Pocket Gamer Connects London is fast approaching, and PG.biz is excited to share insight into the panels and presentations on offer from the speakers themselves.
Bobby Thandi, founder and CEO of XR Games, will be speaking at PG Connects London with his talk, How to Raise Investment Funding for Your Games Studio, which encompasses his extensive experience raising funding for investment experts and newcomers alike.
The full list of Pocket Gamer Connects London speakers and presentations is available through this link.
PocketGamer.biz: Could you give us a teaser of what we can expect from your talk at Pocket Gamer Connects London?
Thandi: My talk encapsulates all my learnings from raising single-digit millions over the past few years. It outlines what I wish I knew before I started raising funds. In short, it’ll cover:
- Where do you start?
- What do you need to get ready before investment?
- What to expect during the process?
- Red and green flags regarding potential investors
Is there any key background information or context people should be aware of coming into your talk?
I’ve written my talk assuming you haven’t raised investment previously. So when I reference Term Sheet, IM (Investment Memorandum), IC (Investment Committee), SHA (Shareholders Agreement), AoA (Articles of Association) et cetera, I’ll be sure to explain what they are, what to look out for, and when they’ll come up in the process.
Investment is obviously key to helping studios make the most of their vision. How early should the discussion of investment be brought up during the production?
Very early! Otherwise, how will you support yourself and your team? When you’re creating your games studio I strongly advise that you have The Golden Triangle Foundation, meaning you have at least two other friends to go on this venture with. One person takes care of all things tech, the second person takes care of everything creative, and the third person all things business – including fundraising.
These three roles cover The Golden Triangle Foundation and a games studio simply doesn’t exist without all three areas covered off. And unless you’re an insanely talented lone developer who can handle creative, tech, and business; or you’re already very rich, you’re going to need to raise funding.
Obviously, you could go down the traditional path of making a playable demo (in your own time, using your savings, et cetera) and then pitching that to publishers for funding. However, I find raising investment for a slate of games from investors takes the same effort as seeking funding for one game from a publisher.
You'll be discussing notable red flags regarding potential investors. Are bad faith actors a common occurrence in investment circles?
In my talk, I reference a story of when an investor I was engaged with didn’t actually have any money! He was trying to shore up exciting startups that he could present to his potential investors for his fund. So bad faith actors do exist in investment circles, and you must always do your due diligence, especially when your spider senses detect something as being off. It was only by speaking with mutual connections on LinkedIn that I was able to verify my spidey senses were right!
Fortunately, bad faith actors are rare in investment circles. And there are more review sites such as Landscape (the Glassdoor for Venture Capital (VC) investors) which helps provide transparency on how VC investors treat founders. Further, online research should help you uncover whether you should or shouldn’t get into bed with a potential investor.
One last note – always check out the investors portfolio. And then speak with those startups they invested in to see how the investors treat them. Hopefully you’ll hear nothing but positive feedback.
It's important to engage in the right dialogue – both regarding the right questions to ask, and knowing the best questions to receive from VCs. Can you offer a sneak peak in some of the most common errors both sides of the table make during initial conversations?
Here’s a sneak peak of three areas:
Have your back – you want to know that the potential VC has your back. But how can this be evidenced during the courtship phase? One example could be that as part of the investment round the VC sets aside 10 per cent of the equity pool for Growth Equity. As they want you and your entire team (including future hires) to participate in a future exit. So the investor is diluting themselves to create this Growth Equity as they know it's you and your team that will drive all the value in your business.
Trust – how can this be evidenced pre-investment? One way could be that the investor introduces you to an experienced potential chairman, non-executive director, or advisor. You get to meet and connect with an industry legend and learn lots from them by listening to their advice to your most pressing questions. Furthermore, this contact will be feeding back to the potential investor as to whether or not you’re investable. In short, always ask how can the VC investor help elevate your games studio? Who can they connect you with? How can they help your games studio to succeed? Which doors can they open? And the top VCs will actually do that pre-investment to show you what they can do for you. This is a very positive signal.
Founder friendly – is a term you’ll hear a lot of VCs talk about. But how can they evidence it? Investors who have been entrepreneurs themselves in the past, really stand out here. They know how brutal your journey can be, re: the highs and lows, and they want to equip you to shoot for the stars. As such, they might enable you to take some cash off the table to help, and alleviate concerns regarding your mortgage. You’ll have to give up equity, mind. Equity that should be worth a lot more in the future. So that’s up to you as to what you do!
Finally, you have one sentence to persuade someone why they should come to your talk. What would it be?
I can give you a couple: if you’re thinking about raising investment for your games studio and you want to learn where do you start? What do you need to get ready before investment? What to expect during the process? And what the red and green flags regarding potential investors are – then you should come to my talk. As I’m sharing all my learnings from doing this multiple times.
You can read all Road to Connects interviews and articles at this link.