Heading to GDC and hoping to score some funding? Digital Capital's W. Todd Tribell here takes a hard look at the developer/investor relationship, and shares his perspective on what the investor really expects -- from his side of the table.
There's never been a more exciting time in the games industry. Platform proliferation, a broadening gamer demographic and a wealth of ever-changing business models all mean that if you've got a great idea and the smarts to bring it to fruition, then you have a real shot at success.
Except you haven't. If your amazing idea is going to make it to market then chances are that you'll need some financial assistance along the way. You might be lucky enough to have a degree of personal wealth or enough savings to get started, but it's more likely that you'll be like the vast majority of start-up developers -- looking for outside investment.
GDC has always been a great place to meet investors and get that ball rolling, but with the huge variety of funding options you can quickly find yourself overwhelmed with possibilities, not to mention a world of new terminology, and legal regulations, some of which are definitely not developer-centric.
Whether you're looking for a traditional publisher; a round of venture capital; offering equity; or going to the "crowd" via sites like Kickstarter, it's vital that you understand what you're getting into before searching for your ideal investor. Regardless of your choice, this isn't a one-night stand. You definitely should be seeking a long-term relationship.
You can have a falling out with your spouse and get divorced; and when you do it with your investor or your board of directors, it's just as painful. It's so potentially humiliating that after being sacked from Apple, the ensuing public feud nearly crushed the spirit of Steve Jobs, who once considered leaving Silicon Valley. Hopefully, with a few pointers, I can help you prepare to find your ideal investor and maintain a positive and enduring business partnership.
There are essentially three steps to a perfect investment partnership:
- Bring value to the partnership
- Find an investor who shares your core values
- Fulfill your commitment
Don't just bring me flowers!
When approached by someone seeking investment, the first thing I always consider is -- them. So if you're striving to raise capital, the place you need to begin is in front of the mirror.
Investors buy into people; not just products. Successful business has always been about relationships. That's not to say that who you know will ever be more (or less) important than what you know, but it does mean that in order to make a genuine long-term connection with someone, you must first look at yourself.
Being objective about how others see you will bring you strength and understanding when meeting an investor. Essentially, it all comes down to how you come across: as a developer, an innovator, a businessperson, and most importantly -- as a human being! Regardless of your personal style, you must be able to show, in both words and actions, that you're committed, creative, reliable and, above all, passionate about your ideas and business.
Investors want to be partnered with people who are interesting, intellectually stimulating, and excited. If you don't love your idea and can't clearly communicate the value of yourself, your skillset and your idea, then I won't love it either and will quickly pass on the opportunity in search of the next one.
In years past, it was sometimes possible for a passionate and super-driven developer to sell a vision to a publisher, get the gig and leave the rest to them, but those days have gone. Publishing today puts you in competition with more than 1 million apps on Apple's App Store alone. Your product is literally a needle in the proverbial haystack. Publishers are consolidating and bringing more and more of their development in-house - and sadly, many are disappearing altogether.
BUT -- it's not all doom and gloom. The reason that we're seeing such a shift in the traditional publishing model is that the likes of Apple, Google, and Steam have thrown the distribution doors wide open, giving you the ability to reach tens of millions of consumers directly. Of course, that's both a blessing and a curse because while this offers almost limitless possibilities, it also requires a shift in thinking and a solid commitment to learning. With great power, comes great responsibility -- which, by the way, is now yours.
So it's about passion, innovation, excitement and integrity, but it's also about commitment, like any valuable relationship. Are you committed? Not just committed until the next paycheck or until you can get a better contract, but all-in, with no back doors and no way out. Do you understand the things you need to know to navigate the swirling waters of this ever-changing industry? Are you able to demonstrate that as well as creating an incredible product, you also know what you have to do in order to market, promote, develop and iterate? Do you understand, really understand, things like F2P, ARPPU, MAUs and DAUs? These are all questions you should ask yourself before seeking outside investment.
You'll need to "get" concepts like player acquisition and retention, and know how you'll monetize your game if you want to convince me that you have a potentially lucrative proposition. Investors are not patrons and they're not investing to just get their money back or to break even. They are investing in this business to really score big and want to see their investment coming back every quarter, or even every month.
Additionally, do you have what it takes to see this through as a leadership asset to the project? Do you know what you don't know? Do you have the wherewithal to realize where your shortcomings lie and have a plan to address them? Are you capable of identifying your own weaknesses and finding an expert in that particular field to strengthen your team? Do you have a sense of where you, your idea and your business are heading? In short -- are you a leader or a follower?
If you want an investor to trust you, and believe me you do, then you'd better be a leader and you better be prepared to demonstrate that to me. Not just at the pitch, not just when we sign the deal, but all day every day from here on. Be under no illusion that all of these skills aren't mission critical because they are. The bottom line is: YOU are the single biggest mitigator of risk for your project.
So don't just bring me flowers on the first date -- I want to know who you are on the inside and what you'll be bringing long-term to our relationship. Show me what you're made of and that you've got what it takes to survive and thrive in this new digital landscape.