Exclusive: is it really possible to get money from investors to develop a game?

Many popular games today have received the “green light” largely due to venture financing. One of the recent successful examples is the Finnish Seriously (developers of Best Fiends), which at the end of November brought the total number of raised investments to $ 10 million. In this regard, we decided to ask domestic investors about whether it is realistic to get money in Russia today to create a game. 

Dmitry Smirnov, Managing Partner of Flint Capital, and Mikhail Demidov, Partner and Investment Director of the T34Moscow Venture Investment Fund, agreed to answer our questions. 

Is it really possible to get money in Russia to develop a mobile game?Dmitry Smirnov

Dmitry: The chances of getting money for a mobile game from a venture fund are close to zero.

Mikhail DemidovMikhail: In Russia, until recently, it was really possible to get $150-200 thousand dollars to develop a mobile game with a scenario that usually repeats some popular foreign product (a typical example is Cashsquare, which made a mobile “Monopoly”), while really similar companies attracted the following rounds exclusively for marketing (up to $ 1 million).

After the deterioration of the economic situation, large business angels and funds that financed such initiatives (Kite Ventures, IQOne, Igor Ryabenky. Igor Matsanyuk, Igor Ustinov and others) stopped looking at the local market, turning to international businesses or closing support for the gaming direction.

Why is it so unlikely to receive funds?Dmitry: In order to launch a real hit that will tear up the market, you need to launch 10-15 pieces of trash first.

The probability of getting into trash is huge. It is impossible to predict popularity.

Mikhail: There is a very complex mentality of digital content buyers in Russia (although according to the latest data from Data Insight, last year it was games that accounted for 92% of all sales in the digital segment) – that’s why there is a different user economy and principles of behavior here (freemium–model games are more active than paid titles, studios are not always engaged legal promotion and so on).

And how does modern startups usually search for a business angel?Dmitry: At conferences, professional websites and communities.

Mikhail: There are very few business angels in Russia and their names-passwords-appearances are known in the industry community. There are very few unexpected deals, so modern startup game developers focus on existing investor portfolios when they show their developments.

What mistakes do they usually make?Dmitry: They believe too much in the idea, without having done enough preparatory work to confirm hypotheses.

Mikhail: Ignorance (the vast majority of requests) of its target audience, poor product marketing, non-obvious economics of the project, legal risks, inadequate investment proposal.

And the last question: what needs to be done / shown so that you specifically give money for a mobile game?Dmitry: Traction*.

*Tracking – positive feedback from customers and the market, proof that the product/service is in demand.

Mikhail: I do not invest in the segment of mobile and desktop games, because I do not consider this business promising for myself because of the risks of the user economy.

Thanks for the answers!