泥中蟠龍's Game愛歌
[A love song for games of the dragon waiting for an opportunity]
Video game development and investment
I have serially written a column about the video gaming market and video game development over a period of time. But this time, I'd like to talk about a game developer which I, as a venture capitalist, invest in. I don't intend to whine about it.
The reason I chose this topic because of what I went through recently. This column is actually for game developers which attract investment on the borrower's side. The recent experience made me feel bad is quite simple. A cash-strapped game studio having developed a good game asked me to make an investment and I couldn't help but turn down the suggestion after thorough consideration. Some readers might think that what the problem is if there is a good game. Besides, the majority of leaders of game developers actually do think so.
It takes a long time and effort for a developer to make a game in general. The process includes game design, development, and graphic art, etc. Even a very simple game takes at least 3~4 months from designing to publishing, up to 5~6 years. Of course, I don't mean that it takes 5~6 years to implement investment. But, on the contrary to this, it absolutely cannot be done in 1~2 weeks.
When it comes to investment in a video game, a venture capitalist (VC) decides to invest money after examining a developer, the production team, and its business condition etc. in 1~2 weeks to a few months and additionally looking into a difficulty in an external problem, a legal issue, the accuracy of the data from the company etc. And the investor should discuss the details about the condition of investment with the investee and perform the basic administrative procedure. It takes 2~3 months to 1 year for the whole process.
Let's go back to the story of the game studio in the beginning. When I had the meeting with the representative, the developer was in a sticky situation where employees weren't being paid regularly and the leader came to me after doing everything he could. I felt sorry as I told him frankly, however, investment to the developer is actually quite challenging. Because there is a possibility of causing troubles within a few months while going over issues related to the investment; talented staffs might move to other companies due to unpaid salaries and the investor might find other debt which he/she didn't catch. What I want to talk about is that the investee should come to ask the investor at least 6 months before actually he/she needs the extra money. That way VC is able to have enough time for a proper review of the data from the developer and also have affection for the company. And, last but not least, it is human nature to want to do someone a favor whom I've been watching for a long time. So I hope that many representatives of video game makers which want to attract investment go over the expense plan and get things ready early in advance. The investment process cannot be done in 1~2 weeks like as if a new game cannot come into the world in such a short time. Failure to provide an opportunity for the potential firm is personally very sad and heart-breaking.
※ This is from Kyunghyang Games column by 泥中蟠龍 since September 2013.
(http://www.khgames.co.kr)
Translation by Kim Ki-hui
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