Getting Past BS Around Game Investments

Presented by:

Sana N ChoudaryKing of the Yetis

April 9, 2013

2012 Game InvestmentsGetting Past the BS about Game

Investments

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

2011 20120

10

20

30

40

50

60

70

80

90

100 74%

51%

% of Investments% Dollar Value of Investments

Game Studios

23%

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%

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

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

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

Discovery

Validation

Efficiency

Scale

Seed and Angel

Venture

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&AIf you want to connect with me• http://yetizen.com/blog/• Twitter: @SanaOnGames• info@yetizen.com