of May 2020.
Here are the things that I’ve been excited about this week.
The Perfect Games Company Pitch Deck
There are dozens of gaming VC who are continually getting pitched by founders. Most of the founder create pitch decks which they share with the investors. Just recently, Ilya from MRGV shared their pitch deck, which they built for people looking to pitch a mobile game company to them.
The deck is so insightful that I decided to break it down for you. I will also include details on how an investor could be using a checklist when evaluating this pitch.
Slide 2: Highlighting the founders
- On founders, show items that are relevant for managing a game studio. This work experience could be a previous founder, product, business, marketing, engineering experiences
- Surface the possible founder, senior, lead, and executive roles.
- It makes sense to bring up “X years of experience in game development.” It would be even better to point out how many years you have been a founder, or a lead, or an executive.
✅ Founders have above-average domain expertise
Slide 3: The full team, burn-rate and hiring plan
- The key here is to share the monthly burn-rate. Twenty people with a $50,000 burn, with experience from Playrix, Zynga, Wooga, is a lean startup.
- The expansion plan seems solid. The raised funding will go to pay for the increased headcount.
✅ Well or exceptionally well manage cash burn per headcount
✅ Founders have an above-average ability to hire talent
Slide 4: Previous titles
- What has the team worked on so far? You could highlight some KPIs here since it shows your understanding of what matters, i.e., downloads versus retention numbers?
- I would highlight which of thee games are generating the company’s income at the moment, month-over-month. If not, what is the current revenue based on?
- As Ilya mentions, if the studio has no titles yet, the founders could put here some games that they’ve previously worked on, before starting the company. Preferably ones that some of the team have worked on together.
✅ The team has worked together on several titles.
Slide 5: New game
- When discussing the new games that are being developed, the founders should make sure that the investor gets excited. The new game should be something that shows the team’s creative capabilities, where they are innovating, and what kinds of proven mechanics they are adding.
- One addition I’d like to make is that founders should highlight why they believe in the project. Why are they passionate about it?
- Screenshots will go a long way. TestFlight access is often required from investors since they’ll want to get an overall feel for the game.
✅ The game targets a balance between innovation and proven mechanics
Slide 6: Competitor analysis
- The competitor analysis is the most important slide. It not only talks about the competition but also shows how stagnant the genre for fishing games is.
- The positioning is excellent: Accessibility means the team is targeting higher retention numbers, and deep meta points towards long-term monetization.
✅ Market and product positioning is very compelling
Slide 7: Roadmap and KPIs
- Sharing the main KPIs here is excellent since the investor will want to see them before they’d commit to investing.
- “Note: Cohort size should be at least 1k players in one geo and 100 paying users in one geo.” is quite restrictive. Many developers are opting to test in several markets to get a clear view of global appeal.
✅ The game has above average soft launch KPIs for a game with these proven mechanics incorporated.
Slide 8: Company info and investment proposal
- Revealing the cap table is essential since it shows how much the founders own the company. At an early stage of the company, the founders will be motivated to work in the long-term, if they still have a majority stake in the company.
- Structuring the funding round: “Multiple investors are welcome. Minimum check is $500 000” This signals confidence: the founders have clarity on how they want to proceed.
- “Our current investor committed to following up, and we have $1 000 000 in soft commitment from other investors.” Existing investor interest is excellent, but mentioning soft commitments is only ok if you’ve asked the current investors for permission to say this in your deck.
- “Our long term goal is the exit in 3-5 years at $60m+ valuation.” Mentioning an exit can backfire, as many investors optimize for 100x returns. Also, the three to five years seems like short-term optimization on the founder’s side. Things tend to take much longer.
✅ The cap table is clean
✅ Existing investors are willing to re-invest
Slide 9: Forecast PnL
- This simple P&L summary of revenue and costs is enough and shows clarity in explaining how the business is doing concisely.
- Target KPIs highlighted here are a great place to end the deck so that the investor can count the most important numbers on one slide. They can see the P&L overview and the KPI targets.
✅ This company operates based on data and numbers.
Final words here
- The deck fits a startup that already has a few games launched and some revenue coming in
- If one of the items on the checklist doesn’t get checked, the likelihood of a NO from the investor increases exponentially
In the past week, we had two webinars here at Elite Game Developers. Here are the recordings and highlights.
- Joakim shared remote work knowledge from Silicon Valley startups
- Sophie shared how they’ve organized Work-From-Home (WFH) at Voodoo
- What is the future looking like for remote companies and WFH?
- Joakim shared why RPG mechanics are so powerful in mobile games.
- Nick shared from his experiences from working on mid-core games and hybrid casual games, incl. Angry Birds 2
- We had an insightful Q&A session, that’s at the end of the video
How To Pitch Over Video Calls — This week we are covering how founders can deliver a great pitch and a great impression to investors, when pitching over a video call.
Pitching your company to investors via video is awkward. It’s frequently hard for the founder’s ideas and personality to shine through a small web camera. Having now experienced a handful of pitch meetings in the last couple of weeks, Joakim will share some of the pitfalls for founders to avoid.
Have you every wanted to know what gaming VCs think? In this webinar from March 2020, we find out how investors are reading the founder, how they make decisions, and how a VC will relate to the founder’s situation. Full transcript available, check it out.
Articles Worth Reading
+ Changing the mindset with data analysis — “It would be natural at this point to be thinking: that how do you decide what rules – creativity or data? For us the important lesson was to let them walk hand in hand so to speak. We wanted the results we got from data analysis to be comprehensible to the entire game team – not just to number crushers and producers. In that way, we made sure that data and quantitive insights were used by all disciplines throughout the entire development process.”
+ Five Growth Principles by Timo Soininen, CEO, Small Giant Games — I especially liked this one: “Identify areas in which you are not good enough and learn them. It seems that very few Finnish companies actually study their competitors and learn from them. “Why are they doing this? Can we learn from this, or block this?” For example, performance marketing competence was one of our weak spots two years ago, but we decided to fix it to succeed: we learned the basics, built the systems and hired the best people top the team, and in a few months after that decision were among the best performing marketers in Europe.”
+ Supercell — Dean Takahashi wrote about his takeaways from Ilkka Paananen’s 10 years blog post. On staying as small as possible: “This is related to the point above, but Supercell almost feels like they move too slow. Their reluctance to hire isn’t intuitive. It feels like they are leaving money on the table by not capitalizing on success. I thought that too. But I realize that Paananen has different goals. He doesn’t want to make the most money in the industry (though he is pretty close to that). He wants to make the best games. He believes the way to get there is through small teams, not big ones.”
+ How founders get through this time with their sanity intact — This is an interesting interview with entrepreneur and investor Kevin Rose, on apps, crypto and how Covid-19 is impacting founders. In this interview, he points out an interesting fact about retail: “I don’t think we should abandon [VR] altogether. I’m not a hater, but look what happened: we went into straight-up lockdown. It was the best possible time for VR sales to go through the roof. And what happened? The Nintendo Switch sold out”
Quote that I’m thinking about
“I almost never, both as an angel investor for 13 years and now as a VC investor for 7, have I funded somebody with domain expertise. I believe people with domain expertise basically have learned “what you can’t do”, not “what you could do.”” — Keith Rabois on This Week In Startups