It’s Joakim here. Greetings from Helsinki!
This week, I’ve been continuing my work on the course material work on the Gaming Angel Fellowship’s angel investor course. I’ve scheduled a few angel interviews now, and those interviews will be posted exclusively inside the fellowship member site.
Here are a few updates I have to share with you this week:
- On October 29th, I’m doing a webinar with Elie Mouraud from Playtestcloud. In this playtesting webinar, I and Elie will go through some big example cases of how playtesting for mobile games can be a success. Sign up to claim your seat here.
- There’s also another webinar happening on November 4th, where I’m talking to Kalle Kaivola from Lightheart Entertainment on how Kalle and his team launched their game Mr. Autofire and gradually scaled up user acquisition to break into the top-grossing charts. Note that this webinar won’t be recorded so you better show up 🤗 Register for the webinar by going here.
Now, on to the news.
👩💼 Adding more co-founders
There isn’t quite a similar situation of applying leverage in a startup’s existence as there is when a startup team comes together.
Silicon Valley tech startups usually get started by two people. In gaming, there are countless examples of founding teams of five to ten people.
Supercell had six founders. Seriously, who was acquired by Playtika in 2019, was founded by five founders. The difference makes total sense. Games are complex, and you need lots of skill to come around the table to build great games.
One might argue that how come you don’t hire employees for the roles, why do they need to be co-founders? At the early stage, there’s loads of risk involved. Risk-averse game devs won’t just jump ship from a big games company to a risky startup, often to a lesser salary.
The truth is: If you’re a team of three game developers who are just about to launch a gaming startup, adding some great talent is the most significant impact you can have. Offering a co-founder title and equity, and a decent salary once the company is profitable, could work on the risk-averse game dev.
Your job as founders is to come up with the hit game. The best leverage to achieve is getting the best people to figure out the game and ship it quickly to get the first numbers.
Here is the scenario to follow. You want to build a great game in a matter of a few months before you raise investor money. By bringing on world-class game dev talent as co-founders, where you incentivize them to join with equity, you derisk everything, increase your odds of building a much better game and a successful games company.
You could be spending time hiring people from the market, paying them a high salary, and ending up having different long-term alignments (if the first game fails 😱).
🗂 Data rooms
In the world of fundraising, the “data room” is a system that holds all company documents and agreements, ready for an investor to browse through as they are doing their due diligence work on an investment. A clear data room can field most questions and due diligence that investors will have.
Why should a small gaming startup care about a data room? I think there are a few reasons why:
It allows you to move fast. Keeping a clean and up-to-date data room allows you to move fast. When you want to close a funding round quickly, you can immediately grant access to the investors into your digital data room.
You can keep it simple. I can be as simple as Google Drive folders, where you’ve stored the docs, PDFs, spreadsheets, and screenshots of the signed documents.
Shows your efficiency. Investors will be impressed by your work as founders, who’ve taken time to be organized about their company.
In July of this year, I read a Tweet from Andrea Funsten that outlined the data room document list for a seed-stage startup. Here are the top 5 items she mentions:
1) Investor deck (long-form one)
2) Operating expenditure with this raise
3) Cap table for the previous round(s)
4) Details on investor commitments so far for this round
5) Recent investor updates for the last six months. “It helps me not just gauge the level of transparency that they have with their investors (sharing the bad just as much as the good) but I can see the progression over time.”
A founder replied to the Tweet with an interesting extra caveat: “We keep a live document (A simple Google Doc, where the link is read-only) of all of these materials and share them openly with our investors, prospective investors, advisors, etc.”
😩 Co-founder relationship mismatch
Something potential hires and investors need to be aware of is co-founder conflict or a blatant mismatch. Especially when the company is a partnership between two people, a dysfunctional relationship can be a startup’s death.
When an investor evaluates a startup for an investment, it’s hard to spot a mismatched co-founder relationship. A good relationship can easily be a masquerade, the calm before the storm.
Here are some questions that people can use to determine if the co-founders have a healthy relationship. I would ask these from the co-founders, without the others being in the room:
How do you resolve conflict? The answer to this question will reveal the co-founder’s ways of dealing with conflict. You can ask for an example of how they dealt with a particular conflict in their lives.
How long have you guys known each other? If they have a history before the startup, you can ask questions related to previous tough times and conflicts.
What’s the last conflict you had together? Figure out if the founders have already had moments where they needed to settle a dispute. What happened there? How do you move on after the disagreement?
You won’t be sorry about doing this investigative work.
📄 Why team is the most important factor for startup success?
This week I wrote about the importance of the team in a gaming startup, and how you can construct and develop your team to achieve success.
“I’ve seen many startup teams who are overly optimistic about their game. Optimism is a critical factor in entrepreneurship; without these positive thoughts about the future, it would be hard to be motivated and keep spirits high when faced with uncertainty.”
🎙 EGD Special: Deep Dive In Gaming Investments and M&A
On October 8th, 2020, I hosted a panel on Gaming Investments and M&A. The panel consists of Anton Gorodetsky and Sergei Evdokimov from InvestGame.net, Micha Katz from Aream & Co, and Miska Katkoff from Deconstructor of Fun. The participants talked about the topics of the current state of M&A in games, these M&A strategies, fundraising in gaming, and shed some light on future predictions.
📃 Articles worth reading
+ Audio’s Opportunity & Who Will Capture — “The content, business models, and health of every media category is driven by technology. And audio tech has never been so diverse + dynamic. After decades of struggles, audio is ready to grow, not just replace”
+ Would breaking up ‘big tech’ work? What would? — “John Rockefeller built a network of production, processing and distribution companies that he bundled, tied and cross-leveraged in all sorts of ruthless and devious ways to squeeze out competition. Then in 1911, when Standard Oil was forcibly split up into over 30 different companies, that market power was broken and the oil industry became competitive again, or so the story goes.”
+ What I wish I knew when: Pitching to investors — “We’ve tried both – the VC route and the publisher route. We published Idle Coffee Corp with Boombit – at that stage, we did talk with investors but we got a better deal with publishing. This opened my eyes to the possibilities of building something and keeping your independence.”
💬 Quote that I’m thinking about
“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.”
— Alvin Toffler
Sponsored by ironSource
We all know that developing a great game is one thing, but developing a great game business can be something else entirely. That’s why some of the top game developers in the industry use ironSource’s game growth platform, which takes care of both sides of the business, helping you monetize to fuel user acquisition, and vice versa.
From their ROAS Optimizer, the only product on the market built to optimize UA campaigns towards ROAS according to both IAP and ad revenue data, to LevelPlay, their in-app bidding solution, they offer everything you need to supercharge your growth. See for yourself at ironsrc.com
Sponsored by Opera Event
Looking for some great new authentic video creative? Try something totally new with Influencer Generated Content (IGC) by Opera Event. Influencers or actors will make specific creative content for your games and Opera Event will deliver you high-quality video ads that highlight the best parts of your game.
Note! You get a free video with the purchase of 4 or more videos. Remember to say that Elite Game Developers sent you!
Go to www.getigc.com to see some examples and get more information.
That’s all for this week. Take care and stay safe!