My presentation is quite short due to time constraints so I thought I would supplement the slides with some further comments on here, mainly around the top problems start-up studios face.
#1 Team
As with many non gaming businesses, its very hard to raise money if your a sole founder. The risk of a one man management team is too great for many investors. Its still quite hard with two people. The optimum number is three. Four is too many and has other issues with it. If you're a sole founder don't be surprised if investors suggest you find a couple of other people, its about risk management.#2 Product
There is a massive difference between a good game and a commercial one. There are hundreds of good games (good art, solid code, nice story) every year that end up with little or no audience. If you're a start-up, start with an audience in mind and build a game towards them. Avoid the build-it-and-they-will-come thing.#3 Timing
There are investment cycles that need to gel with the games cycles to get a good fit for both the studio and the investor. New hardware releases and launch titles are a good point to aim for, so waterfall backwards to see when investment needs to be completed and make that part of the narrative of your investment.
#4 Expectations
Many game studio founders fail to fully understand the expectations of professional investors until its too late and the relationship has broken down. Investors expect to make a return, and often founders see the road ahead and timelines differently. Don't enter into an investment agreement without fully understanding what the investor wants and needs and when.#5 Focus on Delivery
Not everything goes to plan, it would be a naive investor that thought that way. Most investors are perfectly OK with problems if the founders are focused on delivery. What they don't want are long-winded elegant solutions built internally that could have been bought for $500.00 and implemented in hours or days. Always focus on getting to market and your investor will always be ready to help financially.
#6 Governance and Guidance
It can sound a bit pretentious when you talk about boards of directors and non-executive directors ("NXD") but its never too early to start getting the best advice you can. The formation of the board is a good indication to potential investors that you're serious about building a sustainable company. NXD's should be used on a rolling basis to help combat specific issues you're facing. Collectively the board and the NXD's give your company strong governance.
#7 Fail Fast
An oldy but a goody. Plans are useless but the planning process is vital. Make sure you have a plan b, c and probably d. When something isn't working move onto the next version of the plan, but do it fast. Learning that pivoting is not a bad thing is vital and every change needs to be rationalised and documented for the investors.
#8 Plan for Success
Many entrepreneurs know exactly what they are going to do if they come up short on sales targets or revenues. They tend to have a regressive set of steps that make less than expected revenues still feasible. They then utterly fail to plan for success, where revenues exceed their expectations. This sounds like an odd problem to have but getting a business to scale correctly and not lose potential revenue and customers is slightly more of an issue than coming up short on sales.
#9 The Growth Staircase & Transition Planning
In the beginning its about games and being a games studio. Ultimately it becomes about transitioning to being a software company that is currently making a game. They're not the same thing. The transition into having a financial director, human resources, bespoke IT department, sales and marketing staff etc. is not straight-forward but is a symptom of success. Once you reach that point the transition needs to be planned and implemented like anything else. Many games studios fail to make this transition and then struggle.
#10 The Exit
Your investor wants to make a return on his investment. A multiple of x10 in an ideal world, x6 would be nice and x4 is probably something like the average. Understand that this conversation is not one you can avoid and at some point the investor will want a sale (typically 4-5 years). If you wanted to run the company forever then you got in the wrong elevator.
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