Around six o’clock, I ran into an Internet analyst for a rather well known investment bank. We began talking tech development and current trends, basically feeling each other out for our knowledge in the space. I asked him about what he thought of Wikipedia's efforts to commoditize its services without alienating its users. He asked me about what I thought of the iPhone copyright controversy between Apple and Cisco. It was a fine conversation, until I brought up MMOs.
I mentioned that the MMO niche looks to be growing at amazing rate, expected to be in the $14 billion ranges by 2011, the long tail business models, and the vertical and horizontal market potentials. So what did he think?
The Internet analyst, a man with a degree in computer science from a good school, who spends hours on Bloomberg every day ostensibly reading about all things internet, answered: “I cover the internet, dude. Not online gaming.”
Just focus on the statement at the end: "I cover the internet, dude. Not online gaming." How ignorant can an internet investor be? There are three core businesses that made money on day one on the internet: porn, ecommerce, and games. Everything else came much later.
So we see the problem. Venture Capitalists and Investment Banks would rather invest in 57 ways to categorize my vacation photos or home movies. VCs and I.Banks would rather help the next great widget company that has no real technology of their own but bases its entire existence on MySpace or YouTube.
Online games don't exist without the internet but we do exist without the VCs. Just check out some of the indie online folks out there: Three Rings (makers of Puzzle Pirates) or Jagex Ltd (makers of Runescape). They didn't get traditional funding to get started... but they do now. Both Jagex and Three Rings have reported funding from more traditional venture funds. Of course they had to prove it first so those were series B rounds.
So where does one go for startup funds these days? Guess it's time to look at more "nontraditional sources."
| Actually, to quote Lloyd Kaufman of Troma Entertainment: "Dentists!" This is from his book Make Your Own Damn Movie!: Secrets of a Renegade Director |  |
His philosophy for seeking funding for his films is simple: Everyone watches movies. Everyone wants to be involved in movies. Doctors and Dentists have lots of money. Doctors and Dentists are part of everyone. It doesn't hurt to ask. And if you can get 10-20 people to say yes with 25,000-40,000 you can fund your movie...
While it takes a little more money to make a large scale online game / community these days (after all, majority of the film crew only works for 30 days out of the year vs. development staff that works 1 to 2 years), the philosophy is the same. Everybody plays games. Everybody's kids play games. Games are cool. Doctors and Dentists have lots of money... viola!
OK, I'm having a little fun with this, but the basics are still true, it just means beating the street for funding. With the amount of street beating I've seen friends and other companies do, it might not be a lot more work than chasing VCs... and it takes a lot less airfare.
Any Dentists out there? Drop me a line.
