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Getting Past BS Around Game Investments

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SanaChoudary

The document summarizes key points from a presentation on game investments given by Sana N Choudary. It debunks myths about declining investment in gaming by showing that in 2012, game studios received a higher percentage of both number of investments and total dollar value compared to 2011. It also shows the average deal size for game studios was higher in 2012. The document advises that to raise funds, studios should focus on social proof like past exits or employees from famous startups, or on metrics like daily/monthly active users and average revenue per daily active user. It stresses the importance of understanding a startup's lifecycle and only pursuing investment when at the right stage of validation, efficiency or scale.

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2012 Game Investments Getting Past the BS about Game Investments Presented by: Sana N Choudary King of the Yetis April 9, 2013
Agenda • Where am I coming from? • Should you be worried about investments? • Myths debunked • So what should you do
Where am I coming from?
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
Last night at YetiZen’s Road to Success event
Should you be worried by what the media tells you about gaming investment decline?
No!
Comparing Apples and Oranges They count: – Seed – Kickstarter – Follow-on venture rounds
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
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
So what should we look at?
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
Let’s debunk more BS—Truth gleaned from 2012 Investments
BS Line #1: I only invest in picks and shovels, dislike content risk
More Game Studios were invested in than Platforms
BS #2: There are fewer green pastures for game studios, more left for platforms as gaming matures
What the numbers really show Game Studios % of Investments 100 90 74% 80 70 51% 60 50 40 23% 30 20 10 0 2011 2012
What the numbers really show Game Studios % Dollar Value of Investments 100 90 80 70 53% 60 45% 50 40 8% 30 20 10 0 2011 2012
What the numbers really show Game Studios Average Deal Size $9.64 10 9 8 $6.79 7 US $ (Million) 6 5 4 3 2 1 $2.85 0 2011 2012
What the numbers show: a tricky one. Partially right. Game Studios % of Investments % Dollar Value of Investments 74% 80 80 51% 53% 60 60 45% 40 40 23% 8% 20 20 0 0 2011 2012 2011 2012 Average Deal Size $9.64 10 $6.79 US $ (Million) 8 6 4 2 $2.85 0 2011 2012
So what should you do?
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.
If you are considering raising • Be clear on startup lifecycle and don’t waste time with bad fits Scale Efficiency Validation Discovery
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 sana@yetizen.com
Thank you! Q&A If you want to connect with me • http://yetizen.com/blog/ • Twitter: @SanaOnGames • info@yetizen.com

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Getting Past BS Around Game Investments

  • 1. 2012 Game Investments Getting Past the BS about Game Investments Presented by: Sana N Choudary King of the Yetis April 9, 2013
  • 2. Agenda • Where am I coming from? • Should you be worried about investments? • Myths debunked • So what should you do
  • 3. Where am I coming from?
  • 4. 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
  • 5. Last night at YetiZen’s Road to Success event
  • 6. Should you be worried by what the media tells you about gaming investment decline?
  • 7. No!
  • 8. Comparing Apples and Oranges They count: – Seed – Kickstarter – Follow-on venture rounds
  • 9. 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
  • 10. 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
  • 11. So what should we look at?
  • 12. 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
  • 13. Let’s debunk more BS—Truth gleaned from 2012 Investments
  • 14. BS Line #1: I only invest in picks and shovels, dislike content risk
  • 15. More Game Studios were invested in than Platforms
  • 16. BS #2: There are fewer green pastures for game studios, more left for platforms as gaming matures
  • 17. What the numbers really show Game Studios % of Investments 100 90 74% 80 70 51% 60 50 40 23% 30 20 10 0 2011 2012
  • 18. What the numbers really show Game Studios % Dollar Value of Investments 100 90 80 70 53% 60 45% 50 40 8% 30 20 10 0 2011 2012
  • 19. What the numbers really show Game Studios Average Deal Size $9.64 10 9 8 $6.79 7 US $ (Million) 6 5 4 3 2 1 $2.85 0 2011 2012
  • 20. What the numbers show: a tricky one. Partially right. Game Studios % of Investments % Dollar Value of Investments 74% 80 80 51% 53% 60 60 45% 40 40 23% 8% 20 20 0 0 2011 2012 2011 2012 Average Deal Size $9.64 10 $6.79 US $ (Million) 8 6 4 2 $2.85 0 2011 2012
  • 21. So what should you do?
  • 22. 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.
  • 23. If you are considering raising • Be clear on startup lifecycle and don’t waste time with bad fits Scale Efficiency Validation Discovery
  • 24. 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 sana@yetizen.com
  • 25. Thank you! Q&A If you want to connect with me • http://yetizen.com/blog/ • Twitter: @SanaOnGames • info@yetizen.com

Editor's Notes

  • #6: Asked someone if they want to go for an investment and then exit someday. Response ah naah we love making games, we are going to bootstrap. Raising money is hard anyways so many try and fail. No one is really raising money in games anyways.