How We Invest

The creative vision of the game matters along with the art, game design, world building, if we back you we're supporting your vision. All things that don't matter to a typical investor who only wants to look at metrics/payback etc. For us the MORE creative risk you take the better. It's not just better, it's necessary and the ONLY way you'll be able to stand out above others. Where most game developers fail is no longer in execution but in not standing out in today's very crowded market. We talk about this more in our essay "Will They Make Time?"

We are more likely to understand the technical challenges and how long/costly something might take to build or solve or the level of risk/amazingness for the next generation of AI assisted or copiloted game development. General tech investors will not understand relative elementary things in game development like A* for pathfinding for example or more complicated issues like where both the quantity and complexity of entities in gameplay or a level could completely break things. We know things from the old school i.e. the technical challenges a game like Magic Carpet faced with voxels back in the day to present-day procedural generation and an idea of what's to come as we move from the plateau-ing of graphics into a possible new age of AI being game selling points (PLEASE pitch us if doing something in that regard) :D

The importance of choosing your investors is outlined in this talk by Vinod Khosla who founded both Sun Microsystems and Khosla Ventures. In particular, we will likely be the "tolerant" ones of your technical approach

The most commonly cited reason for investors to avoid the game industry is that it's hit-driven. However as London Venture Partners pointed out, this applies to startups as well. However what investors really mean is that it's easier to evaluate many teams solving the same problem or operating in the same space and see who's executing best. As anyone in the film industry knows, creatively no one knows what will be a hit with the masses. Therefore we also concur with general investors to want to avoid trying to pick this altogether as well. Instead we want to be the first check into the next ID Software, Epic Games, Capcom, or in smaller fashion, Telltale Games. We want developers that will stick together and create a multi-decade legacy and ideally create some new paradigms that change gaming forever although we're aware most won't and won't need to. You shouldn't be a one-hit wonder studio. There are already too many in the industry which are formed just to build one game without a plan for anything afterwards. For us to win, your follow-on investors need to win as well whether that continues to be us or others and that only works if there can be enough scale and growth potential to justify investing

You're not creating World of Warcraft or even a Warcraft 3 at this level but you can ship a Warcraft 1 or even a Dune 2 that lays the foundation for much greater things. The first game may not be a hit but we'll need to see a foundation that can lead to greater things even if you fail. What technology will you be able to leverage? what other games or what level of production quality can the team achieve with their new experience and lessons learned? is there now an engine or product base that can be reskinned or extended into another theme or genre? Do the developers have a multi-year plan and a bigger vision beyond the initial game?

The game industry has always been somewhat similar to film and we are increasingly more and more tied at the hip, sharing or licensing out IP and the potential of this common partnership is only going to continue to grow. We eventually just see games and movies becoming the same entertainment companies and single platforms that carry both. We LOVE transmedia and universe extensions that go into other forms of media, books, audio plays and more. Munly personally scoops up all of the media lore-wise for anything he really gets into, not only the games :) We'll look at not just how you plan to extend your universe but how you plan to engage and encourage your players to "cross-buy" as well as that's still a relatively non-mainstream superfan behaviour. Whether it's crossovers, side-stories or lead-ins we want to see you embracing and doing this naturally. If we're going to have to nag you to look into doing things outside of games, we likely won't be writing the check just to have money left on the table.

This is where we take a nuts and bolts look at things like the Steam numbers or DLC attach rate numbers of the genre of your game. Some are niches, some are mainstream. You won't need to be a lowest common denominator mainstream game like Fortnite to be funded but we will size any investment appropriately to the TAM (total addressable market) of the genre. Some niche genres are still quite lucrative i.e. strategy that skews towards an older base with more disposable income to spend while things like MOBA's and Fortnite will skew younger with more impulse buyers on volume who have less to spend and may have higher friction to convert. We'll look at everything and make a reasonable call even if the numbers won't be the biggest.

The percentage of startups getting funded from any fund's funnel/deal pipeline shrinks more and more every year as the number of startups in the world outgrows the number of funds able to serve them. Especially at early stage. It's shrunk from <5% to <3% to now an industry average of <1%. Why does this matter? It's important for us to be able to say yes and to cover a startup in the US well it costs at least $100k. Most other funds are starting at $200-300k. If we can lower that initial risk down to as little as $25k to start, you may not have everything together, we may not have the strongest conviction but it gets us closer to meeting somewhere in the middle. We'll prefer to have a big of a portfolio as possible and we know that information/proof pts/something to actually play goes up a lot more once someone has a chance and enough runway for longer term planning and execution. We could do larger for those truly outstanding whose circumstances cant allow them to move and we'd have to look at not just the burn rate but where it's spent to see if chances of success still make it worthwhile. It could also make sense to stay from a business development standpoint

TLDR. If you're willing to move and make the ultimate bet on yourselves to execute your vision vs someone else's, your chances will increase. Bigger checks are available elsewhere but the odds are equally terrible all over the world and do not favor founders. The costs however are not :)

If you have crypto/Web3 involved we will be taking extra scrutiny and it will be much harder to convince us frankly. But not impossible. This is primarily a fund for teams who never planned for web3 and would only consider it for money.. If you really do have something that impress despite Web3 and we back you then it would also be a pretty strong signal that what you're doing will be amazing on it's own merits and would be a rare unicorn to consider despite a sea of product that gamers would do well to avoid. The Web3 part should only strengthen the value proposition for players and developers first before any consideration for what the "crypto people" think. What you're doing should be interesting regardless if ALL web3 elements were entirely removed. For more detail on our crypto stance, see this post here