Getting Past BS Around Game Investments
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Transcript of Getting Past BS Around Game Investments
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Presented by:
Sana N ChoudaryKing of the Yetis
April 9, 2013
2012 Game InvestmentsGetting Past the BS about Game
Investments
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Agenda
• Where am I coming from?• Should you be worried about investments?• Myths debunked• So what should you do
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Where am I coming from?
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Where am I coming from?• Undergrad business focus on business strategy• In house analyst old world businesses• NYC’s first entrepreneur hub ULS —business model
coaching, navigating investment landscape• Games since last 4 years--YetiZen
– 6500 developers at YetiZen events last year– Over 700 startup applications per accelerator round (2) a year, 8
selected– Large extensive investor network—peak at YetiZen’s board
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Last night at YetiZen’s Road to Success event
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Should you be worried by what the media tells you about gaming investment decline?
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No!
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Comparing Apples and Oranges
They count:– Seed–Kickstarter– Follow-on venture rounds
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Why no seed and Kickstarter?
• Individuals • Mostly bet due to passion for game or team• Momentum driven to some extent• What works: build passionate followers in your vision. Ex
DoubleFine (12 year). Can take entire career
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Why no follow-on venture rounds to investments from prior years?
• Based on company achieving growth milestones with Series A financing
• Indicates match between performance of prior investments with follow-on investor expectations
• Bad indicator of investor appetite for games
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So what should we look at?
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First Venture Financing• Definition--Counts first venture round plus second
round within same year only• True apples to apples comparison• Hypothesis driven• Investor patterns in– Traction– Social Proof
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Let’s debunk more BS—Truth gleaned from 2012 Investments
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BS Line #1: I only invest in picks and shovels, dislike content risk
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More Game Studios were invested in than Platforms
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BS #2: There are fewer green pastures for game studios, more left for platforms as gaming matures
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What the numbers really show
2011 20120
10
20
30
40
50
60
70
80
90
100 74%
51%
% of Investments% Dollar Value of Investments
Game Studios
23%
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What the numbers really show
2011 20120
10
20
30
40
50
60
70
80
90
100
53% 45%
% Dollar Value of InvestmentsGame Studios
8%
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What the numbers really show
% of Investments
2011 20120
1
2
3
4
5
6
7
8
9
10
$6.79
$9.64Average Deal Size
US
$ (M
illio
n)Game Studios
$2.85
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2011 20120
20
40
60
8074%
51%
% of Investments
2011 20120
20
40
60
8053%
45%
% Dollar Value of Investments
2011 20120
2
4
6
8
10$6.79
$9.64Average Deal Size
US
$ (M
illio
n)
What the numbers show: a tricky one. Partially right.
Game Studios
23% 8%
$2.85
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So what should you do?
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So what should you do? If raising
1. If you have it Social Proof—past exits, c-level or early employees of a famous startup use it. May still not work.
2. If you do not have social proof—focus on DAUs, ARPDAUs. Right level? Genre dependent and moving target.
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If you are considering raising• Be clear on startup lifecycle and don’t waste time
with bad fits
Discovery
Validation
Efficiency
Scale
Seed and Angel
Venture
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If you are at efficiency and scale and considering raising
Arm yourself with the right knowledge, mentorship, partnership deals, and way to separate yourself from others with less traction or self-awareness
Talk to us. Email me [email protected]
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Thank you! Q&AIf you want to connect with me• http://yetizen.com/blog/• Twitter: @SanaOnGames• [email protected]