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Lessons from investing in the Indian gaming industry: Elite Games Developers podcast

Updated: May 24, 2021

Salone Sehgal, General Partner at Lumikai, and Elite Games Developers editor & host Joakim Achren discussed Salone’s career to date, the transition from banking, to entrepreneurism, to venture capital, and the takeaways from building a diverse ecosystem

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Joakim Achren 3:10 I want to hear like how did you make your way into gaming and specifically to invest in games?

Salone Sehgal 3:24 Yeah, well, no, that’s a really good question. Something that I ask myself as well, you know, to be honest with you, if you look at it, statistically, I shouldn’t even be here where I grew up. I didn’t see anyone like me playing games. When I became an entrepreneur, I didn’t see anyone who looked like me building games globally, or even be in games as protagonists. And much later, I didn’t see anyone who looked like me investing in games. So they say if you can’t see it, you can’t be it. So I was I was the ultimate outsider, right when it comes to gaming. But there were obviously various choices that I made. I made to leave investment banking and private equity or to build a games company which was focused on female audiences and finally, to to be a VC. And, you know, I always joke that I figured if I wanted to build a games company with an Indian female protagonist, I chances I’d have to build it myself if I wanted to see that happen. And later on, I realised I’d have to finance it myself as well. But we don’t want to on a serious note. Now I’m the CO GP for games and attractive focus media fund. And that’s a culmination of a 15 year long journey of being an investor and games entrepreneur and a former investment banker. I’ve had the good fortune of having seen companies from seed to grow to exit from literally all sides of the table. And here I am. No,

Joakim Achren 4:52 yeah, that’s like you’ve seen the side from the table. you’ve sat on all the sides of the table really like Just go going first to the entrepreneur side, what what were your key takeaways of being an entrepreneur? Specifically in gaming?

Salone Sehgal 5:08 You know, I think it’s you, you realise the limitations of your own capabilities pretty quickly as an entrepreneur. And that’s, that was the first one, you know what, you know, you know, what you don’t know. And you very quickly realise that that that there are things that you don’t know that you don’t know. And it becomes surely imperative to surround yourself with people who are smarter than you, but also complimentary to you. And I think that’s where I really recognise the need, and the imperative of building diverse teams. And that was very key learning. And other key learning was the timing and luck are often equally important, and sometimes key to success. And a lot of entrepreneurs overlook and often undermine that. And that was, that was a very key learning. I think the respect, and the empathy for a founders journey can only happen after you walk those shoes. And to be honest, that has developed helped me develop and has also shaped me as an early stage investor. And yeah, it was, I think, the four years that I spent being an entrepreneur, literally the years where I had the steepest learning curve,

Joakim Achren 6:21 yeah. Do you think like, then you jumped away from the entrepreneurship part, to go back into financing into VC, what drove you to go into VC at that stage,

Salone Sehgal 6:36 it was a, I found VC was a perfect consolidation of my skill set I see is a career where you end up at, it’s not necessarily the best career for you to start with, if you’re young, your journey. And I’ve always advised analysts and associates in that part that you know, to spend more if you do spend, spend one or two years initially, but go out, do something else, and then come back, and you’ll have a much broader and deeper perspective, and you will be shaped as an investor as well. So for myself, it was I spent the first you know, couple of years, six, seven years being investment banking and private equity. And I’d seen companies across various stages. And you know, I had this very solid, quantitative and qualitative skill set, and then I built a company as well, and that was in in gaming, then the choice was eventually to consolidate that and bring it to investing. And I’ve been, I’ve seen companies from seed, build a company at seed, in separate something built a team scaled it, and also had the experience of even closing a company down to my previous experiences, you know, I advise multiple companies raise millions of dollars, seen and advise companies to exit from CDs beyond words up until late stage exits as well. So there was almost a complete kind of a skillset, an overview that I had. And when I initially, you know, took some time off, after my entrepreneurial stint I, I got a lot of entrepreneurs and founders seeking my advice and inputs and on various aspects of running the company. And I felt that those perspectives added value. And I found deep affinity to the early stage, and hence that drove my decision into becoming an early stage VC. Yeah.

Joakim Achren 8:26 I think like what you said about associates, thinking first about like doing, like a stent, for instance, in a startup that really opens up your mind to kind of like, what is what are the realities there on a day to day, which you can’t really observe if you’re in the VC firm already.

Salone Sehgal 8:46 Absolutely. And it also drives a lot of credibility with founders, especially if you have been in the trenches before and you have built businesses, you know, how difficult it is, you know, what that trade off is, when you have are constrained for resources and time? I think it’s just that that appreciation only comes after you have been in a start up, and you’ve handled those challenges yourself. Particularly at the early stage. I believe, growth stage investing has a whole different skill set that you require. And that may or may not necessarily require you to have operation expertise.

Joakim Achren 9:19 Hmm, that’s true. So you were a London Venture Partners, what were your biggest takeaways from one of the best gaming VCs out there?

Salone Sehgal 9:31 Yeah, and you know, I think it really shaped the way I looked at games investing. I mean, given that and, you know, LVP pioneered investing in games way before this current games Gold Rush. Right. And he has been the absolute early stage investors and have been responsible and instrumental in some of the successes we’ve seen in urge and and there’s there’s no denying that I think The sophistication in terms of the way to think about the market is something that’s it’s definitely gathered with me. I think the biggest learning is that, you know, before my gaming career, I used to look at consumer internet. And gaming was one of the verticals I used to look at. But what I’ve learned is that games investing is very different from consumer internet investing. You know, a lot of VCs apply the problem solution framework, but you often hear this in the venture circuit, the victim and painkiller approach. Now, when you want to apply that to entertainment companies, that framework totally breaks down. Because the biggest competition game developers have is boredom. And that’s not a problem in an era inheritance, that sense of away because it’s just a byproduct of the attention economy. Is that does the world need get another match three game? Probably not. So how do you then evaluate companies? And how do you then make decisions based on very limited information, particularly when it comes to entertainment products, which is all about understanding the pulse of the audience? It’s all about getting the timing right. It’s all about capturing the current Zeitgeist. And that is that complexity only comes with games investing, because you know, games investing is a con. It’s a weird Confluence, confluence of technology, culture, you know, which which kind of interest and new media which intersects. I think that was an appreciation that I had at the second appreciation that I’ve had for at least four games investing is that the myth of large markets, you know, every VC will tell founders about large markets and going after a large market and a large user base. But when we look back at gaming companies, we we know that it is possible to drive very large, successful outcomes with focused niche audiences, which may or may not be possible in other tech investing. So I think there are nuances and complexities to gains investing. And that is an appreciation that I’ve been up over my experience. From my experience.

Joakim Achren 12:09 Yeah, just thinking about like, if you’re thinking about investing in a games company, you also want to know how the founders think about their audience and how that the appetite of the audience is developing. If they played one game, what kind of games do they want to play next? And you need to be having the mindset of what is the opportunity? How are they thinking the founders? Yeah. Can Can you talk about the founding of Luma Chi, which is your new venture startup venture for interfirm? How did you convince your limited partners on the thesis of Lumikai?

Salone Sehgal 12:50 Yeah, so, Lumikai, we’re in we’re in early stage fund. We’re actually India’s first interactive media and games focused fund. Now, I’ve dragged the India market for a very long time. And I’ve been storing it, I studied it I did a lot of work with in the Indian market. And one interesting trend that emerge, I guess, within the last 24 months is that game usage, adoption, monetization and infrastructure converged. in a way that’s never been seen before. There was this supernova event in India where there was the launch of geo mobile, which essentially resulted in data rates being slashed by 95%. So and one gig of data in India costs about six cents versus $6. In the rest of the world, suddenly, you had 400 millions for and 50 million smartphone users out of which 300 million gamers emerged. And people were consuming games like never before. I mean, in 2018 5 billion gaming apps were downloaded in India, making it the second largest consumer of games in the world. So you know, there were all these trends that happen. So there was always a lot of curiosity in the India market, and there was the need. And it was the time for a seed stage focused venture capital fund looking at the games and interactive space. And in fact, a lot of the investors that we have in the fund, but also either planning a market entry or curious about the India market wanted to get insights. And the India market is complex. It’s also opaque. It’s very difficult to do business without local people have feet on the ground. And, you know, we raised a debut fund in the middle of a pandemic. To be honest, we we had a very warm reception from the LPs. And it was a story that resonated because there was the pieces was playing out in front of our eyes during the last year and especially COVID accelerated that with gaming usage going up by 70% paying users bases increasing revenues of games increasing. So this, so there was just just a, you know, big demand for understanding the India market. And that’s something that helped us get to MCI. And you know, we did our first close last month, we’re very fortunate, we’ve had some had some amazing LPs join us for this journey ahead. And we act as as this perfect conduits between this larger strategic and financial capital, and the early stage ecosystem, which is needing funding and you know, we bridge that gap.

Joakim Achren 15:33 I think BITKRAFT just announced that they’ve invested in India as well into a startup. So there’s some some other people as well, coming into the market, thinking about investing in the India market. Can you expand on that gaming consumer, what they’re like, what is the difference with the Western market there? Those kind of aspects are really curious.

Salone Sehgal 15:57 Yeah, so the gaming market, you know, we’ve we’ve tracked the digital Indian user for a while, and the sociology of Indian digital Indian user is very different from that of a Western user, and particularly that of gamers, right. In the Western markets, we have seen a very linear progression of gamers, you know, you had the arcade games, and you had the consoles, and you have the PCs, and then you had the mobile generation. And then they were exposed very linear, you know, gradually towards different business models with in a box games, and then the paid games and premium games and then fight free to play and finally subscription. It’s in India, there have been hundreds of millions of users who have started being exposed to all of this all at the same time. So they’ve been exposed to social media. They’ve been exposed to video, ODT, they’ve been exposed to chat, audio chat, gaming. And it’s all at the same time. So the evolution of this user is very different from that of the user market. These users are inherently social, they are inherently multiplayer. In fact, pub g was is a massive phenomenon in in India, it has over 38, government banned pub G. And now there’s there are new developments of that. But before that it had 34 million daily active users. It was it was a phenomenon and 40% of Indian users were actually using it as a place to hang out. It’s, you know, a social destination. They were leveraging it for voice chat. They were they leveraging it to socialise and date. So it’s a very different kind of business models as well, which are resonating in India, for example, real money gaming is a phenomenon which is very popular in India. And whether you think of it as gaming or not, if you’re a gaming purist, there is no denying the fact that we are money gaming has trained millions of Indians to stake and win small amounts on digital gaming platforms. And that in itself, unlocks monetization. And now you’ve got the payments infrastructure developing. You’ve got Facebook now, which is coming to India via reliance geo. And there’s this talk of unlocking WhatsApp for payments. And that’s a huge event with the capitalised monetization and adoption for gaming even further.

Joakim Achren 18:24 Yeah, let’s set up the policy model has worked, there are certain gaming that that works in the region, then thinking about the entrepreneurs, the founders, who are operating, like local gaming startups and the echo ecosystem, are they picking up the signals on what is working? Or is there kind of like underlying understanding that what they want to do? Can you talk about the entrepreneurs in India?

Salone Sehgal 18:50 Yeah, absolutely. I mean, games development in India has, you know, been five years back when the industry body tracked game development studios in India, there were 25 game development studios. Now, as a tape, there are more than 300. But when we speak, when we track these smaller circuits, and there’s an Indian Game Development Association, where we speak to the Google guys and we speak to various ecosystem partners, there are more than thousand game developers out there. Now while they may have one or two man shops in there, a lot of indies is no denying the fact that there is a lot more popularity of gaming in the India market currently. And interestingly, what we’ve seen in terms of the kind of deal flow that has come to us and over the last six, eight months, we’ve we’ve already seen more than 140 deals, I mean, as a as an esport, looking at 200 odd founders that we’ve already spoken with, and they’re very interestingly we have noticed that there are three kind of personas of entrepreneurs that we are seeing the first is this gaming one All found up, you know, these are founders who have been in the system for a while they’ve been big, you know, they started building flash games and they started there. And there were two kinds even within that the ones which kind of focused on, you know, small, low quality games and then started building for the global markets. And then there were the second kind of founders who started using familiar Indian game mechanics and started building popular card games into became incumbents now, whether it’s games like rummy or as a genre or theme party etc. In India, which are very popular, and there is that kind of entrepreneurial, which is also seen the Indian games industry to multiple false starts. So there are a lot, there are a lot more sceptical, a little bit more cynical, and, and a lot more, I guess, guarded in terms of the bets that they’re taking. And we have two other kinds of entrepreneurs that we’ve seen. The second is a experienced PM, who’s coming from gaming companies, or these are second time founders from adjacent industries, who are now coming into into gaming. This is also a function of the fact that India has now seen one entire lifecycle of a venture fund, for example, it is already seen 10 years of startup ecosystem investing, and now you’ve got a lot more liquidity in the system, you’ve got a lot more sophistication in terms of building companies, hiring people, scaling, analytics, etc. And you seen those kind of founders now coming into the gaming space, complemented with the product managers from games, companies like Zynga or a blue or EA, and those guys now building games. And then there’s a third kind, which are like these Gen Z founders. And these are founders who are millennials who have grown up playing Clash of Clans, and they have been exposed to Minecraft and Roblox and now these guys have a very inherent understanding of what it takes to build games and game mechanics. And we find that the latter two categories are the ones who are making the oldest pets. And they’re also now being able to raise that capital to support them. And and I think that’s, that’s where, you know, the inflection point in terms of supply has has been hit as well. And it’s only going to grow.

Joakim Achren 22:15 Yeah, that’s really interesting. And thinking about that ecosystem, like evolving, growing. Let me guys now playing a role there. What do you think, is, as well needed to take the ecosystem of the entrepreneurship the games company building to the next level? Do it? Is there some components that you see lacking in the Indian market?

Salone Sehgal 22:41 Well, capital, of course, Indian gaming creatives and creators have been undercapitalized. I mean, over the last five years, there’s been a little bit over the 300 and $50 million, which have been invested in the market. So and majority of that has come within the last 24 to 18 months now, things are obviously changing this year, there have already been to companies which have ordered, you know, raised massive rounds, including one one bed made by makers fund, and obviously, the deal by bit craft as well. So as you start seeing a lot more capital going into the market, there’s obviously that’s one constraint, the second has been typically access to talent, access to best practices, the access to analytical sophistication, the mentality of building successful games, right, where you have rapid iteration and ability to take feedback, etc, all of that has to come in. And all of it comes when the ecosystem matures. And this can be via, you know, mentoring, it can be by accelerator programmes via just the education and hearing success and failure stories around you or, and via funds like us, who are here to support and give back to the ecosystem and as as much as we can. And we you know, we’re always encouraging founders to think beyond a single product and really think about building a company. And that’s where, you know, we as a guy comes in, it’s purely it’s, it’s still early, it’s a developing ecosystem where we’ve been approached by a number of funds globally, to partner for the India market. And we do believe that the next, you know, 12 to 18 months are going to see a lot more activity, at least in the gaming ecosystem.

Joakim Achren 24:18 Yeah, like, I’ve been recently writing a lot about angel investing. How do you see that field evolving now? When, like, India has the tech tech infrastructure to actually people to play a lot of online games and it’s not a barrier anymore. What about like, angel investing coming outside of the country even to back these founders

Salone Sehgal 24:44 India is maybe undercapitalized for gaming, but India as a market for venture is extremely well capitalised. In fact, there are now you know, all the global funds have presence in India, whether it’s the sequoias, the XL, the matrix, the lightspeed, they’re all very active in the market and they have all seeded some fantastic success stories, whether it’s an oil or whether it’s a buy juice and all of these companies which are now you know, deca corns etc, which are heading out for global markets. So clearly their ambition has been catalysed by the company by the funds which are playing in the market. And, and there is now been an increasing interest for angel investors coming into the market a lot more risk appetite. So, and especially surprisingly, during COVID, we’ve been seeing platforms which are sourcing, at least investor capital have actually seen greater, greater allocations as a lot more rush towards allocating capital, perhaps, to some extent, riskier assets, as well, contrary, and quite counterintuitive. But this, this is happening. And there’s just a lot of activity currently in the Indian ecosystem and a lot of interest also, towards game. That’s really good to hear.

Joakim Achren 25:55 Hey, let’s talk about a bit about the investing process. And the evaluation of a company. First off the founder, what kind of qualities do you look for in founders.

Salone Sehgal 26:11 So India’s a little bit of a different market for us. Given that, you know, it’s still an early, it’s a market, which is still growing. So for us, the criteria is perhaps a little bit different from what I’ve seen, at least in the Western markets, you know, I think the first criteria that we have is, you know, founders strength and creativity. So you have a lot of founders, chasing some of the existing incumbents, which have traditionally been either well funded or become profitable in India. So whether it’s a real money gaming, or whether it’s a traditional card games, industry, or whether it was fantasy gaming, which was very big in India in 2018, and yielded a unicorn in the form of dream 11. So there are a lot of new products which have come founders, which are chasing those. And I feel that we are always searching for this talented developer and creator ecosystem who are building original content and IP, who has traditionally been now been under capitalised. So we’re always on the lookout for those unique ideas. Because, you know, to be honest, building content for games is a creative business. And yes, to some extent, fast follows work a across the world in gaming, and we’ve seen that time and time again. But for us, it’s not interesting to chase be number five, or number six in a market, which is already has well entrenched players. So that’s, you know, that’s a big criteria for us. The second is, do the founders grasp the nuances of building a games business, you know, you want to see founders who actually have knowledge of the genre, and art and landscape of what they’re building. Because the craft of building games is both an art and a science, the art is the creativity, the innovation for either building, or redefining genre, and the science scientists being able to marry that with data and analytics. So and you need to understand all of these intimately, and you need to understand what it takes to succeed. So that’s often also very key criteria for us is, you know, to the grasp the nuances, and do they really understand the audience for what they’re building for? And I think another key criteria for us is the ability to take feedback and iteration cycles, you know, it’s a creative process, you you have to experiment, you have to see data, you have to fail, and you have to try again. And it’s very unlikely that you get it right, in the absolute first time. And that’s, you know, it’s a brutal process. But that’s the process of making games. And that’s very clear, that comes out very clearly, when we speak with founders, you know, good teams will have this mentality, the, you know, the not so good teams don’t necessarily have this. And if they don’t have it, it’s very difficult to inculcate in them. And then the last is the market, you know, how are you going? Well, how do you feel about the market, a lot of founders feel pressure to build products for large markets and building games that appeal to all. And to be honest, we spend a lot of time educating founders that there is merit and value in being laser focused on a particular genre, and for an audience that you really want to delight. And you can stay focused and still achieve big outcomes. And you know, again, that’s something that I feel is also a criteria for us.

Joakim Achren 29:25 Yeah, definitely. I want to talk about in your previous startup experience, the the female audience in gaming, there’s this big opportunity definitely for, you know, opening up a new market, like how will the games industry grow? It’s definitely like, not gonna be the shooter audience, probably. So how can you talk about the opportunity for developers to to attract an audience, a new audience and the ways that developers should be thinking about especially about the female audience?

Salone Sehgal 29:59 Sure. So you This is a very controversial topic when I used to when I was building my company. And that was many years, a couple of years back right now, and, and the view has changed in the market for that. And I’m very glad to see that. But at that point of time, there used to be a lot of scepticism and a lot of resistance around this idea, you know, a lot of people you should have, why do we need entertainment, which is focused on games, which are focused on a particular gender, like candy crush is, is not focused built for women, but yet it is played by women. So why do we need to have specifically a single female audiences? And you but nobody could at that point of time? Answer. My question is that is that clearly, four years in games development, the male perspective has often been the only one for building and designing games. And we have seen across other entertainment, whether it’s books, whether it’s film, that there is a appetite, and there is a obviously a demand for a certain kind of entertainment, which does appeal to a female audience. And games, being far more interactive games being far more immersive, and still get to scratch the surface of what that feminine entertainment looks like. You know, there have been multiple research studies on the way men and women game, there have been multiple studies on the motivations for male players versus female players. And I’m not saying that, you know, these are very clearly demarcated guests, there are men who like to play games to relax. And yes, there are women who like to play games to be competitive and to destroy and to shoot. But there are certain characteristics and typicality is of a particular gender when they’re approaching games. And yet, it isn’t catered to, you know, there was a very interesting research in a white paper that Google did with newzoo, maybe a year and a half, two years back, where they said that 60% of casual gamers in the US are women, but yet less than 30%, that users feel that less than 30% of games are actually built for women. Now, last year, I did this detailed research where I spoke to product managers and game designers from Supercell, through Zynga. And the consensus was that companies have yet to scratch the surface of what that entertainment looks like. It’s, it’s not about being princesses. It’s not about romances. It’s not just about catering and tending to farm animals. But there is a need to build more complex, more immersive gaming experiences and contents globally for for female or feminine audiences. And that can only happen if you have more diverse teams, which have more women in them. And you can can only happen when you’ve got a lot more women in decision making roles. Because it is very obvious to me that in order to build products and audiences for that audience, you need to have people in your team who look like that audience. And if you don’t, you’re probably likely to miss out on building.

Joakim Achren 33:01 And coming up with game ideas is so much about like connecting unique ideas. And you want to have unique people around the table early on, to reveal something that’s new and fresh for players. So that’s what I’ve been talking to a lot of startups is just bring more diverse people to the table when you’re starting a startup, the co founders don’t all all need to look like guys. Like you know,

Salone Sehgal 33:28 that’s absolutely and you know, financing has been constrained this and this is not just for gaming, right? This is women in tech as well. Now, when we floated to investors, our men, the type of games and the companies that get financed, will have a similar skew. There was this breathless talk about VR a couple of years back, but then there was a research which showed that women are four times as likely to get sick from VR devices than men because of smaller facial structures. And you know, it blocks are your spatial vision. And those are interesting aspects that you will know if you have women in your team. It’s an obvious gap, yet I feel that there is there is discussion, there is discourse, much has changed. But there is still a lot more that can be done.

Joakim Achren 34:11 Yeah. To me, it feels like it. It comes from direction of talking about the benefits on the level of how you can create like a business that pays salaries, like or is successful, in a sense when you have these kind of components in place. And diversity is one of those interesting or important components that shouldn’t be something that you later on, like worry about later or something.

Salone Sehgal 34:39 Absolutely. But diversity is so intangible, right? It’s it’s a benefit, which is so intangible, which doesn’t end it has a long term implication because in the short term, it is much easier to build a game that you’re familiar with, like diversity of needs being out of your comfort zone. I understand. I can understand it, but you know that it is it is now it’s 25 Do you want to change?

Joakim Achren 35:01 Yeah, yeah, totally. Hey, I wanted to talk to you about learning, which is a always important topic in startups, because we’re all trying to learn from what happened. And do you have approaches for becoming better at reflecting and learning from your work from your experiences.

Salone Sehgal 35:24 So I don’t necessarily know if it’s a process where we do have certain processes, at least as a fund that we operate. And of course, there are certain internal processes as an individual that I like to follow. So at least, as VCs, particularly, you spend a lot of time being front facing and talking to people and talking to founders and industry experts and managing your portfolio that we instated a rule where, you know, two days a week, or whatever two days may be, we only do deep work, which are no external facing meetings, but it is about internal reflection, it is about, you know, whether it’s doing research, whether it is going deep into a portfolio company, and helping them out whether it’s dissecting a particular potential deal. I think that’s, you know, giving yourself some space to introspect and reflect in a world where we’re constantly switched on where we’re all working from home. So there’s that line between work and home has now become blurred, that is a process that we’ve put in place to be more thoughtful, more reflective. Personally, I read a lot. So you know, my learning style is, it’s a combination of experiential, but also being able to, you know, read and learn from people who are far more knowledgeable than I am. I also meditate. It’s something if you haven’t tried, I would recommend it. It’s 30. I do 30 minutes a day in the morning, and it helps me stay sane, and it prevents my brain from being scattered all day. And yeah, to be the sound of the sound of the processor. Yeah,

Joakim Achren 36:59 I I meditated like an hour in the spring, it’s really helps. Like, if, if you want to kind of like have focus? I think that was the biggest benefit from meditation.

Salone Sehgal 37:10 Yeah, absolutely. And I think we are constantly, you know, I find we, as a species, particularly, you know, constantly switching, you know, you’re switching tasks you’re switching called your switch, you’re constantly switching and that that constant switch, and that constant multitasking often is a is a drain on your energy. And, you know, the days I don’t meditate versus the days I do I can I can really feel the difference in in just my mental framework as well.

Joakim Achren 37:37 Do you have like any tools like journaling, those kinds of things that you use for for learning purposes?

Salone Sehgal 37:44 I do like writing. So that’s I do that I you know, I have a notion account where I constantly write certain thoughts, streams, all with the intention of eventually converting into blog post, which doesn’t happen that often. But I definitely use use motion for that for capturing some thoughts and musings.

Joakim Achren 38:05 Yeah, I just went to Rome research, which is the the high end, there’s more even deep, like tools out there. For that stuff. Do you like as a VC? What’s your approach, therefore giving feedback to founders? Because usually you have this The decision is no or no for now. And yet yes, to proceed? Like, what do you specifically do at this? No, for now, stage one feedback?

Salone Sehgal 38:35 I think we will. As a rule, we have been stated, you know, having also been founders, it’s very frustrating when you don’t get clear feedback and clear signal from from investors. And you know, and also fundraising is very painful, and we are not very soul sucking exercise. And in a while, the quick, no hurts. I it’s always for the best. Because you know, you just don’t invest energy in that in that space. So first are always Our intention is to give a quick note. So there are four categories. One is a quick note, it’s, you know, out of our fund mandate, it’s out of a valuation threshold. The second is we’ve looked at the company we’ve evaluated it’s no, because of certain, you know, reasons, and we provide some feedback for it. And if it’s a no, not yet, I think we’d like to give more detailed feedback in terms of why we are saying no, and what we, you know, what are the things that we liked? And what are the things which are holding us back, sometimes, founders can change it immediately. That doesn’t happen so often. Sometimes it requires a little bit more time where, you know, they just need more time to either develop the product, further gain some more traction, maybe hire, hire a person who could change the trajectory of the company. And, you know, that kind of feedback is really important. We seem to provide founders also, you know, for us, the way we evaluate companies is very different from that of other funds. Because we’re sector focused, the conversations we can have with founders is very different from other founders, or other funds, we don’t need to be educated about the market, we don’t need to understand the mechanics of the business necessarily, because we probably familiar with it. So in fact, from the get go, we’re able to have very deep conversations with the founders, and we’re able to identify the leaders of that business or what they need pretty quickly. So even the feedback that stems from that is, we hope, valuable for founders. So that that’s how we operate.

Joakim Achren 40:36 Yeah, I think one of the anomalies in investing is when you have this fear of missing out feeling happening with with the hot startup, where, you know, there’s still room to participate in around how, what do you think about the existence of those kind of situations for for investing, and

Salone Sehgal 40:58 yeah, we’ve been in both situations very recently, to be honest, and especially as an early stage fund, right? You are, You have a certain portfolio construction, you have a certain valuation threshold, and you have only X amount of four person capital to be able to deploy. So that choice is even harder, as opposed to being in a larger fund where you, you where those are all fungible, those can move up and down. Whereas for early stage fund, it’s, it’s more difficult. And we obviously, as an early stage fund, also have to be mindful of future dilution. And, you know, if the company is a gas guzzler, and requires plenty of capital to scale, we need to solve for our economics to be commensurate to the effort we invest in the company. And, and there are companies where we suddenly see we’re talking to a company and their valuation is then you know, just in please TX, because they found another fun, which would probably come in and, you know, back then, and it’s resulted in a valuation inflation. And that has happened. And, and to be honest, it’s not a zero sum game. I mean, as a VC, you may, you know, you may find that puzzling, but as an early stage, fund, you have to stay disciplined, you know, get your portfolio construction. Right. And, you know, there are there are, unfortunately, deal economics that you have to adhere to. And yeah, you can have those situations happen. And, yeah,

Joakim Achren 42:23 yeah, like, I think that’s what I’ve also learned in the last year of doing angel investing that the portfolio approach is so healthy for everybody involved, in a sense, like, you don’t, you don’t necessarily go into around where it doesn’t make sense for you to be in that round, in a sense, like, it’s past or early, or whatever. But yeah, now it’s interesting. Hey, I got some final questions for you. salona. What’s your favourite book? And why?

Salone Sehgal 42:59 Oh, that’s interesting. One, um, you know, I have I have a favourite, it’s very difficult for me to identify a favourite book, I have always have a favourite book of the quarter, which is, you know, I’ve read this book, and it’s left an impact. And then the next one that I’ve read, you know, I’m constantly evaluating, you know, was that one better, but I just recently read this book called everybody dies. It’s by former Google data scientists. And it’s an absolutely fascinating book, where he talks about human prejudices and biases, leveraging Google Search data and history, and absolutely incredible reveal about the various eccentricities and the peculiarities of just human beings. And you know, it is or not trends, like explicit racism, matching that to Trump’s victory, you know, in prejudices against against girls versus boys. It’s super interesting, like, but very fascinating.

Joakim Achren 44:00 Yeah. So it’s, it’s not about data, but it’s all about people really,

Salone Sehgal 44:05 it is and what that data tells you about people and how your social media persona is obviously very different from your Google search history. So because you tell Google things that you will probably not tell anyone, and how he has now gone and dug deeper into Google data and try to arrive trends. It’s really fascinating. I would highly recommend the book.

Joakim Achren 44:25 Yeah, need to check it out. One out. Hey, do you have a story that has shaped you in how you approach your work today?

Salone Sehgal 44:34 Um, that’s an interesting question. Um, I think there was there were many stories when I was building my company. I think there were many stories that shaped me and the individual that I am today. I think the first one was, you know, I came from investment banking and it was a fairly male dominated career and I never felt up until at least you know, the analyst associate years. You never felt it. But as soon as you started to climb the ranks, you started to feel that come through. And you know, then I came and I found it a game company. And again, you know, you’re, you’re a woman, you’re a minority. And I was not from the games industry, I was an outsider. And the experiences that I had with respect to fundraisings, and interfacing with investors. Well, I think experiences that have shaped me. And you know, this is often an experience that I’ve heard other female founders talk about as well. And, you know, small anecdote. I remember when I was pitching my product, and my my game to certain investors, if they would say, well, and it was a product and game, which was a social world with four female audiences. And you know, I’d have investors saying, Oh, well, you know, we’re not your audience, but I’ll get my wife or girlfriend to sample it. And and then we’ll give you a feedback. And that always puzzled me because I felt you know, if I was building a blockchain startup, and if you didn’t understand that, you probably educate yourself. Yeah, no, we wouldn’t necessarily go back and say, Well, I’m going to use a sample size of one to validate your business idea. And there were many, many, many other instances where, you know, I indeed, discovered that, you know, being a female entrepreneur and being a female founder, particularly you do have those challenges, which then are eventually not very well researched, and statistic, you know, how it’s done multiple studies, and it shows in the data that comes up. there’s far more data than dollars for for women out there. And yes, I think those have shaped my chip me.

Joakim Achren 46:39 Yeah. Hey, I wanted to finalise this by asking like, if people entrepreneurs, especially in, in less represented groups in in gaming, who want to get into startups into investing, what’s the best way for them to get in contact with you?

Salone Sehgal 46:59 Um, well, I’m on social media. I’m on Twitter, I’m on LinkedIn. Also, you know, reach us via our emails are on our website, reach us at Hello at Luma ky that you can reach out to us at so feel free to drop us a message.

Joakim Achren 47:14 Great. Hey, thanks so much salena for this interview, and

Salone Sehgal 47:19 it was such a pleasure.

Joakim Achren 47:20 Best of luck to do your projects and see you soon again. Thank you. Thanks. Bye bye. The new online course pitcher games company is live on the late game developers website under courses. If you’re looking to raise funding for your game startup, I want to know what it’s all about. I recommend that you take a look. See you next time guys. Bye bye.



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