How to pitch your company to Angels or VCs – What we are looking for

[Music] okay so garlic now we've got 20 minutes so I apologize if I talk relatively quickly I'll try and make it as clear as possible so first of all atomic oh we're a VC firm we've invested in a few game companies that you might know one of them is supercell the other one is Rovio more recently we've invested also in Bossa studios here in London we've also invested in a company nice and called tea-time and our more recent investment with the Paris company called OBB and Stephen Matthias and myself basically do that I'm also the CEO very public labs

I'm actually in the games entrepreneur so I know where to be well both sides of the table I've pitched PCs I've had to raise money I think I pitched 28 these different pcs before one of them said yes so for me it's quite interesting to be on the VC side as well now on and understand so I'll try and have as candid as possible a discussion with you guys about what's interesting why do we see at least some VC's see an opportunity in the games market well first of all because it's a huge market right I mean and Mobile's already this is actually last year's numbers now it's bigger bits already forty six billion dollar opportunity is still growing fast here on the air you can scale so it's just really a big market I'm actually very surprised that so few VCS are looking at this market in a very verse especially in Europe I mean you've got some excellent early-stage VCS not that many VCS looking beyond that here in Europe which is great for us but not so

great for dia for game companies and our reason is obviously the the platform's continue to develop I mean you've got incredible distribution if you're doing mobile with Google Play and Apple that's an amazing opportunity sell on PC obviously steam has been very strong but you also have some really really interesting you know changes to happening with you know this course gonna launch a store if God wills the epic that's gonna launch a store as well as going interesting also to see what at what happens to the to the revenue shares is announced or I don't know if they've announced it yet but definitely they will take a smaller cut from what we understand so there's a lot of movement there obviously Facebook and other companies are doing you know a lots of that first in terms of the instant messaging side of things so this there's gonna be a lot of change with the platforms I think over the next you know year - and when you're saying change you mean opportunity so it's a good it's an

interesting time right now other thing is to make money games actually is a liquid market there's a lot of exits actually you'll see there's more exits in the games mark in terms of proportion than other technology investments and you know this range from you know twenty five million dollars or below - in up to ten billion dollars if you look at the supercell exit and you know recent exits are now King supercell obviously space space ape they got acquired by supercell my own company was that I exited the year and a half ago so lots of action lots of buyers also in the market which is interesting the company the acquire mr. Lefranc where I still work for example making several acquisitions just last year so it is a very dynamic market right now very fast returns actually this is this is some information I think we got from Goldman Sachs that is showing you that basically the the mass

consumer adoption that you're getting around games means that you can really get that famous mythical 10x that every VC is looking for much faster in games and in other technology investments and kind of interesting part another point which actually took took a long time for me to explain to investors especially now is that it's very cash efficient game companies are not like other tech companies the moment they start working another game that's working they actually make profits which which for some VCS is kind of like what what do we do with that the good news is that if you get the right ones right game companies you don't have to do a lot of funding rounds which means it's as an entrepreneur you can actually keep quite a significant stake in your company and as a VC as well you know if you get in relatively earlier at the right time you can actually get a pretty nice stake in the company so it's great

for angel investors it's great for the stage VCS it's great also for VCS that come in a series a maybe series me but you don't see a lot of series CED and so forth in games at least not involve our games so that's a really interesting side of it and then obviously in a phenomenal revenue growth when you get it right I mean this is this is this is a graph for supercell but you know you can see the same graph for our companies like play regs you can see definitely for epic with fortnight more recently I mean when you hit it right when you hit it on the nail the returns are just amazing so that's what's also it makes ensuring it's difficult it's harder but it's definitely still doable and then the thing I personally love and like is amenity you know this kind of talk about games is a head driven business and then you know and then you're only as good as your last hit yes but then your if you're hit lasts 20 years who cares you

know you can really really do very well there and you can see like these franchises you know have many many years of revenues and this is all you know the live operations discussion and all that and the other thing that we really like as we see this when you look at a team and they've already had one success normally that team is better able now to create multiple successes and their iterate just gets better so that's another thing that that we that we like obviously and then Europe's great there's very deep European talent in Europe this is not a situation where basically you know us is much better in Europe or even China is much better in Europe Europe is very very good you find amazing returns here and you have incredible companies and you have a real deep tool pool of talent you know you had some great PC game companies that were here a lot of people who were working for these companies than worked for mobilis or stuff so you've got teams with lots of

experience and it's a unicorn Factory what is better than unicorn factory you know and here we're missing a few paradox should be in here but you've got King Mojang other will say is rails part of Europe soap Latika so you definitely have a lot of unique of game unicorns that have come from Europe even have decade corns like supercell so that's another interesting thing here so why does the tummy could do that's a bit different and if you're interested there's a video of Hilkiah who's the CEO of supercell talking about how Tomiko helps supercell basically scale grow into asia and do a few things there is basically we have a growth acceleration team I'm part of that growth acceleration team of people that basically have done it before I've experienced in games and we're basically able to kind of help you out with some of the strategic kind of issues that you

might have as you're trying to scale your business internationally also obviously the network that we have is kind of helpful and up to now we have a pretty okay track record in terms of giving investments so if we're looking at you and your company and then this probably means that we saw something really special in you and then the other thing that we find really amazing in games and that that I think is kind of underplayed is kind of the incredible audience which the games have now especially with mobile I mean there's apparently this is something like 2.2 billion active games game gamers out there are spending and that's also of course free-to-play has brought a lot more consumers to it so that's another thing that we like other powerful kind of things that we look at and we like is and is the scalability that it's just huge I mean you can basically now with the help of the stores you can be a

small team in in our case was we had most of the student the biggest city in Romania and our number one market 50% of our revenues were in the US you know you can basically the world it's your is your is your is your playground which is which is amazing roll out speed of course is also amazing although we're seeing that with the better games the roll out speeds are getting a bit slower you see in game staying in what we call early access or soft launch much longer but still you know you can still kind of roll out really quickly once you've got those KPIs doing and are really interesting thing is the gaming engagement potential people are playing games more and more and more they're spending more hours playing game so that's kind of really another thing that's kind of showing that the markets still going the right direction obviously monetization we're seeing more and more ways to monetize your games free-to-play is not an end of to all things it's a business model and there's other new ways that are emerging of

doing free-to-play and so we're leasing kind of you know a lot of things happening of obviously Apple now pushing subscriptions very strongly again which is kind of an interesting way but basically the flux that is interesting and then the other thing that's amazing is the margins I mean we keep complaining that we're giving 30% to the Google Apps or dyrus apps I'm sore and a little sore stuff but we were forgetting that you know before Google and Apple came here in our mobile you know the operators were keeping 70% of the revenues and leaving 30% to the developers so actually although the marketing costs are going up and all that the margin games are still really really good I mean it's still from recruited companies so it's pretty clear which publicly kind of say that our goal is to stay at 30% evita not many businesses at scale can achieve that sort of a bit and obviously other companies that are supercell even I've even higher a bit numbers so that's another great thing one thing that VC's

definitely love is that it's highly data-driven because you know we're all and we're afraid of making a mistake especially because we're managing other people's money so the more data you have the easier it is for you to make an investment decision and you know what games were very good at data at least right teams are you know you know really well you can pretty well you know predict a lot of things and we have kind of all these kind of phase launches that we do and then sort of live operations or that so it's pretty easy to read how something is doing and then what we're seeing is yeah there's a lot of competition maybe the downside is that depending on who you read is between a thousand five hundred games and more than a Long's being launched every day to be honest a lot of that is crap and copycats and knock-offs I actually think that this may be a lot less proper games being launched every week but still it is a super competitive environment so that's the narcotic and

that's kind of not changing so what do we look at as we cease obviously we look at metrics it's very hard for us to not invest in metrics but I was saying that not all metrics are created equal it really depends on what your game is like so and even within crack in within jars like there's another casual drawer you can't just say oh if you've got a casual game you know your KPIs must be 60% less they want retention and so forth and this is the motivation because sports it's not true it completely changes depending on whether you're super casual game or you're kind of a candy crush tab casual game whether so so it's kind of it's not as simple as that the one metric I tend to really kind of believe in is one is kind of the seductiveness of your game and the other thing is obviously you know it's your LTV bigger than your cost of acquisition that's the kind of key metrics that probably true across the line so again same thing in

mid core you'll have different drawers and all that so don't pay too much attention to to people they will tell you you dissin have in terms of retention number in terms of our towel and all that for your game to be invested or successful because it really depends on what kind of game that you're doing and and what kind of target market you have to me the most important thing more important metrics is teams they're really really critical while I try and look at is obviously you know people are passionate about doing games not just tourists games industry there's a lot of tourists still and then the thing I look at and I always go into a studio before we make an investment is there is there some sort of telepathic kind of vino thing going on I mean do these people work so closely together they don't even even need to speak to understand each other because that's I think what kind of set things aside and

obviously you know that only happens when you have a long history of work of working together and we have some things that we look at to judge founders internally now we look at a set of criteria is that founder what we call a talent magnet magnet and culture builder because you could be a great team that can be life great lifestyle business in it but if you really want to scale to become you know to have super cell like results you know you need to have something special in there and we're trying to find out what that is talents is is super key you know is that team great at gathering understanding metrics can they make the right tech choices in terms of to enable scaling to have fast designing to a site cycles do they do weekly sprints or just are they just a disorganized mess that's all things that obviously we we look at but

we need me look for creative risk takers you know it's very easy right now to just basically do you know just a slight now we have this thing we're saying now standing on the shoulders of giants which is really you know copying someone and hoping for the best and trying to do better performance marketing it's very important to also have peeped Eames I think the heart of things is very after you find teams are very good at running a metrics kind of based business and teams that are very good at being very creative you don't very often have teams that can do both things really well and that's something that we that we really look at so to conclude and looks like I'm gonna be able to down time even this was done four more times that's great so one thing that is that we always look for as a VC is what we call defensive modes how defendable is your business and the great thing in

gaming is when you start winning big you can create some really powerful defense so that's really that's kind of really interesting because you've got the economies of scale we know it in terms of performance marketing if you've got a better better ARP Dow and better means you can kind of you know price people out of the equation so there's a lot of really cool interesting things that you are you can do another thing is success a track style a success you know if you are a very successful studio that as a game displayed by means of people the best artists the best designers the best programmers will want to work for you so that's a neuro defensive mode so you've got talent defensive modes you've got marketing defensive modes if I love really interesting things that you can build up to to build those great valuations and while you do this what you're doing is really although I just say before that's extreme the games are extremely competitive really it's it's really that the top guys who need take most of the value there because you're stocking the oxygen out of the

smaller ones it's not great if you're one of the small guys but if you want have the big guys and you're a VC that's invested in them that's pretty good it's a tough business that's it that's that's all I have for you I'm was able to go through it thank you do I have a minute for questions yeah go ahead so I'm gonna give an unpopular answer if you're a publisher I do not believe in publishers I do not think that it's a good model for definitely not for free-to-play and I think that a right now the kind of game team that are that have the potential to become in your billion-dollar companies or more they need to control the whole chain they need to be able to really control everything and they need to be good at doing the games running the metrics they

may need to have the marketing team they need to be the full package if they're not the full package doesn't mean they're bad saying they're not VC material [Music]