japheth funding your startup - dating the devil
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Japheth Dillman
Funding your Startup: Dating the DEVIL!
Who is Japheth Dillman? • Began Programming and making games at the tender age of 10 • Reached over 500+ million users with my games • Created games for nearly every online and mobile plaMorm • MulNple Ntles on iOS with 5-‐10 million users each
Most notorious for: CoFounder of Ye,Zen
• World’s first and only game industry accelerator
• World’s largest community of game developers
Sample of brands I have touched in a Gamey way
Ok, What devils exist? Who can help me?
Publishers, Friends and Family round, Angel Investors, Seed Investors, VC funding, Agencies, Incubators, Accelerators, Brokers, ugh… WTF? Let’s unravel this mess!
Components of the Devil’s Contract
1. What they give you 2. What they get from you 3. What you give up 4. How you’re screwed! Time Pending: • Examples • Your Stories • How to find them
The details of the contract
The Devils
1. What they give you:
• Funding (maybe) • Marketing/Distribution (usually) • Creative Guidance (loads of experience), tools,
technology, branding (sometimes) 2. What they get from you
• Revenue! 20% - 80% 3. What you give up
• Creative Control, IP (sometimes), possibility to get investors (wait till end please)
4. How you’re screwed! • Did you see #3? What about #2???
Publishers
1. What they give you:
• A tiny bit of money ($5k - $25k) • Sometimes a family lawyer
2. What they get from you • Not much. A bit of equity.
3. What you give up • Not much! Maybe some awkward family reunions.
4. How you’re screwed! • Does VC McJohnson want to see your uncle on the
board??? Do they want “non-active” people on the cap table?
Friends and Family
1. What they give you:
• Bigger amount of cash towards product release ($50k - $1mil)
• Connections (insanely valuable) 2. What they get from you
• Equity (convertible note vs. stock) 3. What you give up
• Creative Control (depending on how active), board seat (sometimes), often they suck your time (personal passion projects)
4. How you’re screwed! • Not much downside, unless you don’t use a
convertible note!
Angel Investors (typically pre-product)
1. What they give you:
• Bigger cash injection for accelerated growth used for marketing & UA ($500k - $2mil)
• Possibility to participate in later rounds (more $$$) • Distribution Channels, UA, Marketing: leads
2. What they get from you • Equity (convertible note vs. stock, USUALLY stock)
3. What you give up • Board Seat • 20% (typical, b/c in CA this gets you a board seat)
4. How you’re screwed! • Less involved than angels (not passion projects)
Seed Investors
1. What they give you:
• BIG cash: for accelerated growth in market AND of company… ie: hiring ($1.5 mil - $100’s mil)
• Possibility to participate in later rounds (more $$$) • Distribution Channels, UA, Marketing: leads
2. What they get from you • Equity (straight stock WITH better preferences:
NOT COMMON) 3. What you give up
• Board Seat • 20% - 30% Equity (often less at later rounds)
4. How you’re screwed! • Loss of control (eventually, maybe, sometimes) • Loss of Equity
Venture Capitalists
1. What they give you:
• Publisher deals/contacts (generally not investors, just publishers)
2. What they get from you • Revenue Share! 2% - 15%
3. What you give up • More money beyond the publisher take
4. How you’re screwed! • Well, go back to #3
Agencies
1. What they give you:
• A bit of cash (usually $5k-$10k per founder head) • Office space, computers, equipment • Connections to Seed/Angel investors • Generic business mentors (usually not industry
specific, tech or investment generic) 2. What they get from you
• Equity (usually straight equity, 5% - 20%) 3. What you give up
• Larger bit of Equity early on 4. How you’re screwed!
• Are you sure you need this tiny bit of cash, services, and connections? Can you bootstrap and save your precious equity?
Incubator (pre-product)
1. What they give you:
• A larger bit of cash (sometimes) • Office space (sometimes) • Connections to VC/Seed/Angel investors, and pitch
mentoring • LOADS of Industry specific mentors (150 @ YZ)
2. What they get from you • Equity (usually straight equity, 3% - 10%)
3. What you give up • A bit of Equity early on (typically less than
incubators because company is further along) 4. How you’re screwed!
• Did you need the VC connections? The Industry mentors? The pitch mentoring? Etc…
Accelerator (post-release)
1. What they give you:
• Connections to VC/Seed/Angel investors • Pitch mentoring (sometimes, usually not)
2. What they get from you • Percentage of the close (5% - 10% is standard)
3. What you give up • A good chunk of the capital you just raised
4. How you’re screwed! • Did you need the VC connections? The pitch
mentoring? • Will this PISS OFF your VCs? Will it stop a deal
if they aren’t familiar with the broker? • Can you afford this large loss of cash?
Brokers
Will the REAL Devil please stand up?
What type of a studio are you? Ultimate it comes down to:
• Lifestyle Business vs.
• Scalable Business
Hold on… it’s not that easy
LifeStyle Business: You PURELY want to pursue your passion. • You care not about making millions (M&A,
Exit, etc) • You want to play it safe • You’re not here to make a “business” Scalable Startup: You want to make a big, thriving business, possibly exit (maybe not, see Riot Games), and all while doing your passion.
Ok… define me in a nutshell
LifeStyle Business à Publisher Scalable Startup à Investor What you CAN do: Get an investor, and later go publishing. What you CAN’T do: Get a publisher, and later go investment route.
So who do I pursue?
Examples & Your Stories
Ok J… wrap it up buddy
Developer: • You need help with Strategy, fund raising, mentorship • You’re interested in our accelerator program
(investment, mentorship, biz dev deals, etc) Investor: • Need help navigating the mobile/gaming space? Extra time: Convertible notes Riot Games
See Me if…
