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likon

The right metrics for investment?

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Hi guys,

 

Wanted to ask if someone maybe tried to find investors for their indie game?

Maybe someone knows what metric numbers (if any) of retention, engagement, ARPDAU, LTV, CPI etc you need to have to attract investors?

What are the minimum values you need to have to start looking for investment? 

 

Like retention 30%,10%,5% or 20%,5%,0% etc?

Or maybe it’s not about numbers to them?

 

Any advice in that topic would be appreciated.

 

Thanks!

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An investor wants to make a profit. Some investors look for short-term profits - those investors will want higher numbers in your metrics. Some investors see value in the long term (to see the business grow and release more games, not just one game). Not many investors are going to see a future in one game idea. One game is not a business (Legendary Riotous exceptions notwithstanding).

What retention/engagement numbers would make you willing to risk a bunch of your own money (if you had it)? What numbers would constitute success in your own eyes? What I'm trying to say is, you should dig more deeply into the math and the psychology of business and profitmaking - it's more than one or two magic numbers. 

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The numbers are an indicator.  You want lots of positive indicators.  But indicators are not everything.

For example, if you can show that your little project is able to invest $x each year and see a revenue of $x*1.5, or a 50% profit per year, that's a big number. You can't get 50% annual returns from a bank account or stock investment.

If that is all you showed them, that you are currently bringing in 50% margins, they might be tempted to give you money.  However, even that isn't enough for many.  Other types of investors are looking for big profits, and they're willing to invest in bad projects in the process.  Maybe take $10M and invest a quarter million dollars into each of 40 different projects.  They know many of them will fail, but if a few generate 100x or 500x or 2000x profits it will pay off overall.

Games are generally a high risk, low margin venture.  Some groups are willing to invest in game studios, but often it boils down to Friends, Families, and Fools. 

Typically minimizing the risk involves creating a group of industry veterans who have experience in each area of game development, from the initial pitches, design iterations, art, animation, programming, sounds, effects, scripting, testing and QA, sales, marketing, distribution, business management (accounting, law, strategy) and business development (finding new work and new partners).  Any skill you don't already have you will need to hire out.   Since you're asking, you probably need someone who has skills on the business management and business development end. 

They want to know you have all the things required to build a successful game business.  Success breeds success, so if you can show them you've already got a successful small business and are already turning a profit, that will help.  They want to know exactly what you plan to do with the money to make more money.  Wanting investment because you need $x for your startup doesn't do much good.  Wanting investment because you need to hire n people for m months to expand a product line by s units for an expected z% return, that is something business folks are more likely to consider.  All the metrics you can show them to how you will spend the money and convert it into profits later on are important.

Also, you need to understand what you're asking for.  Understand rounds of funding, understand different types of stock, including convertible stock, along with the details of risks and responsibilities of each.  If you are not business savvy investors will generally find someone who is, or if they're unscrupulous, they'll fund it and take it all for themselves.

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