Panel: Why Angel Investing Matters

[Music] [Music] start our second uh panel discussion um joaquin akron from elite game developers will be moderating the discussion why angel investing matters just give a moment to get ready and then all right welcome everybody to this show that we're gonna be having now regarding angel investing in gaming so i'm going to start off with round of introductions so my name is joachim okra and i'm running and a company called elite game developers

which is a podcast and a newsletter and a blog on entrepreneurship in gaming i also do a lot of angel investing and i'm a venture partner at play ventures which is early stage gaming venture capital pond so um let's kick it off with the panelists and can we get an introduction from all of you let's start from nick you damn i knew you made a mistake by certain on the end um so i'm nick brown i've been in the games industry for a long time um i've started many companies some of them have failed some of them haven't and i now i now help out variety of companies and i do some angel investing so i did 14 angel investments last year hello i'm laurence excuse me lawrence founder of lenderwise we are a fintech funding platform for the telecom industry

actually relatively new to the gaming it's a provide so cash flow is industry with over 1 billion in funding facilities available so we're a very strong debt facility provider coming back to success uh discussions on on debt facilities versus thank you we are that much better we also have an equity as relatively small fund uh we have recently uh done an investment in scooty which is a very disruptive uh platform for the gaming industry which we're very very happy with because it essentially matches or offers win-win opportunities for publishers for gamers and for aggregators and for

brands actually so we also do now do equity investments in gaming players i'm cassie curran um my background is in business development corporate development investor relations for companies such as netties and jagex investment funds such as wings and i run current games agency very imaginatively named where i give strategic advice business advice to indie game studios and i also do various angel investments i've done three angel investments in the last year hey everyone i'm john i'm the ceo of boom hit so my day job i'm also investing in in studios with like a vc meets mckinsey and outside the day job i acted my first company a long time ago in the early days of whap when it was basically just admob and since then been been angel investing and as a big source

of my deal flow has stood right next to me so uh thank you very much for all the work that you do in your syndicate and also personal introductions so yeah it's great to be here right vc meets mackenzie that's interesting yeah it's true it could be hey let's not talk about the mckinsey or vcs but angels so why should founders pick angel investors nick you go first um generally because we can help um i mean it's a flippant thing but i've got so many things wrong at the very least i can help you not get the same things wrong that i got wrong um so a big part of it is you know a founder will talk to me and yep don't do that i did it it didn't work try something else so at least you get to make a fresh set of mistakes rather than the same mistakes that i made

so thank you i prefer your mind so essentially it depends on uh at what stage you're at obviously angel investments are perfect for smaller companies perhaps pre-revenue companies in fact i would say a must for pre-revenue companies it depends on on at what stage you're at uh angel investments are smaller investments uh they're earlier investments with individuals i agree with nick uh with investments which can with by angels that can also play an active role in contributing with ideas with contacts so an angel investor is fundamental in my belief uh but once again if you are generating a lot of revenues then you probably want to go towards a vc or a more structured uh inves which can as has much bigger uh investment power yeah i mean uh angel investments can be small but they can be incredibly

impactful when you're a very early stage company just having someone who believes in you enough to be putting some of their hard-earned money into your company um that can really form a fantastic basis for going to the next stage of vcs and and just you know the next six months of your company helping to scale to that point i think it can be a really critical really game-changing uh investment and first step for many small companies yeah i think early on with angels it's you know of course it's about the money but it's definitely the the expertise right um whether it's like game design whether it's distribution um but i i i completely agree actually just a great example from recently i think it's just also just a a shoulder to be there um like one of the studios i've been advising about four years we just closed our first seven figure seed round and just probably twice a week just for 20 minutes the ceo just like venting down the phone at me

about what what was what was discussed on the phone versus the term sheet he got and a lot of swearing um in a different language it sounded quite nice to me actually it sounded quite poetic but um but yeah just just also just again been there done that and um just a bit of mental support because you know i think i can see a lot of you in this room like being the ceo of a startup or the ceo of a public company is plenty hard right and so i just think having someone that is you know vested in you but also emotionally attached detached from the business just to be there for you is you know is incredibly valuable yeah i like when i get involved companies i basically always want to have that open line of discussion so i'm like the hotline for the founders to ask for like troubleshooting so i think the the word troubleshooting comes to mind as like let's figure things out together so you're not alone because building companies can be pretty

lonesome thing if you don't have really good investors and teammates on board definitely feel like a therapist sometimes yeah it is i mean there's an interesting trend recently so some of the the vc funds are inviting angels into later rounds and we've both participated and um but that's so they're wanting to bring in the connections the networking just the general understanding of the business and kind of helping with advice so vcs are putting in kind of 40 million rounds and carving out a little bit just a little bit but then looking for angels to kind of get involved and be there to support and help and i think so far it seems like it's working out pretty well yes hey uh another topic that's keen for people in the audience for sure is like what really matters the most in a company that you're evaluating for an investment what what is the few things that you really want to nail

down there let's start with uh john mean everyone says it's the cliche you're looking at the the founding team um you know for me personally pre-prerequisite of having shipped a live product is not necessary um versus some of my peers it is um i've got quite a healthy appetite for risk um i i you know depending on i've got a startup is there you know yeah yeah yeah is it blockchain if there's no blockchain i'm not interested um i i i think yeah i i really buy into people um i just think you know a bit like when you meet people you can probably tell in the first i don't know minute or so how this is going to go and just some people have just got just that unbelievable uh vision um i also like quite technical people um i'm not a deeply technical person and usually there's you know i i i think it's i think it's always great i have my business with a co-founder um

so i invested in a company recently and the the ceo was a real visionary but the person i was listening to was the cto and i didn't really understand 95 of what that person was saying um but to nick's example they came from a vc doing the series a and i just whatsapped them afterwards and said right i mean because ceo is a visionary and has just got that drive and i can see people buying into him but the the the cto was just an absolute wizard both in terms of product but what really got me was that same product logic to their interview process and i just i just love that obsession with uh obsession with detail so yeah for me doesn't matter if you haven't started a company before i'd never started a company when i did my first one and someone backed us but yeah i just just yeah just give us give us the vision really quickly and let me meet your cto yeah it's definitely about the team 100 um so i definitely look for someone who is for

teams that are super smart and super like full of energy like having that drive and the ability to work really hard because starting companies so difficult um and i think with that kind of those sort of really strong fundamental characteristics uh they even if their idea ends up not working out they are able to make the right choices to pivot in the right direction whereas some other opportunities you might find like yeah you really believe that they've got the right vision but you're not believing a team as when that happens i don't invest because i just i i think fundamentally the team is the ultimate arbiter so yes i totally agree with this with everything that's been said of course it has to be a great idea there has to be a good team that's capable of deploying because of course you can have a fantastic idea but if you can't deploy you won't get very far so the technology and the in the cdo is fundamental but i think in terms of choosing

in the end it comes down to guts to gut feelings how good is that idea and how probable are they going to be able to to deploy it and to make it become a reality and how much are they doers because a lot of people can talk a lot of people can dream but you have to be a doer and to be a doer you have to be a problem solver which means you have to be able to think outside the box also and so that's what we really look for we look for the ability to look outside the box and to do things um most investors will tell you they apply a rational set of rules and analysis to making their investment decisions that's just not true generally you make an emotional connection so you make an emotional connection and then you will provide evidence to support that first gut reaction so the most important thing for me is actually that story is kind of engaging me with your story your story of why you're creating

your business why what you're doing is really cool and really exciting because ultimately i'm going to go and talk to my friends about the really cool thing that i've done so if you give me a bunch of ammunition as to why your thing is the coolest thing then i'm much more likely to say yes so apologies for overuse of the word cool yeah so many good points i think one thing i would add is also i really love to follow the team a bit like how they're talking about what they're doing how they start executing like team building usually it's a few founders in the early stages but then sometimes you don't really need it because you can see it that like these people know what they're gonna be doing really well but yeah it really depends but i mean that's the same for vcs that's for everyone they you actually you're much more engaged if you've followed the story if you've spoken to them six months before gave them some feedback that doesn't mean they have to have done your feedback but at the very least you see how

they've evolved over time actually so they thought about it and they went in this way yeah yeah can you talk about how angel investing is like or can shape the games industry because we've we've seen a lot of models in gaming you have publisher funding all sorts of crowd source funding you have bc but then like angel investing is getting more prominent now um how do you see it shaping up the industry cashier can you i think for the it means that it's a bit easier for early stage companies to kind of get that traction especially ones which potentially uh lack expo that the other new that lack a bit like a bit of experience but um when if they connect with angels that can really help them take that first step to strength and um uh angels can also help them connect with the important uh potential hirings etc so i think like from macro scale it

just helps a lot new start-ups and helping them thrive you don't have to have like a massive vc like backing you that's like a prerogative for success you can actually just start off with some angel hell i mean i guess the reach so i set up a loose angel network nowhere near as organized as joe kim's is really good um but the reason why i did it was i really struggled to get angel money and that early stage that it's really really difficult to get going and in the end i know i you know i raised angel money but it was people that i knew and people that they knew and that feels like a terrible way to select businesses just based on the people that you know so part of my reason for selling an angel network was so it wasn't quite so the people that you know and it should be a wider group and hopefully a more diverse group um without that first stage and that help

and that advice it's really really difficult to get to the stage where the vcs will give you the money vcs are very very picky um so yeah you just need some help to get to the stage where you can get access to the rest of the money yeah i think i think you touched it earlier i i think an interesting dynamic now is with all the amazing entrepreneurs in gaming and the exits that you're seeing some of the vcs i think on the one hand they work very collaboratively with angels but also these super angels now that are deploying very sizable checks to displace where vcs may have even come in at seed round so for me it's i think it's just such an exciting time to be founding a games company because i think one the angel if i can call it that infrastructure is is there with all these amazing syndicates and telegram groups and whatsapp groups now like for me personally deal flow has never been easier like borderline distraction at

the moment with blockchain but i also yeah generally now i've just it's just amazing just to see how the games industry continues to help each other just um as i said i've just been amazed at some of these like c checks that are being written now by gaming founders so i just love the fact that as a gaming community everyone is just supporting each other right they've had a great exit and that money and expertise is coming straight back into the ecosystem to support the next wave of startups so yeah for me it's great so i agree with you john there is kind of an infrastructure in this whole angel network world i totally agree with that actually and i urge any founder to look towards some of these networks actually it wasn't too long ago that we fundraised it feels like ages ago but we've gone through the whole phase from from friends and family to angel networks we did a very successful fundraise multiple times with angelsden which is one of the biggest angel networks here in europe we've done it

so with kretsu forum in the states and in australia actually uh very successful and that which led us to significant institutional investments so the angel networks provide security for the investors for the angels and and it facilitates for the founder the whole move from friends and family to semi-official or semi-institutional uh with greater structure and so i think i i think angel networks are absolutely very instrumental and they're growing very quickly because there's a lot of money out there and yes they are syndicating and they are becoming a team which helps each other and i think that's very useful hey john you already mentioned blockchain a few times i think you have something to say to this next one but like because like we're here at pocketgamer which has traditionally been very much focused on the mobile games industry and

now we're seeing this new genre or i would say even a platform in a sense emerging through blockchain gaming like how do you panelists look at blockchain gaming now how do you evaluate a team that is pitching a crypto project which is new oppression and still evolving like who wants to go first yeah you could go first do it i can just hold my hand while i just we're all just stepping back okay um here's my therapy session welcome um look it's incredibly exciting um with every opportunity you get opportunists right um so i see a couple of challenges as an industry um i'm seeing a lot of presentations um i say presentation because i i think calling the white paper would be uh flattery um but a lot of presentations from especially free-to-play games

companies that um have struggled in free-to-play gaming maybe got a quite tired and it's like oh look i can sell some nfts and make loads of money really quickly um and i think that um that's always going to be a challenge i think for like the gaming vcs and people that work in gaming we're going to see through that pretty quickly because for me you still need to make a game right fundamentally right not just a nft that you know you might be able to make a bit of money from um but but for me it's even harder than i mean the kind of it's almost like you have the day job and like mobile gaming and now you're having to learn by by doing with these blockchain projects so what i'm seeing is the same rules apply if you're raising a game for like a mobile console game is you know like the team and experience and i think at least having someone in the team or some advisors that have got really strong knowledge of blockchain and you can see that in two minutes if you read a white paper and look at the tokenomics you can just see instantly when you're talking

to the ceo if they have anyone like that around them um but from a cynical ruthless investing point of view i can also see the upside right because unlike angel investing in a traditional approach you're probably doing it with a you know five six seven year lens whereas with these blockchain games i see the appeal right you can you can get in if you back the team you could have a very interesting exit in 12 18 months so you know i i also see the investment appeal there but it still comes with uh with huge risk uh it's it's a personal taste uh i don't particularly like blockchain pitches where there's a reliance on the value of the nft increasing you know if that's your business model i'm not a big fan but i do love interoperability i love where nfts are adding permanence transferability am i allowed to name check you now he's not known so david david's a big fan of interoperability and you know

when he came to talk about that it's like well the business model makes sense to me and it's not just reliant on that steadily increasing value there is a reason for the nft outside of that increasing value um but that's my personal take and every angel is slightly different some angels won't touch nfts at all and some angels will now only touch nfts i do own some nfts which was kind of a bit weird to go out and buy an nft um i felt i had to do it to at least try so yes i am the proud owner of a number of pets i got gifted one of those apes you've got stuff for free yes i got gift well i say gifted but i was gifted it on improviso that any profits i made from selling it i would then invest in games made by people from marginalized backgrounds so yeah i'll have to do some more angel investments there well you really managed to turn that around well done cassie there you go like

uh so i i'm actually really fascinated by the whole blockchain stuff i've been looking into reading off about it um yes now i own fts and all this sort of thing um i'm still making up my mind honestly and i probably i don't i don't think i will personally make uh angel investments in any blockchain game in the near future but um that might change i don't know i haven't made my mind up yet so we'll see so i think this topic is is it's a harder topic actually to discuss if i were to use the hat of equity versus lending or debt facilities i would we're not doing debt facilities for a blockchain gaming but we could do an angel investment and the reason we wouldn't do the institutional investment is because we think it's higher risk

and it's also a technology which is changing rapidly and the underlying assets are changing rapidly which is sort of coming back i guess to what nick was saying in the beginning is that when value changes so rapidly and without necessarily having a logic behind that change it becomes higher risk i think we're going to be in an interesting position talking about blockchain in a year already because it's moving so fast so let's come back to this next year um and john and i will be smiling or cassio will be smiling yeah let's see who's going to be smiling so just like one topic that really comes a lot to me founders reaching out on social media asking me like do i know any angel investors they should be talking to because it is a fact that vcs are really good at

getting the message out that they're looking for companies they have websites they they do a lot of pr and then it comes to a gaming angels who really don't have that kind of like presence where they're promoting their own investment and sort of being actually an investor like how do you think founders should go out and find angels who are doing gaming investments i think that they should be looking for people that they want as advisers and asking them to do angel investments is one track of doing it um because i think the fundamental value that comes from angel investment is the advisory aspect uh so thinking about from that perspective rather than necessarily going through angel networks although there aren't angel networks now that can be tapped into by yourself or by a nick for example so that is one rude hey todd i mean i have a truly lousy website that

i did in about half an hour oh you do i do but i haven't answered it because it's scary i mean it is you know there is a reasonable amount of pipeline there there is this idea that we kind of know each other so once you're into it it's easier to kind of get passed around so it's finding your person who can be your lead and to cassie's point actually the best way to do it is have somebody who you want to help you and if they're advising you then they will you know if cassie comes to me with something then i will listen to it doesn't mean i'll say yes but the fact that she has spent time on it that's a really good indicator to me so i will then spend time on it and then because i'm spending time on it maybe i'll share it with you again yo i can then spend time and and it it it does connect but you do need that first person to believe that your idea is worthwhile and worth spending time on yeah i just think i think building on that one one way to save time as well it comes onto focus is

you don't need like 50 angels to start with right i think if you are really clear on who you want and you can close a couple of those that then gives you a lot of momentum right as we've just said because they will then bring others so i think as a founder you you can waste an awful lot of time but also i also just enjoy the tenacity of a founder right like you know you want to try and build a company and and some people just very tenacious right just accessing you on every single form of social media something you even forgot about a long time ago but i i also respect that immensely but that would also be my advice which is what we've just said is you you can you can just waste a huge amount of time i think once you've got the right collection of two or three and closed a small amount of initial money that then completely changes your outreach strategy right because you can then with their permission name who those angels are how much you've got committed and then all of a sudden perhaps those people if you had just cold emailed first would have ignored you i would say there's a 50 50 chance they're then

going to reply to you based on depending on who those who those names are so i think there's also a little bit of art to a strategy and i also apologize to jokim because he tweeted that this morning and i just stole it yeah they're free you can just pick them so i guess the question is are vcs more public than angels i guess that's basically the question sure of course they are it's their business an angel might be doing something an investment part-time of course so crowdfunding platforms are definitely key and instrumental if you're seeking angel investments as far as i'm concerned i don't know if there are thematic uh angel networks for gaming actually i should know there are for fintech there is for insure tech there are the syndications i totally agree if there isn't one for game tech or for gaming we should all sit down and talk about it and probably create one

because excellent excellent good and it makes sense it makes sense because uh the need is there uh the resources are there and so it makes sense to really be as thematic as possible i mean i've got to just just one thing is that i have like there's like good points and bad points to me being very public about doing angel investment um and one bad thing about being being public about angel investment is that you get a lot of a lot of people coming up to you essentially begging you to angel the best and often you just don't have the time to to engage um but for me i kind of feel a little bit of a duty to be quite public about it because uh just to be like really blunt there's not that many women of color doing angel investment in the game space um and actually kind of helps with deal flow a little bit um so uh yeah with uh i feel like a duty in terms of representation just to be a bit more public and and

potentially bring more more people from more diverse backgrounds into angel investment as well yeah i think it is worth realizing whereas it's a vc's job for all of us it's a hobby um you know it's not our full-time day job it's we're doing it and we fit it in around other things so yeah the vcs have people that are paid to just receive the incoming submissions every incoming submission that we look at is our personal time yeah since we have some time i'm gonna also tip in with this because i remember like two years ago when i was getting like really sort of more into this angel investing stuff and i was talking to some founders who had raised angel rounds in finland like mobile studios and there's this thing in finland called the finland business angels like network where people had pitched and i was reaching out to the people who had

invested into these companies and you had like dentists and lawyers and you talked to them like so are you are you looking at doing more deals and they were like no like i burnt all the money already i put money into this studio and it went like you know under under and i didn't get any anything out of it so i'm not gonna touch gaming anymore and that same message came to me like 10 times from people so i think like in this space if you have the domain expertise as an angel that matters so much like that you're gonna be betting even though it fails yeah if you're in the uk there's a uk business angels association which is the kind of trade body behind angels groups i've raised money from non-gaming angels but it wasn't easy and it relied on me finding an evangelist within that angel group so i've done it twice and it it's worked but it's really hard

but i do think it's changing um so you know lockdown made made people outside of the games industry much more interested to it's just how you get to them um and i often often the easiest way to get to them is to have some people with recognizable names that are saying they're backing you you know there are there are some great very well known uh kind of british angels who you know to be honest if certain one of them signs a check then your round is done you know they're not giving you the whole amount but then like 15 people go yeah yeah please let me in that's how it worked wasn't it david yeah um so yeah and and then hopefully there's access you know i think we're all in conversations about trying to get access to some of that other money and trying to get them to follow and maybe something will happen but it takes time sorry yeah there's plenty of money in the game space now there's plenty of people interested in angel investing i think every single time you drop a deal that's

just like it's just gone uh space has been an angel saying it's just gone within half an hour yeah so um i don't think you even need to look outside uh what's the value that they uh non-angel long gaming angel would give to a gaming startup and entire show yeah yeah final question i wanted to hear your thoughts this is one of my podcast questions that i always ask from investors i think what is one founder characteristic that you look for in founders that points to to some kind of future success john you go first uh humility i i think i mean symptoms what nick said earlier like i mean it's very easy to talk about your successes but like when you failed like why did you fail and what did you learn i think that's the most important thing um you know i i make mistakes every day and i think the most important thing is you know why so for me it's just the humility to know

like why you failed it's okay to fail and then what you did to correct it um you know particularly if you've had a you know i think i think most of us here would have had at least one startup that failed miserably but the important thing is you learn from that and take that into your next company and for me you know it's just about mitigation of risk when i hear something like that that's just a big tick in the box for me um about this founder and you know the de-risking that investment cheat a little bit and b and these two which is guts and smarts so you know the guts take risks but being smart about it making the smart decisions um and uh yeah those two things i think are the most important for me what i'm looking for um sheer bloody mindedness i mean being a ceo is crap it's a horrible job you're on your own um you feel responsible for anything if you have any empathy for other people it's just it's just like you're carrying a weight on your shoulders all the time

so just being able to keep going through those and you know you you find ways to cope but you've just got to keep going sometimes yeah so the bottom line is are you a doer are you a problem solver are you ready to take risks but mitigate mitigated risks at the same time so because obviously we all make mistakes if you don't make mistakes you're not doing something probably so you have to do things and you have to risk making mistakes as long as you learn from them and don't repeat them so essentially it's a combination of all these factors put together but i agree it's got to be within a risk mitigating logic because we can't be crazy obviously we can't be jumping into things without backup plans backup plans are fundamental all the time i was gonna say also don't be a gate um i know because i'm gonna have to spend a bunch of time with you so i'm going to spend time with people that i actually like

um it's for fun i'm doing this for fun this is my hobby same goes the other way around by the way that is absolutely right if if you hear of an angel investor who's a gate don't go with them it is hey thanks for the panel do we can we do questions like is that like format here this time around um yeah okay questions so i've raised money in norway um a place where it's really hard to raise money for games because nobody knows anything about game investments um and i've found that i can in norway at least raise some governmental funds and send some friends and fools and and angels but then there's a gap which is really hard to close and that's between like a million euros and two three million euros there's just nobody there is that the same in uk uh other places

there's a couple of funds that operate at that level there's not enough um but i mean play yeah play adventures yeah um yeah uh moon fire there still needs to be more you're definitely right there's a gap there's a not big enough to do the kind of five million round um they're starting to be more b games yeah it's getting better the same way there are now more angels there are more funds at that level and it is it's changing all the time you do have to look outside of norway i don't know why norwegian investors are just interested in oil and energy sources but yes sweden is right next door and it's got a really vibrant games industry and always like um but i hope you can change that i mean i don't think we really have geographical boundaries anymore i invest in a variety of different countries you do yeah maybe some legal like there are benefits yeah yeah i mean there's tax benefits to investing in the uk yeah um

but yeah i mean it's it's european do we get that much american yeah there's times some kind of concerns but yeah like you can look at all americans are good oh no no no no um they're not i love them some of them are my good friends yeah they're great so are we out of time yes all right thank you thanks everybody [Music] [Music] you