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More in the 50 Questions Series50 Questions: What are the Key Terms in a Termsheet? (Part 1 of 2) | 50 Questions: How do VCs make investment decisions? | How does a VC value a business? |
50 questions you should ask when raising venture capital
GAMESbrief is about the business of games. It covers everything from self-publishing to raising capital to looking for future business trends.
One topic that I keep coming back to is that game makers do not understand how the investment community thinks.
Perhaps that is not surprising. There are as many different types of investor as there are types of game maker, and even those who look the same from the outside (say, “venture capitalists”) can have very different objectives, motivations and investment criteria.
From the point of view of the entrepreneur, this can be very frustrating. They often struggle to understand why an investor says no, or doesn’t “get” their business.
Nic Brisbourne to the rescue
So I was delighted to see a post pop up on the Equity Kicker entitled “Explaining venture capital”, written by my friend and VC at DFJ Esprit, Nic Brisbourne. Nic had been speaking at the Develop Conference with a panel of VC luminaries and had realised that he had assumed a high level of knowledge about VC amongst games companies. His post was about helping newcomers to the world of raising money understand what motivates investors.
I read it with enthusiasm, but as I did, my heart sank. Not because it was a bad post – far from it – but because I started to realise just how much of a chasm exists between investors and entrepreneurs.
Nic was explaining a whole range of important concepts, but it was still filled with implicit assumption that the way investors think is obvious to entrepreneurs.
I don’t think it is, and I told Nic so.
An idea was born
Out of that conversation came an idea. How about the two of us collaborate to demystify venture capital? I’ve been an investment banker (Deutsche Bank, Lodestar Partners), and an entrepreneur that raised money for two start-ups (ShopSmart, GameShadow). Nic is an experienced investor who sees hundreds of proposals every year. Surely between us we can demystify the world of capital raising.
So that’s what we’re about to do. Every fortnight, I will put a post up on GAMESbrief that will explain some aspect of the capital raising process. On the weeks where I don’t post, Nic will post on the Equity Kicker (which you should be reading anyway if you have any interest in raising money).
We’ve tentatively entitled it “50 questions you should ask when raising venture capital”. After 50 posts (and about a year), we expect to release the series as a free ebook and in physical form for the price of a good paperback.
So, here’s the question for you. Do you think this is a good idea? And if there was one thing that you wanted to know about raising money, what would it be?