So you have your start-up, and the age old game developer dream. “I want to make a world famous game that people will remember forever!” You do what has to be done to make ends meet. You are good at what you do. Your clients are happy, your products show some promise, however, you are not there yet. You haven’t yet fulfilled your dream. Everything in life is a step by step journey, unfortunately there is no “Beam me up, Scotty” option. Or is there? FUNDING! Everyone around you tells you, “Dude, you guys have potential. All you need to be successful is some money. Investors can give you that”.
Investors can and will give you money, but in India, they are totally risk averse. They are ready to invest in you if you are already successful or making lot of money. So in essence they will give you money, when you actually don’t need it. Even if they do fund you when you need it they will make sure your dream takes a backseat to minimizing their risks. In such a scenario you may find yourselves and your studio demotivated and directionless. What happens then is that neither are you driving in the revenues nor are you making those awesome games you promised yourself you would be making (which will eventually make you those revenues and more if you take that road).
Your objective becomes “Satisfy the Investors, make money, spin off services business, make apps, … , make product in spare time. The truth is, in business there is no spare time. If you have spare time, it means you are not running the business well. And the Investors will not let you do that.
I firmly believe that businesses need to be driven by revenues and only supplemented by Investors. An industry just pumped up with cash because it’s the buzz word right now is not a healthy industry. Most of the Investors enter into their agreements knowing very well that their exit is going to be a buyout by some other fund or company (IPO’s being extremely rare). So you have an industry full of obese companies with mediocre output. The companies never admit that they are not doing any real revenues (other than branded adver-games and deals) and their Investors will do what it takes to not let it be seen as a “bad invesment” as they eventually have to sell their stake to another Investor or fund or corporate at a higher price and make their money. This trend continues forever and you find yourself in an industry completely in denial, not ready to accept its shortcomings, without which they can never correct themselves and in turn never truly grow.
Unless your Investor is seriously interested in games and is extremely patient, making it work will be very difficult. Simply due to the fact that we as an industry haven’t delivered as many great games globally. Despite all the self proclamation of availability of amazing talent, the truth is that all of us have a lot of learning to do in how to make and how to polish games. This means the people running the business have to patiently learn and the Investors have to patiently back this learning and wait. Something which may be too much for most Investors to handle.
The problem actually is that both parties have different dreams. For a typical technology Investor sectors like app development, web apps, web services, e-commerce portals, IT services are all viable options to invest in. If his objective is purely to make money, some or many of these options are much bigger and quicker bang for the buck than your offering, simply due to the amount of learning and research you need to do, let alone the creative unpredictability of the business. Even if the Investor is focused on games, guys providing game dev. services, art out-sourcing, QA services might be more lucrative. So Investor restlessness is fairly understandable.
In conclusion, I truly think that entrepreneurs and Investors should only invest in each other (and I do believe the investment is a two way process) when they are absolutely sure that they are on the same page with what they want to do and how they want to do it. They need to know you and your business as well as your best friends. They need to believe in the SAME PATH to success moreover have the same definition for SUCCESS as you. Not just that, if the market conditions change in the future, they need to be able to almost predict and be comfortable with what you will want to do. Funding is more than just an exchange of a business plan, a presentation, an agreement and a cheque. You have as much a chance of meeting your true love as of meeting your true Investor.