real investor

[noob]

I'm not trying to offend you or assume you know nothing and I'm not going to start a dispute on the forum. Believe and do what you think is necessary. I'm merely giving advice base on my actual experience. At the end of the day, all I can say is good luck on finding your investor.

[dragonrift]

I have dealt with investors in the past, both on commercial projects with game companies i have dealt with as well as with my computer business. It is just nearly impossible to find investors for the software industry. It feels like this, as soon as a investor hears video game or mmo, they lock their check book in a safe and seal it in concrete.

[JMediaConsulting]

Alright Dragon,

Share with us what you do know, so we can all be on the same page.

[dragonrift]

Currently I have 1 successful business, 1 business that is in startup stages, as well as one project that has been a long term commitment. Both my of my established businesses had investors to help get started and these investors are profiting from the ventures. The long term project has been a large capital investment and is within months of completion providing that I can get additional backing. I can go into detail on the long term project if anyone is interested. In order for the long term project to see profit, we must complete the software that we have been developing. This software is an innovative venture that has taken years of work to get where it is as well as a very large amount of capital investment from myself. My first business is a designated driving service that has grown to the point of being handled and dispatched from a call center. My second business is a supercooled laptop business that is in start-up stages and is going quite well for progress.

[Gaulkin]

No offense but if your a coder and you have 500k invested into this business, wouldnt it be expected to have a better website?

[Carlos™]

Again, the assumption that I do not know anything.

First of all. Right now, you don't. The video game industry is very, very hot. Very competitive. Especially when you're entering your game engine with the likes of Epic's Unreal Engine which has garnered a lot of attention with a lot of marketshare. What do you offer, that this engine doesn't? What is the selling point of this engine? How are you going to gain developer support for your engine enough to make a venture capitalist drop a check on your lap? What advertising are you going to do before you start putting this engine on the market? Which developer are you targeting? The casual market - like the Wii, Project Natal, and PSMove? The hardcore market - PS3, PC, or Xbox 360? Is the developer a heavy coder, or a modifier, or a custom-made from another engine kind of guy?

You have a lot of bases to cover, and one of them is a business plan that covers the above ideas. Your engine has to have a ROI because it has something another engine doesn't.

You are facing a market that is already overcrowded as it is, by corporate conglomerates.

No offense but if your a coder and you have 500k invested into this business, wouldnt it be expected to have a better website?

Ah yes. He's right. Most game engine websites are hard-coded by the guy who did the game engine. Most game engine websites have an appealing-looking website design.

I have dealt with investors in the past, both on commercial projects with game companies i have dealt with as well as with my computer business. It is just nearly impossible to find investors for the software industry. It feels like this, as soon as a investor hears video game or mmo, they lock their check book in a safe and seal it in concrete.

You have to find retired video game executives, or current executives of game companies you're targeting. Software investors don't want high risk investment, with minimal returns on investment. Its like this, if Epic wasn't famous for Unreal or any of their games, and they wanted to market their own game engine as the choice as precedent in developing famous games - no investor would give two crap about them then.

Let me give you another example, in recent years, ID software has been very "low-key" in game engine industry with little to no exposure for their new game engine, or let alone Doom 4. No press, no interview, no new information. Nothing. This tells me that the management for this engine is falling apart and needs better technological breakthroughs. They don't understand that Epic is gobbling much of the game industry right now. Almost every game you see on the market is powered by the Unreal Engine. ID software is losing millions for each year they keep developing the game and the engine.

Every time we see Epic, they have something new to show without it having a title. Recently, Epic showed off next-gen Unreal Engine with a trailer that showcases the power of the engine, the internet is buzzing about the tech demo because Cliff said he wants to compete with the likes of Uncharted (and right now, GOW3 by the time he sees how powerful the engine is). But amiss all the buzz, there are rumors that Gears of War 3 is coming sooner than what we think. This gives Epic more and more VC's than a budget for an entire video game.

Right now, your best bet is finding a game company that brings so much media attention to its video games, that they don't talk about the game yet, but rather, the engine first - that's actually what they do first. Marketing the technology the game possesses.

[dragonrift]

I understand the ridicule that you guys are presenting at me and second of all, I am not a coder... all my work on my game engine has been done by independent contractors, thus the high investment. Third, my game engine has a lot of technology that is close to being presentable.

[rogercbryan]

Noob- stop being so nice! If this poster wants us to believe that he has put a half million into his product and then he is asking for investments as little as $5K... the signs are already there that you can not help this person. People that get defensive as soon as you offer them advice (like 99% of the people on here) are doing so because they are full of it.

dragondreamer (sorry dragonrift) - If you have $500K in this already then you should be looking to sell part of the project to an investor. I can't believe someone with the skills to put $500K into something would have such a piss poor approach to soliciting for investments. With that being said you'll have better luck trying to sell 25% of the project for a couple $100K. People invest in product not idea... I think your full of shiot so blast away!

[Gaulkin]

I understand the ridicule that you guys are presenting at me and second of all, I am not a coder... all my work on my game engine has been done by independent contractors, thus the high investment. Third, my game engine has a lot of technology that is close to being presentable.

[noob]

I am not a coder... all my work on my game engine has been done by independent contractors, thus the high investment.

I think your signature is misleading then. As it states "I am a Game Developer and Computer Technician/Engineer". Game Developer and Engineer, albeit indirect, gives the obvious impression that you are the person doing the development work (including programming work) on the project. Although it doesn't directly state so, it's not hard or difficult to see why someone would assume this.

Having said that, take what you will out of my previous advice. I honestly wasn't trying to instigate you didn't know anything about anything going on. However, my advice stands in regards to investments. Sure there are ALWAYS possibilities of things happening out of the norm but that's a lot like playing the lottery. So while I won't say you won't absolutely get any funding or find an investor willing to invest, I'm here to offer advice base on what I know and my own experiences as a general guidelines that would best benefit people I'm offering my advice to (generally speaking). Afterall, I think that is the only way to go about it when offering advice.

So, with that, where is my advice coming from?... Well, I am very familiar with raising capital (although I won't dare say I'm the best at it or anything, because I'm not and don't consider myself to be). My experience comes from talking with over 25+ VCs alone for my previous start-up and that doesn't even include the number of bridge financiers, angel investors, venture debt firms, or people who wanted to just outright acquire my company, etc... Mind you, I never approached a single one of these companies/investors. They all approached me including names like Sequoia Capital. This isn't to brag but to prove a point. I spent countless hours talking to all of these people (mostly to hear what they had to say) and I went through majority of the negotiation process, LOIs, actual term sheets, etc.. On top of this, I am personal friends with some of the largest VC firms and Angels in the US. While there are two sides to every story and there certainly is a possibility you can raise funding, base on the comments you made, I can't imagine why anyone would want to invest (base on what I know of the entire process).

I made a quote directed towards one of your comments regarding raising $5,000 to $1M. The reason I know this is a turn off is because when raising capital, the investor wants to know exactly how the money will be allocated and the "burn rate" at which the money will last you before three things may occur with an emphasis really on just two things:

1] You getting acquired (this really isn't even a consideration and you shouldn't really even think that it is)

2] How much you'll burn before you need to raise another round of funding (this is the one that is most important to consider)

3] How much you'll burn before you hit profitability

Base on those 3 factors (2 and 3 being the most relevant with 2 being the most crucial piece), you, as an entrepreneur wanting to raise capital, must construct a specific timeline and outlook on how that money will be spent and then JUSTIFY that dollar amount. There is a reason why some companies raise $5M for their Series A while others raise $80M. It's relative to actual usage. An intelligent and experience investor will tell you that raising too much or too little can have massive negative consquences on the company down the road and hence would want to produce enough fundings for your company to reach a TARGET GOAL prior to hitting factors 2 and 3 mentioned above. I'm not going to get into the nitty gritty details of all of this as you should be researching this info for your own good.

With that said, in the range of $5k to $1M (still a large range), typically the only people that are going to invest are Angels. Most VCs have no interest in investing less than $1M and they'd actually prefer to invest $3M to $5M minimum ideally. Regardless, the range you proposed is way too wide of a gap. Hell, anything less than $100k might not even be worth it to an Angel investor and you're better off building seed money. In rare cases Angels will participate for less than $100k but that's typically because they are structured to do deals like this. Again, there are possibilities but these are the norm. Take all of that however you'd like, but after dealing with so many investors and successfully exiting my last company, I dare say my advice is worth something to consider.

[Mega B]

I think everyone is finding this a very interesting thread but can i remind folks that although you can voice your opinion please keep it diplomatic.Thanks

[dragonrift]

You do not need to be a coder to be a Game Developer.

[noob]

You do not need to be a coder to be a Game Developer.

I agree, depending on the interpretation of the usage. I'm not arguing that it can't be distinguish as separate. As mentioned in my last response, I can see why it may come off as misleading or being interpreted otherwise.

[dragonrift]

True, I completely understand.

[Carlos™]

If this poster wants us to believe that he has put a half million into his product and then he is asking for investments as little as $5K... the signs are already there that you can not help this person. People that get defensive as soon as you offer them advice (like 99% of the people on here) are doing so because they are full of it.

Honestly, if he spent 500k in investing on the game engine itself, and he developed parts of the engine as well, then he has invested not only his money, but he has invested his time, dedication, and passion into the project, that it would be very easy for the investor to see - from the project itself. And the investor will see it through a demo - the problem isn't saying that his business idea is a game engine. Its the fact that the general software industry is used to low-risk investment, with a high ROI, now merge this pattern with the case of "the wrong investor" so the solution to the problem is finding a retired video game executive, that knows a video game company that is in great need for a game engine. Now, this company might acquire the technology, but he's making double the cash that you invested into his project. That's what they do, acquire the technology, and pay double with stipulations, such as bringing him on the team, or bringing his friends/workers on the team.

Finally, you have to understand making a game engine isn't one of those... 5k investment kind of project. Game Engines cost anywhere between 100k to 500k to a million. Take this into consideration: Modern Warfare 2 costed Infinity Ward and Activision almost $40 to $50 million to produce. Almost quarter half of that comes from a modified Quake Engine. The launch budget was a whooping $200 million, Modern Warfare 2 went on to become the best selling video game of all time with a staggering $550 million. Do the math.

Now, as of this writing, MW2 must be selling anywhere between 3 to 5 million copies and its been on the market for what? 5 months? And what are the investors doing at this time? Anywhere between a vacation, investment in another multimillion-dollar start-up, or corporation, a mansion, a home...you name it.