I will be the first to admit that, as much as I have enjoyed playing video games in my time, the only game I ever created was a C++ text-based Pimp Quest spinoff in my sophomore year of high school. I have an idea of the sheer amount of time and hard work involved in developing a console or PC game from the ground up. But I am far from capable of creating the next big MMORPG.
Let's talk dollars and cents, for a moment. Assuming my cruddy, embarrassing sophomore project could have a value attached to it, I might get away with charging $.01 for it. A penny, no more. It might have taken me three hours of solid work to make the game, and I believe minimum wage at the time was $5.15 or so. In the realm of game design, I was worth less than that. How much do you suppose the developers at Infinity Ward were paid by Activision? The publishing giant shelled out $42 million to 38 employees when the legal fiasco first took off, so I imagine their time was worth far more than mine.
Let's say you're a designer who has just put a team together and launched your start-up game development studio. You have an awesome concept and the right group of people to make the idea a reality, and you don't want to waste time struggling through the channels to gain recognition and build funding for this awesome game. But you want to compete with the giants like EA and Activision, not work for them. So what do you do? At this point, it's safe to assume that this game will cost you hundreds of thousands - if not millions - of dollars.
Maybe, if your idea is original and appealing enough, you have some excellent plans for marketing and selling the game, and you can demonstrate a superb understanding of the industry and why your game will sell so well, you might be able to land seed funding from an angel investor or venture capitalist. Now there's a right way and a wrong way to approach an investor and ask if you can use a large amount of their money to satisfy your business needs. Shervin Pishevar and Martin Zwilling are two investors who have been on both sides of the business pitching table, and they offer some useful information to those who are willing to pay attention. If you plan on going after their money, you might want to take their advice, first.
Shervin Pishevar received his B.A. in interdisciplinary studies from the University of California at Berkeley, and is the managing director at Menlo Ventures. He founded the Social Gaming Network , and has raised over $50 million in capital for other start-ups. He has invested in over 40 companies since becoming an angel investor, and it's safe to assume he has read through and rejected far more business plans. Pishevar is also an immigrant entrepreneur. His unique perspective as an immigrant provides him with equally unique ideas, such as recruiting entrepreneurs on a global level. In a moving email to friends shared on Tech Crunch in 2008, Pishevar reveals the depth of his entrepreneurial spirit, as well as the depth of his focus on social platforms.
While I encourage you to read the email, the point that I took away from it was that any new venture should place a great amount of focus on current trends in social technology. In 2008, in the middle of a lonely night away from home, the one thing on Pishevar's mind was his family, and how easily he could connect with them through Facebook, no matter where he was in the world. Today, the trends are shifting towards mobile gaming, which is simply an evolution of social gaming. If your game has a unique and innovative social factor, be sure to drive that home with investors, because it shows you've done your research and you know how to play nice with the rapidly changing technological landscape.
Martin Zwilling boasts an impressive track record serving in various business capacities over the past 30 years, and now serves on the selection committee of two different angel investor firms. He maintains a blog on Forbes.com, and recently published his first book, Do YOU Have What It Takes To Be An Entrepreneur? Zwilling shares some slightly more practical advice for entrepreneurs seeking investment capital in his blog post, "Top Ten Investor Turnoffs Around Business Plans." In this post, he highlights some simple mistakes that many entrepreneurs make that immediately exclude them from consideration, including grammatical errors, a business plan that lacks an executive summary (or consists entirely of an executive summary), too many appendices, and negativity, in any form. I think the most valuable piece of information to be taken from Zwilling's post is the most obvious tip: don't forget to show the investor how they will recoup their money. If you cannot show them how your game will make money, they won't bother investing in it.
Any business plan should consist of certain sections that are key to getting the "plan" across; how will you market it?; how will you sell it?; to whom will you sell it?; and where is the money going? Keep in mind that most investors will care about the product or service that you are offering, but not as much as they care about you. So be sure to do an adequate job of selling yourself and your team, as well. If an investor has confidence in you, they will have more confidence in your business.
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