Each company cares a lot about its funding. Whether it's to develop a new game, grow a studio, or transform gaming passion into a successful business, none of this would be possible without the resources. Even a supposedly hit idea requires a compelling pitch, as well as a high-quality presentation, and a relevant offer to secure funding from investors.
This guide will explain in detail ways and reasons to prepare a good investor pitch.
The article is based on the WN Dev Day Canada 2022 conference lecture by Victoria Beliaeva, our Head of BizDev & PR.
Let's start from the very beginning
Before applying for funding, it's crucial to know the purpose for which you need the funding and the things you will use it for. Thus you can quickly figure out the deal format and then look for the right partner in the future.
The most popular funding forms
1. Product funding without investing in the company itself
In this scenario, money is allocated to a specific project, mainly under tight KPIs and milestones, with a refund from the developer's share of the project's income. Promising projects rarely get financed without investing in the company, but exceptions may always occur.
AppQuantum considers this option only in conjunction with the subsequent publishing of the project.
If you don't want to get third-party funding without any further obligations in terms of publishing and selling shares of the company, then your partner choice narrows down to angel investors or wealthy friends/relatives :)
Keep in mind that with complete coverage of the team's burn rate, in the majority of cases, the IP will belong to the investor.
2. Development funding later convertible into the company’s share
Almost similar to the previous point, but with the option to convert the amount spent on development into the developer company’s share (either fully or partly). In this one, the company is freed from the obligation to pay back the debt from the project’s income.
This option is convenient when both parties are interested in the considerably promising project, but are still determining whether they are suitable business partners.
3. Development funding + investment in the company
The main difference here is that such funding consists of two different deals.
This type of funding doubles the number of papers for you to sign. We prefer reducing the approvals count if making a deal with only one contract is possible. This format makes it easier to get started.
For instance, a publishing and financing agreement can be done way faster than the investment one. In this case, you can sign one of the contracts and get down to the development right away while the second one is still being drawn up.
4. Company investment
This option involves purchasing a share of the developer's company without an additional development or publishing agreement. This option is often suitable for those in need of funds to scale, while already having a sustainable project and a team. This may come along with other cooperation formats such as co-development, publishing, etc.
Prepare the investment basis
Once you’ve decided that you need investment in your company, ensure that all your accounting and legal issues are settled. In case there are problems, think about how you will resolve them and whether you will need the help of an investor.
Examples include creating a new legal entity; or undergoing an audit stage if your company has been around for a while with a cash flow history of income and spending. Ensure that you create all the necessary conditions to pass this stage as quickly and painlessly as possible.
How to apply for an investment?
We recommend establishing clear goals before applying for investment. A few questions can help you with this:
- Do you want to handle the full cycle from developing to publishing or only focus on development?
- What genres do you plan to work with in the future, and what kind of team do you need for this?
- What do you expect from your partner: financial support, relevant expertise in your current genre, or knowledge in a genre you want to explore in the future?
Providing honest answers will enable you to build a relevant shortlist of possible investors and develop a good pitch. Having a clear understanding of your business needs and wants will increase your chances of finding a reliable partner.
You will need to do
Research is a crucial step in the investment process. Look into companies currently offering investment and funding, and use the answers to the above questions to filter potential partners. If you require a partner with genre-specific experience or expertise in publishing and marketing, seek companies that offer these services.
This point may seem obvious, but some developers forget that not all companies provide the necessary services and required expertise.
Additionally, consider the companies your potential partners have previously invested in. You can easily find press releases about investments online and look at data from analytics systems to see if the businesses they invested in have succeeded. What happened to the developers they had invested in? Did their business get off the ground?
It’s essential to keep in mind that developing a project from scratch takes time to yield results. Therefore deals signed only six months or a year ago may not provide an accurate picture. Looking at data from 2-3 years or even five can give you more useful information.
If you have enough free time: reach out to studios and inquire about their experience with their investors, what they do and how they help, or on the contrary, about the things they can’t help with. That can be done at conferences, for example. And remember, an NDA does not restrict good recommendations :)
2. Prepare the material
Regardless of the funding type you have chosen, the following set of materials will be required:
- A presentation about your company
Share the most important facts about your studio:
- Foundation date;
- Registration country;
- Field of expertise: genre, niche, art style, target audience; technical stack: engine, single player or multi, etc.;
- Released projects. Make sure to tell more about the games developed and published by your current team (in case there are any). Aren't your projects published? No problem, just leave a link to the games you've developed. Don't forget to provide details about the genre, art style, target audience, release year, number of downloads, and total revenue (when applicable).
- Number of employees, number of offices, and their location;
- Number of GDs/artists/producers/programmers/UA managers, etc.);
- Key team members (Art Lead, Tech Lead, Lead or Senior GD, producers responsible for the product, CEO, founders, and, if any: CMO, Creative Lead, Analytics Lead);
- Tell about key employees in more detail: their experience in game development, the projects they’ve worked on in general, and in your company specifically.
Whether you need investment for a project in live ops or the preproduction stage, you have to provide details about it. The only difference will be in the content:
If you have a new project, provide a high-level concept that will include the following:
- Genre, art style, setting, USP, target audience;
- Key gameplay/art references;
- Concept or GDD;
- Competitors and market analysis;
- Roadmap and target KPI;
- Ideally: a financial plan which shows the point you plan to be in the black;
- Required funding amount. Remember that if you don’t expect your partner to take part in the publishing process, you’ll need to - take into account marketing expenses as well;
- If you have a service, then instead of the genre and art style, mention its technical components;
For a published project, indicate product and marketing metrics. Those include:
- Main product metrics: Ret 1,7,14,30,60+, ARPU, ARPPU, Ads ARPU (be sure to tell which GEO the metrics were taken from and which analytics system was used — for example, US, AppsFlyer, October 2022);
- You may as well indicate the volume of traffic purchases (in case there were any) and sources.
Team scaling. If you need money for scaling (for marketing, hiring, etc.), then you should still provide detailed information about your main project: its KPIs, development plans, and financial expectations. You will also be expected to show the investment allocation plans: sources of purchases, people you are planning to hire, etc.;
Use these materials in your emails to investors. While some companies may have specific requirements but all listed above should be enough for a general “intro.”
How to create a good application?
Sadly enough, we still receive requests which read: “Hello, we are team N, and we would like to receive investments for the development of our game *store link*.”
Of course, we will go through this application in any case, head to the store and the spy systems to check downloads and income, look at the company's website and collect some primary information by ourselves.
But here we are talking about simple business ethics and professionalism. You wouldn’t want to hand out business cards that look like a piece of paper with numbers. Yes, this may be some sort of brand positioning, but you will most likely try to make your business card readable, with the name of the person, contacts, and company name.
To make things easier, we’ve prepared the following template:
- Briefly about yourself: who you are and what you do;
- What you want to receive;
- Briefly about the main advantages: highlight the metrics of new or old projects and prominent members that are on your team;
- Convenient slots for meetings;
- Attach presentations we talked about earlier (about your team and project)
Hi! We are “BlahblahGames”; we develop casual free-to-play games and mainly specialize in the Time manager genre. We are interested in finding the right partner for our next project, a time management game in a space setting. We have already received some promising results by testing the MVP of our project in the US market: ret day 1 of 45% and ret day 7 of 20%.
Our studio has 20 years of experience in the niche, and we are sure we have found a way to revolutionize the market.
We are located in Spain, so our time zone is UTC +1, and we will be glad to meet any weekday after 11 am.
Please find more info about our company and project enclosed.
You can either use our example or ask ChatGPT to write another one for you :)
3. Online meetings and calls
During the call stage, developers may struggle to communicate their needs to potential partners clearly. Funding is a given, but who will be in charge of LiveOps or the game’s marketing? Does the company consider investments in the product only or in the team as well? If so, what numbers/shares do they find appealing? And quite a number of other questions to a team that knows no answer.
Formulating your request as clearly as possible is crucial to increase your chances of finding the partner. If an investor has to put in extra effort to extract necessary information from you, then you are clearly not prepared for a meeting or further productive work.
Furthermore, each investor evaluates studios based on their own inner criteria. It includes things beyond just desired profit :) For instance, we always look at founders: their background, their passion for their ideas, and their ability to assess the market, prospects, and risks. Then, we analyze the team: if the employees get on well, whether the team has already released any products, or how experienced each member is.
Prospects for the team are one of the key factors that investors consider. Whether you want to build a full-cycle company or develop mid-core games, you need to be prepared to discuss goals. Thus we will better understand how to make our collaboration as beneficial as possible.
Remember that not all of your products may be suitable for an investor. For example, AppQuantum is less likely to invest in niches where we have little expertise — this goes against our policy. We would like to fully share our knowledge and help our partners-developers in the fields where we are sure to be professionals.
It's better to communicate your needs and goals early on and clearly to avoid wasting time for both parties.
4. Supplementary materials
In any case, you are likely to be asked the following additional materials during the first meeting:
Undoubtedly, such materials are to be provided only after the NDA signing. However, we recommend preparing all the documents in advance before drawing up the application to save both parties precious time. You, in your turn, have the right to request additional information from the investor:
Drafts of the following contracts:
- Investment treaty;
- Convertible loan agreement;
- Joint development or publishing agreement;
- The term sheet, if we are talking about options.
Investors should have all these documents at hand, so they will be immediately provided to you upon request.
Ask the investor to compose a detailed work roadmap, e.g., types of tests and when they are expected. If the investor also acts as a publisher, the roadmap expands and now includes live ops, marketing, analytics, and other services.
Further steps may vary greatly depending on who you are communicating with and what types of deals are in discussion. You should expect a series of meetings with teams, your future project partners, and decision-makers.
The described process can be applied to most deals. Rest assured that completing the guide will greatly increase your chances of getting funding. A correct and comprehensive approach will help you come across as confident professionals who know their needs, wants, and ways to fulfill them.
Last tip: start looking for partners in advance. Good market research will surely take a lot of time, and several weeks more will be spent on getting acquainted with potential partners.
Preparing contracts also tend to take months — even with the drafts on hand, a lot will be altered depending on the company’s structure or its registration country.
In short: pre-production is a solid base and half of your success:
- The negotiation and approval process can take up to several months, so start looking for funding in advance;
- Choose the funding type and suitable options for future agreements;
- Choose the kind of partner you want and what additional obligations you need them to fulfill (e.g., publishing);
- Research the market to find out companies that provide funding and studios they have already invested in, request feedback from developers, and analyze the results of their collaboration;
- Create a high-quality presentation about yourself and your product that is comprehensive and contains all the necessary information;
- Write a good intro, try to get across all the information about yourself and your product, and share a convenient time for them to contact you;
- Before a personal meeting, prepare answers about your team: what are you looking for, why are you developing this particular product, and why you've decided to seek investors;
- Be prepared to allow direct access to traffic trackers and share company financial information. Though only after NDA :)
- Do not grab the first opportunity, talk to different potential partners and choose the best option suitable for you and your company.
Now that you've read our guide and decided on the type of funding you want to get — you’re prepared to find your ideal partner. Feel free to contact AppQuantum and ask your questions, our team is always eager to help you!
Best of luck!