Becoming an entrepreneur in India seems to be the most popular choice with Angel investors and seed funding institutes queuing up. But that does not seem to be the case with gaming entrepreneurs.
According to international reports, India is the third largest in terms of downloads on Google Store. The Ficci-KPMG Indian Media and Entertainment Industry report 2013 approximately 100 million apps are downloaded monthly in India, and this could surpass 5 billion downloads per annum in the next three years. According to an Avendus Capital report mobile games and applications in India are expected to become Rs 2,700 crore market by 2016, driven by smartphone growth.
Yet look around and you will find a handful of firms who have managed to raise money from venture capitalists. These include the early birds like Indiagames (now part of Disney India), Dhruva Interactive and Games2Win. In the last two years about six to 10 firms have managed to raise angel funding this includes Pune-based Rolocule Games and Bangalore-based HashCube.
“There is a mismatch between what the investors are looking for and what the game developers are looking for. Gaming is a hit driven business. If you get that hit you can then think of many monetizing mechanisms, and that is sure to attract VC attention. Right now, the Indian gaming industry landscape is full of very young startups that are looking for small fund infusion like Rs 25-50 lakh, a better fit for angel and seed funds. But what they really need is mentoring more than the money” said Rajesh Rao, chair, Nasscom Gaming forum.
Alok Kejriwal, founder and CEO of Game2win and who has raised three rounds of funding so far blames both VCs and gaming developers. “India based investors have got used to skewed expectation on returns due to the rush in e-commerce segment. They tend not to understand IP and products much. VCs in India are trying to fund P&L, whereas gaming is a balance sheet investment. They do not understand that Angry Bird was the 47th game for Rovio,” he said.
Kejriwal shares a recent instance where an investor approached them and was ready to invest Rs 100 crore if Games2win would make another Angry Birds. “Game developers are also to be blamed equally. Some of them just do not have the maturity to approach investors. The focus should be on gaming as a media proposition. The other problem is that VCs and entrepreneurs are not sure to set expectations on exit and returns,” added Kejriwal.
Till VCs figure out their investment strategies, game developers in India have resorted to raise funds either from family and friends or roll over cash that the first game makes into the development of the other, and some have managed to tap crowd-funding to finance their games.
Arvind Raja Yadav, of Pyrodactyl Games, has successfully raised $36,000 by crowd funding on Kickstarter for its yet to be launched game Unrest.
“We have been approached by funds. Investors look for sustainable revenue streams and games is a hit driven industry. The other reason why we have kept away from investors is because it leads to compromise on story angles and design vision,” he added. Kickstarter is a platform where individuals from films, music, art, games, design and technology can raise money for their projects.
Shailesh Prabhu of Yellow Monkey Studios believes that investors tend to invest according to the ongoing trend. “Since freemium is doing well they will invest in such studios/games. Or many will tell you to take project work as well as work on games. That is stressful situation,” said Prabhu.
