[Venture capital firms can make or break a game company's ideas and ambitions. Gamasutra business editor Colin Campbell sat down with leading VC, Accel's Ping Li, to tease out some key advice.
Accel is a VC partnership, located physically and spiritually in the heart of Silicon Valley. Its success stories have included Facebook and Groupon. The company is steering Rovio towards growth in the U.S. and sees gaming as an enormous opportunity.
I sat down with partner Ping Li to talk about how he chooses the entrepreneurs Accel works with, how he helps to grow game companies, what opportunities he looks for, the common mistakes he sees, and the pressures he faces alongside the companies he supports.
I came away with 10 perspectives that can help gaming entrepreneurs understand how to interface with the world of VCs. Here is a selection of Ping Li's quotes and some conclusions.
1. VCs Are Picky
Ping Li: "In any given week every partner will see 20 companies or entrepreneurs. In a year every partner will sign up, at most, three or four."
Those are seriously harsh numbers. The VC is looking for something truly outstanding. If you're not sure your thing qualifies, then it probably doesn't.
2. VCs Are Also Hungry
Ping Li: "We don't live in an ivory tower where we just sit here and things come in and we ordain the ones we like. It's actually quite the opposite. We're out there pounding the pavement, meeting entrepreneurs, game developers and getting excited about what they're doing before they are even ready to raise money."
Make yourself known to VCs as early as possible. If you're exciting enough, you won't have to do the presentation tour. They'll be the ones showing up with a Powerpoint.
3. VCs Want Evidence Of Your Excellence
Ping Li: "If you're building a game it's important to have as much to show as possible when you are presenting. There are a lot of concepts out there and every concept sounds good. But the more you can show, the more it helps."
Show, don't tell.
4. VCs Expect You To Know Your Shit
Ping Li: "Really understanding the platforms that you're building on is so important. There are a lot of folks we see who come in here and say 'hey I've built console games my whole life and now I'm going to build a mobile game'. We've found that the guys who really understand how these platforms are evolving, what are the unique things about them, are the ones who succeed. They usually have whole teams whose biggest asset is that they understand the unique properties and the unique problems each platform brings. Like Angry Birds
. It wasn't a new game concept. It's about knocking things over. But they really thought about the touch dynamics of the platform and that was very, very smart."
There is no 'winging it' when VCs are in the room. Nothing beats demonstrable, particular, relevant experience. If you haven't got it, get someone on board who has.
5. VCs Aren't Just About Money
Ping Li: "In some cases we are working with companies that don't need money. They're actually doing well so they're like 'why do I need more money?' Then it's really about adding value. Advice is a big part of it. We're bringing best practices from all the hundreds of companies we've invested in over two decades. Every company is different but there are some best practices that you can share."
Sometimes, knowledge and experience is more valuable than cash.
6. VCs Sometimes Leave The Door Ajar
Ping Li: "I'll maybe see something and pass on it. But I'll always stay close especially if the entrepreneur is exciting. Because the good ones pivot, change. You'll catch them a month later and you'll be like 'wow, that is really cool'. Even if it's just tilted two degrees. Now 'I get it'. There are situations where you've passed on deals and they've gotten funded and it's done really well. We'll do our darndest to get back in the next round because you know, there's no reason to hold a grudge. You just missed it, right?"
Is your idea perfectly pitched, or could it use some tweaking? If you get a "no thanks", you might be closer to a "yes please" than you think. But be aware, the VC might just be wrong. If you really believe in the exact rightness of your thing, stay strong.
7. VCs Enjoy The Hustle
Ping Li: "The one thing that's most important is just the hustle, you know? Helping them do whatever it takes. Talking to people. Bringing things about. They need to talk to someone at Apple? OK, let's pull out the Rolodex and make that happen. A lot of it is just taking their call at 11:00 p.m. when they tell you they have a problem and they need some help. It's pretty hands on, frankly."
You need something done? Don't be afraid to pick up the phone and make the VC do some heavy lifting.
8. VCs Are Under Pressure Too
Ping Li: "Entrepreneurs are busy. We should not be an obstacle to them. We should be an accelerant to their business. That should be our job, supporting them. Ultimately we are judged by the quality of investments we make. We are measured by the strength of our results. We have to be patient. It's one of these jobs where it does take time and it takes is a lot of luck. The markets have to cooperate. The exit markets have to cooperate. All these things have to line up together. You can be good but sometimes it's better to be lucky."
The VC isn't your boss. The good VC is your partner, and wants the same things that you do.
9. VCs Love Change
Ping Li: "Our goal is to find that person who has that insight. I should go into a meeting knowing 80 percent of what he's already working on because we're in the sector, we're in the space. Then we try to identify the 20 percent that we don't know, the stuff that's really, really unique and awesome and is going to change everything. We know how the industry works, the particulars of this platform against that one. But it's all the subtleties that we are looking to tease out of the entrepreneur. That's what gets us excited."
The VC doesn't need a lecture on how the industry works. The VC needs to know how you're going to change things.
10. VCs Are Human
Ping Li: "I don't think you can do this business and work for seven years with an entrepreneur if you don't believe it's the one. You're working on them for a long time. You're pounding away. It's because you're excited that it could be the one. And if it doesn't work out, you know I think that's okay. That's part of the business."
VCs are in the business of risk. They understand that some deals will do okay, some will go supersonic and some will fall away. But your job and their job is to move the slider away from risk and towards opportunity.
[As well as being business editor for Gamasutra, Colin Campbell works for a marketing agency. You can follow him on Twitter at @brandnarrative.