Securing funds.
by Anders Jacobsen · in General Discussion · 12/04/2004 (9:39 pm) · 13 replies
Hello.
I'm wondering if anyone of the more experienced members here know about companies specializing in acting as middle men between the entrepreneural game developer and VC companies?
I've sourced out a few VC companies that invest specifically in information technology, software and services. But I'm afraid to contact them since I am not in any way experienced with talking to "suits" on this kind of level.
And by contacting them I'm afraid to burn off a bridge or four...
These guys handle billions of dollars!!!
Is there an index on some site somewhere on VC and VC management companies that invest specifically in games and entertainment?
I'm wondering if anyone of the more experienced members here know about companies specializing in acting as middle men between the entrepreneural game developer and VC companies?
I've sourced out a few VC companies that invest specifically in information technology, software and services. But I'm afraid to contact them since I am not in any way experienced with talking to "suits" on this kind of level.
And by contacting them I'm afraid to burn off a bridge or four...
These guys handle billions of dollars!!!
Is there an index on some site somewhere on VC and VC management companies that invest specifically in games and entertainment?
#2
And on the management company part, I was merely interested in their consulting services. As this should include both business and legal advice.
Where would I go about finding these Buinsess Angels?
Also I don't plan on doing this right away, I'm in the middle of growing my team and "business bible" + our product and plans of course.
I've set up two companies myself before, so I'm not totally unexperienced.
I'm just not used to the level these VC's work on :)
And I know they're just trying to f*** me a little bit faster and a little bit harder than I am. However I do believe I have a water tight strategy.
Back to the management part. I don't have much education in business processes and would need consulting in forming a viable business plan on this level.
The last company I started only needed 100k USD of investment so a regular bank sufficed for that. However, if this project I'm involved in now is to achieve it's full potential, it's going to need a lot more than that.
12/05/2004 (12:57 am)
Thanks for the information. I'm not afraid of talking to them myself, I am afraid of approaching them in the wrong way. If I know too little about the VC I plan on contacting I'd be just as well off shooting myself in the foot.And on the management company part, I was merely interested in their consulting services. As this should include both business and legal advice.
Where would I go about finding these Buinsess Angels?
Also I don't plan on doing this right away, I'm in the middle of growing my team and "business bible" + our product and plans of course.
I've set up two companies myself before, so I'm not totally unexperienced.
I'm just not used to the level these VC's work on :)
And I know they're just trying to f*** me a little bit faster and a little bit harder than I am. However I do believe I have a water tight strategy.
Back to the management part. I don't have much education in business processes and would need consulting in forming a viable business plan on this level.
The last company I started only needed 100k USD of investment so a regular bank sufficed for that. However, if this project I'm involved in now is to achieve it's full potential, it's going to need a lot more than that.
#3
Since you're in Norway, what you want to do is see if your country has the equivalent of a "Small Business Administration". They probably do, and here in the US they have retired executives giving out free advice. If there's something like that where you are, get all the free advice you can, because retired businessmen have a knack for spotting things that us inexperienced people don't see. Or, you could ask around and see if you know someone who knows a businessman who is willing to take a look at your plan and blow holes through it, which is just as valuable.
Another thing you'll need, and this is true for VC's, Angels, or the bank, is a Business Plan. Right now, I'm currently in my third or forth rewrite of mine, and it's reaching towards 50 pages. What they want to see is a balance sheet proving mathematically that your business will produce money. Whether it actually will or not is up to you, since Thomas is right in that they want to believe in you. If you can sell ice to eskimos, you can make your plan work(provided the math is there). This is how I have my plan mapped out(by chapter):
1) A Brief Introduction to
2) Brief synopsis of the game
3) Analysis of the competition and market in your field
4) What is different about your product
5) The team you have working on the product(short bios)
6) Return on Investment calculations: The most important part for anyone lending you money, as it will show them how detailed you are in planning and seeing what you need, and also gives them an idea of how strong the business model is. I was told that I need to show at least 15% profit in the projections for banks to consider a loan seriously.
7) Tech/Design docs in brief: Don't assault them with the very technical stuff, since they won't understand it. Hit them up with the more high-level design docs.
8) Some concept art
9) Milestone/progress chart
10) Marketing/branding plans
You can probably find a better order for most of the chapters, and that will probably happen in my next rewrite, but the way I wrote it has a certain flow to it, so it's no so bad ;) But if there's one thing that I felt the advisor was most impressed with, it was that I had all the math in front of him(let Excel handle the math for you so you can just plug in numbers), and I had answers to just about every question he had about the business(which is where they start believing in you).
The Business Plan is the best weapon you have for this, and there's a lot of good info on the 'net about them. What I'd recommend is writing it up, and give it to people who you know are critical, so they can shoot it full of holes, and then go and fix the holes and rewrite. But this is what you'll be asked to provide in any event.
12/05/2004 (6:13 am)
Water has a way of proving that nothing is water-tight ;)Since you're in Norway, what you want to do is see if your country has the equivalent of a "Small Business Administration". They probably do, and here in the US they have retired executives giving out free advice. If there's something like that where you are, get all the free advice you can, because retired businessmen have a knack for spotting things that us inexperienced people don't see. Or, you could ask around and see if you know someone who knows a businessman who is willing to take a look at your plan and blow holes through it, which is just as valuable.
Another thing you'll need, and this is true for VC's, Angels, or the bank, is a Business Plan. Right now, I'm currently in my third or forth rewrite of mine, and it's reaching towards 50 pages. What they want to see is a balance sheet proving mathematically that your business will produce money. Whether it actually will or not is up to you, since Thomas is right in that they want to believe in you. If you can sell ice to eskimos, you can make your plan work(provided the math is there). This is how I have my plan mapped out(by chapter):
1) A Brief Introduction to
2) Brief synopsis of the game
3) Analysis of the competition and market in your field
4) What is different about your product
5) The team you have working on the product(short bios)
6) Return on Investment calculations: The most important part for anyone lending you money, as it will show them how detailed you are in planning and seeing what you need, and also gives them an idea of how strong the business model is. I was told that I need to show at least 15% profit in the projections for banks to consider a loan seriously.
7) Tech/Design docs in brief: Don't assault them with the very technical stuff, since they won't understand it. Hit them up with the more high-level design docs.
8) Some concept art
9) Milestone/progress chart
10) Marketing/branding plans
You can probably find a better order for most of the chapters, and that will probably happen in my next rewrite, but the way I wrote it has a certain flow to it, so it's no so bad ;) But if there's one thing that I felt the advisor was most impressed with, it was that I had all the math in front of him(let Excel handle the math for you so you can just plug in numbers), and I had answers to just about every question he had about the business(which is where they start believing in you).
The Business Plan is the best weapon you have for this, and there's a lot of good info on the 'net about them. What I'd recommend is writing it up, and give it to people who you know are critical, so they can shoot it full of holes, and then go and fix the holes and rewrite. But this is what you'll be asked to provide in any event.
#4
But a grand plan alone is not going to get me anywhere.
I don't know of any business man that has gotten anywhere without working with other people/companies. I just need to figure out where the people worth working with are, on the business side of things.
Pay no attention to my current location. My business will eventually be Nevada based for a number of reasons.
What I'm looking for is a company or person with expertise in VC consulting in the software/entertainment/games industry, someone who will help me build my management team and pull strings with the VC companies. I myself is neither a lawyer or a business school graduate and won't be very appealing to a VC company alone. I just thought maybe someone on here would know about a few people/companies? :)
Loans are horrible, they are expensive and more often than not, the bank will pull the plug on you at very inconvenient times. This is why you want someone who knows the business. Banks usually don't.
PS, for ROI I think you should be looking closer to 30%
12/05/2004 (6:44 am)
Hehe, this is like repeating the ABC. I already know :)But a grand plan alone is not going to get me anywhere.
I don't know of any business man that has gotten anywhere without working with other people/companies. I just need to figure out where the people worth working with are, on the business side of things.
Pay no attention to my current location. My business will eventually be Nevada based for a number of reasons.
What I'm looking for is a company or person with expertise in VC consulting in the software/entertainment/games industry, someone who will help me build my management team and pull strings with the VC companies. I myself is neither a lawyer or a business school graduate and won't be very appealing to a VC company alone. I just thought maybe someone on here would know about a few people/companies? :)
Loans are horrible, they are expensive and more often than not, the bank will pull the plug on you at very inconvenient times. This is why you want someone who knows the business. Banks usually don't.
PS, for ROI I think you should be looking closer to 30%
#5
I would ask your questions to people like that instead of here in a indie game dev forum. As most of us have been there, done that and gotten sick of it, it seems a bit far fetched to find someone here who will give you good advice on VC consulting companies.
Good luck
12/05/2004 (6:55 am)
Here in Denmark we have a "national business angel society" - I would bet that something similar exists in Norway.I would ask your questions to people like that instead of here in a indie game dev forum. As most of us have been there, done that and gotten sick of it, it seems a bit far fetched to find someone here who will give you good advice on VC consulting companies.
Good luck
#6
True in that banks usually don't know the business, but at the same time, loans are less expensive for you than VC's are, from everything and everyone I've heard from on the subject. They want part of you business, and they take money over a much greater span of time (sometimes at greater rates than a loan). Not to mention the fact that most of the people I talk to call them "vampires", haha... I could be wrong about it, but you're actually the first to say that VC's are better than a loan (though you make a good point as to why).
It ranges from 20-50%+ for my project, but the banks have a minimum of 15% profit margin they want to see here, if they want to call the business doable ;)
12/05/2004 (7:47 am)
Quote:Loans are horrible, they are expensive and more often than not, the bank will pull the plug on you at very inconvenient times. This is why you want someone who knows the business. Banks usually don't.
True in that banks usually don't know the business, but at the same time, loans are less expensive for you than VC's are, from everything and everyone I've heard from on the subject. They want part of you business, and they take money over a much greater span of time (sometimes at greater rates than a loan). Not to mention the fact that most of the people I talk to call them "vampires", haha... I could be wrong about it, but you're actually the first to say that VC's are better than a loan (though you make a good point as to why).
Quote:PS, for ROI I think you should be looking closer to 30%
It ranges from 20-50%+ for my project, but the banks have a minimum of 15% profit margin they want to see here, if they want to call the business doable ;)
#7
I aggree it's a long shot to get any VC advice on here, but if you haven't looked for easy answers first, you might have missed them. :)
Now I shall begin my journey onto the web for a solution to my quest.
Begone bad google hits, and bring aboard the loot! (Laters) ;D
12/05/2004 (8:08 am)
Yeah I guess the banks aren't as strict as the VC's. And yes, the VC's will certainly help themselves to a nice cut of your cake, but the cake wouldn't be there, or certainly not as big without them.I aggree it's a long shot to get any VC advice on here, but if you haven't looked for easy answers first, you might have missed them. :)
Now I shall begin my journey onto the web for a solution to my quest.
Begone bad google hits, and bring aboard the loot! (Laters) ;D
#8
Dont make the mistake as to think of them as business advisers on top of being a very expensive bank
Business angels on the other hand are individuals who made their money working hard, and if you get lucky you will find someone who cares about your product and you - helping you on your way and giving advice. Be also advices that when things go badly its on a more personal level with them - its their personal money they are putting into this unlike most VC employees.
Make sure 110% that your personal well being is not economically tied into your business when working with either.
Enough from me.
12/05/2004 (10:34 am)
The major problem with VC is that they (usually) do not know your business, dont care about it and dont give you sane business advice. They only think money, money and more moneyDont make the mistake as to think of them as business advisers on top of being a very expensive bank
Business angels on the other hand are individuals who made their money working hard, and if you get lucky you will find someone who cares about your product and you - helping you on your way and giving advice. Be also advices that when things go badly its on a more personal level with them - its their personal money they are putting into this unlike most VC employees.
Make sure 110% that your personal well being is not economically tied into your business when working with either.
Enough from me.
#9
I don't have time to make a long post, but this has been covered many times in the forums. I'm not sure what search terms will find it.
12/05/2004 (1:57 pm)
I have posted over and over and said it over and over in my presentations. There is little to no chance of getting investment capital for the games industry. Even if you could get the money, you have a duty to pay it back. Your chances of paying it back are slim to none. If you do have a potential investor, and they do their due diligence, it would be best not to have them talk to me because they will probably be turned off.I don't have time to make a long post, but this has been covered many times in the forums. I'm not sure what search terms will find it.
#10
1. Don't hit up the VC world. They don't care about you or your product.
2. Banks, and other industry specific investors are much better suited to giving you money and the direction. Most likely they won't give you the money, but you may get some direction on how to hit up others or at what level your game needs to be at before they'll even consider an interview.
3. Asking for someone else's cash cow on a public forum will rarely ever garner real invesment dollars.
4. Pitching to a publisher is often more realistic, and often as soul-draining.
But good luck in your journeys.
12/05/2004 (3:30 pm)
For some strange reason, I had flashbacks of the Cash Cow thread a while back.1. Don't hit up the VC world. They don't care about you or your product.
2. Banks, and other industry specific investors are much better suited to giving you money and the direction. Most likely they won't give you the money, but you may get some direction on how to hit up others or at what level your game needs to be at before they'll even consider an interview.
3. Asking for someone else's cash cow on a public forum will rarely ever garner real invesment dollars.
4. Pitching to a publisher is often more realistic, and often as soul-draining.
But good luck in your journeys.
#11
12/05/2004 (5:33 pm)
Thanks for all the input guys.
#12
I don't need funds to develop my game, I will however, need funds to launch it. I'd think those two would be quite distinct differences...
12/05/2004 (5:35 pm)
@Jeff TunnelI don't need funds to develop my game, I will however, need funds to launch it. I'd think those two would be quite distinct differences...
#13
yeah they are different one is to build something the other is to MARKET it, now in the PAST entertainment software was done like traditional MUSIC and MOVIE funding. With the DISTRIBUTOR putting up the money and financing the MARKETING launch and you having to REPAY them with money from sales WAY before you ever see a penny.
this did not work for many reasons, first one is most people never sold enough to actually pay back the marketing budget completely and did not read the fine print and lost ALL their IP RIGHTS as payment, the money source only benefits from this becuase they don't care about overspending or poor marketing they are getting their money back way before you finish paying them and end up getting everything anyway.
you will have an even HARDER time finding people to finance a marketing campaign for something that has a tiny chance of succeeding, and the "interest rate" will be so high you might as well just give them your product and skip the foreclosure formalities.
12/08/2004 (3:58 pm)
Quote:I don't need funds to develop my game, I will however, need funds to launch it. I'd think those two would be quite distinct differences...
yeah they are different one is to build something the other is to MARKET it, now in the PAST entertainment software was done like traditional MUSIC and MOVIE funding. With the DISTRIBUTOR putting up the money and financing the MARKETING launch and you having to REPAY them with money from sales WAY before you ever see a penny.
this did not work for many reasons, first one is most people never sold enough to actually pay back the marketing budget completely and did not read the fine print and lost ALL their IP RIGHTS as payment, the money source only benefits from this becuase they don't care about overspending or poor marketing they are getting their money back way before you finish paying them and end up getting everything anyway.
you will have an even HARDER time finding people to finance a marketing campaign for something that has a tiny chance of succeeding, and the "interest rate" will be so high you might as well just give them your product and skip the foreclosure formalities.
Torque Owner Thomas \"Man of Ice\" Lund
In my previous jobs I've had to work with VC companies a few times, and imho they wont give you money unless they believe in _you_. Its your idea, and if you cannot even deal with them directly what does that tell them about your personality?
With that said - should you even get considered, its my personal experience that VC money is money from the devil himself. 3 companies I've been in have been shut down after some time due to money greedy VCs. It would never touch money from those kind of people. Remember their sole business is to invest money, let it grow and then harvest it as fast as possible with no particular interest in your company at all.
If you _really_ need money from external sources, try some business angels instead. Preferably someone who has earned their money in the game dev industry. They will be able to work much closer with you and not only be cash cows, but also give you advice and work _with_ you instead of against you (like VCs will do after half a year when they need to cash in their investment).
For business angels its even more important that its YOU they believe in.
No matter what, you will need a very good lawyer on your side who can help you through the contracts.
My advice (and I bet from 99% of the people here): grow your business organicly (sp?). Its the only way if you do not have a great track record or lots of experience to show.