Fully agree with the insight you provided on the UA moat... so critical that the moat is on the LTV component and not on the CPI component especially on mobile. With all the marketing research tools out there, CPI gets matched pretty quickly between two serious teams. LTV though has a real chance of remaining within the company's control. Publishers still focus on CPI as they should, because their timelines and expected outcomes are pretty different from VC timelines and outcomes.
" With games, you’re competing for consumer attention that’s split among apps, videos, music, and more. That’s why investors are always looking for differentiators with games: faster GTM, cheaper UA, network effects, platform plays, UGC lock-ins."
👆👆👆 just wanted to highlight this is a great distinction between VC vs Publishers as I've argued that TikTok or Netflix is as much competing against us as another competitor. So often in game studios you see a hyperfocus against competitors in the genre vs an understanding that it's about the attention economy.
Really great insights with the pitfalls and VC perspective... lots of food for thought.
I read your assessment on the different requirements in each state of investment and I would like to challenge them in each stage with the following:
- Pre-Seed: Team & Product-Founder-fit. Either expertise to tackle a genre that the team has insane & deep knowledge about from work experience (e.g. Dream Games team) OR no games industry experience but deep understanding from an underserving genre with a valuable insight that is neglected by veterans in the industry (e.g. early Riot founders coming from DOTA communities)
- Seed: Team & Problem-Solution-fit. Same signs of Pre-Seed + the early signs with KPIs that there is an interest in the userbase on a raw user game experience launched. This can simply be looking that play the game with some frequency every week (e.g 4 times a week every week) with organic growth from word-of-mouth. Crucially there must be some insight on how and why this players are organically finding the "raw" game + what and why the players love/hate about the current released version of the game
- Series A: Product-Market-Fit and Go-To-Market proven: When games find product-market-fit, everyone in the team and the founders just know it. It's amazing that the hard work of many months and years before finally pays off, while at the same time, the stress, anxiety and fear of losing all these players just puts a huge pressure on the team to not fuck up. A complete mental-health killer where the team just wishes the game to stop growing so they can take good care of the new explosive demand. Also knowing how to profitably acquire new users, is fundamental for a healthy round at this timeline before growth becomes the bottleneck
- Series B: Market Genre Leader: When the studio becomes a market leader in a genre established by the released game and relevant as an entire genre-market size. I've seen different numbers of MRR in games in this series but I believe anything between $2M-$10M to be healthy in this round
Curious on your thoughts if this is too demanding requirements?
Fully agree with the insight you provided on the UA moat... so critical that the moat is on the LTV component and not on the CPI component especially on mobile. With all the marketing research tools out there, CPI gets matched pretty quickly between two serious teams. LTV though has a real chance of remaining within the company's control. Publishers still focus on CPI as they should, because their timelines and expected outcomes are pretty different from VC timelines and outcomes.
" With games, you’re competing for consumer attention that’s split among apps, videos, music, and more. That’s why investors are always looking for differentiators with games: faster GTM, cheaper UA, network effects, platform plays, UGC lock-ins."
👆👆👆 just wanted to highlight this is a great distinction between VC vs Publishers as I've argued that TikTok or Netflix is as much competing against us as another competitor. So often in game studios you see a hyperfocus against competitors in the genre vs an understanding that it's about the attention economy.
Really great insights with the pitfalls and VC perspective... lots of food for thought.
Glad that you guys are in agreement that smaller and faster is now better! That wasn't the case for VC's in the past.
I read your assessment on the different requirements in each state of investment and I would like to challenge them in each stage with the following:
- Pre-Seed: Team & Product-Founder-fit. Either expertise to tackle a genre that the team has insane & deep knowledge about from work experience (e.g. Dream Games team) OR no games industry experience but deep understanding from an underserving genre with a valuable insight that is neglected by veterans in the industry (e.g. early Riot founders coming from DOTA communities)
- Seed: Team & Problem-Solution-fit. Same signs of Pre-Seed + the early signs with KPIs that there is an interest in the userbase on a raw user game experience launched. This can simply be looking that play the game with some frequency every week (e.g 4 times a week every week) with organic growth from word-of-mouth. Crucially there must be some insight on how and why this players are organically finding the "raw" game + what and why the players love/hate about the current released version of the game
- Series A: Product-Market-Fit and Go-To-Market proven: When games find product-market-fit, everyone in the team and the founders just know it. It's amazing that the hard work of many months and years before finally pays off, while at the same time, the stress, anxiety and fear of losing all these players just puts a huge pressure on the team to not fuck up. A complete mental-health killer where the team just wishes the game to stop growing so they can take good care of the new explosive demand. Also knowing how to profitably acquire new users, is fundamental for a healthy round at this timeline before growth becomes the bottleneck
- Series B: Market Genre Leader: When the studio becomes a market leader in a genre established by the released game and relevant as an entire genre-market size. I've seen different numbers of MRR in games in this series but I believe anything between $2M-$10M to be healthy in this round
Curious on your thoughts if this is too demanding requirements?