”An investor view of gaming startups”

BerGameBergamo - March, 5th 2013

Niccolò SanaricoAssociate, dPixel

www.dpixel.it - nico@dpixel.it

twitter.com/il_nico

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2013 - dPixel2

First, some introductions

Me, bullet-pointed:

- MSc in ICT Engineering, PoliMi- MSc in Compure Science, UIC@Chicago- MBA, Oxford University

- Today: Associate & dealflow manager @dPixel

- Board Member and #1 fan, Mangatar

- Past: ICT Consulting & Corporate finance experience (Neptuny/Moviri, Strempel&Co)

- Ever: Geek & Tech PassionateOpinions are mine, unless otherwise stated

2013 - dPixel

Today’s menu

• Of VC, the environment and everything• dPixel, Venture Capital Advisor• What I look for in a gaming startup

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2013 - dPixel

What exactly is Venture Capital?

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cashflow

time

early stage expansion stagelate stage later stageseed start-up

stage stagefirst second thirdstage stage stage

Venture Capital

Buyouts

Growth Capital

Turnaround Financing

debt involvement

early insolvency

early endingof growth

ongoing growth continuing growth

ongoing maturity

turnaround

corporate lifecycle

types ofPrivate Equity

+

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A selection of the Italian VC scene

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“FF&F”Reveun

es

Time

Early StageExpansion

stage Later stages

• Small investment • (< € 1mil)• Business start up• Hands on approach

• Average investment (€ 1mil to €10mil)

• Business development• Round A, B, C, D

• Significant investment (> €10mil)

• Business Discontinuity (Acquisitions, turnarounds, vulture…)

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A value proposition for VC

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Active Investor- Leverage the VC partner’s experience- Strong focus on product, customer and go-to-market- Help in planning&recruiting (CxO, bizdev, etc..)

Collaboration- Support & coaching to the management team- High standards for performance, management & integrity- Eccellenza nell’execution

Relationships

- Access to strong network when required- Access to international markets- Co-investments with other VC funds, support in

fundraising

Efficiency- Efficient use of cash- Holistic approach to resources- Create value for all stakeholders

Not Ju

st cash

!

2013 - dPixel

Today’s menu

• Of VC, the environment and everything• dPixel, Venture Capital Advisor• What I look for in a gaming startup

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2013 - dPixel

The Italian innovation factory

• Our Team is at the core of innovation in ICT and Internet in Italy

• Strong proprietary dealflow: 1600 business plans received between 2010 and 2011, >600 in 2012

• Since January 2011, we launched Digital Investments SCA SICAR, a Venture Capital fund, of which the Seed Compartment is currently active

• In 2012 we launched a new scouting initiative, the Barcamper – www.barcamper.it

• We are advisor for Telecom Italia’s Working Capital Accelerator project

• We have built and still growing strong international relationships (Kauffman Fellow Program, Silicon Valley, Startup Sauna)

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We help talented entrepreneurs in creating successful enterprises

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Our Portfolio

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2013 - dPixel

Where do we invest

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Life Sciences & Medical Devices

Clean & Green Tech

Internet&

Digital Media

E-Commerce: Italian market worth 8B$ in 2011, +20% with respect to 2010 (*)

Mobile Apps: 25B app download in2011, market will reach $25B by the end of 2015 (*)

Cloud Computing: booming market ($3.7B in 2010, €10.5B in 2015) (*)

Bioinformatics: Expected market size in 2015: $5B (*)

Smart Grid: market size will double from €5.6B in 2010 to €9.6B in 2015 (*)INFORMATION &

COMMUNICATION TECHNOLOGY

(*) Sources: gartner.com, techcrunch.com, scottmadden.com, ibtimes.com, repubblica.it

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What do we look for

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Global entrepreneurs

- Be ready to expand internationally- Innovative, motivated, with track record- Ambitious and with the ability to execute- Aligned to shareholders interests and motivated to create value

Market Oriented

- Opportunity to dominate a market segment- Ability to capture market more important than market size- Market segmentation and targeting are key to success- Fast mover / first mover advantage?

(R)Evolution- Revolutionary and evolutionary technologies: disruptive or

improving?- New business models

Visionaries TractionExecution

Team Track Record Commitment

2013 - dPixel

Today’s menu

• Of VC, the environment and everything• dPixel, Venture Capital Advisor• What I look for in a gaming startup

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2013 - dPixel

What I look for in a gaming startup

1. Traction.

2. Retention.

3. Pipeline.

4. Awareness.

5. Ok, well, Team.

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Let me elaborate a bit

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Traction

“Quantitative evidence of market demand”- Naval Ravikant

• Show traction!• Ideally, in order of relevance:

1. Profits2. Revenues3. Active Users (MAU/DAU)4. Registered Users5. Traffic

• Don’t have it? That’s ok, but know how to build it. Have a plan.

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Remember: you build it bottom up!

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User Retention

“The percentage of a user segment who used your service in period A who also use your service in period B, where period B comes after period A.”

- An answer on Quora

• In the gaming world, it means players have fun with your game, and are willing to return.

• So, I expect games to be fun.– IMHO, one of the key aspects of game design. – 1-day retention– 1-month retention

• Understand what makes players come back. 15

2013 - dPixel

Pipeline

• The Gaming industry is not anymore only about the Hollywood-style “multi-million dollar hit”

• New distribution channels+gaming platforms -> web, mobile, social networks, OUYA

• Fast development cycles-> graphic libraries, gaming

frameworks• Fast game evolution cycles

-> social, location-based• Do not rely on a hit-or-miss single title, find a

vertical market, aspire to become a hit-factory*. 16

*but be ready, as hardly every title will be a hit

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Awareness

• As a team, you should know your strengths …

• … and your weaknesses

• Understand your player acquisition and retention drivers. Be able to explain them.

• Ask “why” things happen. Observe. Act.

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The team, a MUST have

• 2 / 3 founders• Complementary skills• Chemistry/ ability to

execute• Statistically proven +

nobody invests in one-man-bands Would you

bet on these guys?

2013 - dPixel

Farewell

Niccolò Sanarico

dPixel srlVia Filippo Turati 38, Milano

nico@dpixel.it - 334 585585 3twitter: il_nico

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