How to Jumpstart a Financing Climate

Historic Time
 Lower Costs
 Recessionary Trends  Open Source Solutions  Global Labor Pool

 New Markets
 Billions of New Consumers

 New Models

Casual Games = Entertainment 2.0
 Mass Market  Consumer Engagement  Counter Cyclical

Casual Game Challenges
 Passion -vs- Practicality (cottage

industry)
 Media Attention  Product and Model Innovation  Investment Climate  Limited Success Stories

Investment Opportunity
 $60 Billion USD Invested (50% US)  3,000 Companies Funded  3,800 VC Firms  17,000 Professional Venture

Capitalists

Define Clear Market Sectors
 Game Technology  Game Infrastructure  Game Development  Consumer Portals  Retailing  Advertising

TIP: Casual Games needs to break away from the hardcore market

Develop the Sectors
 Vision and Agreed Upon Goals  Defined Market Opportunities and    

Models Specialized Media and Associations Broader Media Awareness Investor Outreach and Education Success Stories!

Case Study: Retailing
 Goal: Sell Casual Games  Model: Try Before You Buy  Association: Casual Connect  Awareness: Sporadic Major Media*  Success Stories: Real Games (TBD)  Investor Outreach: TBD
* Have casual game sales grown in the face of economic slowdowns?

Raising Capital is Difficult
Low Management Effort Time to Close Pitches Offers Received Equity Dilution Amount Raised 25% 4 mn’s 10 1 15% $0.5 MM High 50% 12 mn’s 60 5 45% > $10 MM

• Ownership is an illusion with Preferred Equity

The Classic Cycle
 Max Out the Credit Cards  Convertible Debt F&F / Angel Round  Preferred Equity by Venture Capital

Firms
 Preferred Equity by Private Equity

Firms

The Steps
Fundraising Law Firm - Delaware C Corp The “Throw-away” Pitch Prepare Your Approach and Materials Pitch 30 Funds in Two Weeks Receive an Offer - do not accept it Close the Deal - have a back-up plan

Know the Game
Good Signs
• Thoughtful Questions • Market Understanding • Set Follow-up Items • “Interesting” • Meeting Partners

Bad Signs
• No Questions • Market Size Ignorance • No Further Steps • “Maybe” or “but” • Handled by Associates

• Are they doing competitive research? • Are they overly concerned about traction? • Do you sense a run-around?

Additional Funding Tips
 Do not outsource your fundraising  Lawyers work for the investors  Do your homework  There is no “Industry Standard”  There is no confidentiality  Understand exit scenarios  Inform targets of progress