Lumikai’s purpose is to curate and fund the next generation of visionary, forward-thinking founders across India’s gaming and interactive entertainment market.
The gaming market is in a constant state of innovation and disruption, creating endless new opportunities for founders to build. With the democratization of creator tools, 40% Year on Year domestic sector growth, and the rapidly increasing sophistication of gamers, there’s never been a better time to start a gaming business.
Earlier this month we launched Lumikai’s Spark program, an open forum for founders to jam with our partners on their idea, without the ‘exam pressure’ of a traditional VC pitch. One question that has come up repeatedly: Is your company more of a “lifestyle” business or can it be venture-scalable?
While it seems simple, it is one of the most fundamental questions for founders to introspect (and for us to take into consideration).
We put together a 5-point checklist to help founders answer the question:
1. Build conviction around a core thesis that has massive scale potential.
The gaming market innovates and moves fast, constantly opening up untapped white space opportunities. Do your research, understand the competition, the opportunity, and align your energy, team, and resources with 100% focus. It also helps to:
Have a comprehensive understanding of your target users. Who are you building for?
Map the size of the audience in those markets. How fast is the market growing, what’s the total addressable audience, what’s the competitive landscape, and how will you stand out?
Know your user personas and collect tangible insights around user behaviour, adoption, monetisation, which will help drive the choice of game genre to build and mechanics to design.
2. Know your “North Star” metric. While the genre is a key choice in your game design and development, benchmarking the corresponding metrics, initial FTUE performance, user funnel, and retention metrics for the relevant genre you are building for, is critical. Metrics benchmarks are different for a hypercasual game vs an RPG vs an FPS game. Deeply research and identify your white space and spend time understanding performance best practices for it. Our friends at A16z have a good primer to get you started.
3. The right mix of vision and adaptability. Start with a clear and focused vision — how can you exceed user expectations and build truly delightful world-class experiences? It starts by having the mindset to create high-quality experiences and the desire to deliver original, innovative experiences to your users. At the same time don’t be afraid of evolution, which is inevitable. Iterating quickly, refining the vision of your game and studio until you are crystal clear about what’s working and what’s not. Sometimes you may get it right the first time, but most of the time you’ll have to continue iterating and innovate along your journey to find the right formula.
4. Have the right founding team and persistence to execute your vision. Ultimately, it all depends on the founding team. Building a successful gaming company requires the right blend of creativity, commercial acumen, data science, technical skills, game design experience, and patience. We look for founding teams that can cover all these aspects (or founders that are looking to hire great teams to fill those spaces). As an early-stage fund, we ultimately invest in founders and vision. We look for a well-balanced founding team with co-founders bringing complementary skills to the table and with the mental fortitude to be in the race for the long term.
5. Ask yourself if venture investment will get you to escape velocity. Venture investment is distinct from publisher or project financing. It’s a long-term, company-level partnership over the course of 5–7+ years. Depending on the stage, expectations during that horizon are for the business to probably 100x+ in revenue. Ask yourself, what happens if my game or product fails? This usually isn’t the death of a company if you have built a great team focused on the fundamentals. A good VC will support you if you learn from your mistakes, find out what worked quickly, and move on until you find that hit.
Gaming businesses can yield massive outcomes for founders, and there’s never been a better time to jump in and build. For venture investment, successful founders need to be laser-focused on executing in a market with massive scale potential. Founders may only have a few of these aspects figured out in the early stages. We’ve been through this journey and are here to help.
Drop us a note via Lumikai Spark for a chat, or on hello@lumikai.com if you are pitch-ready.