In case you had not noticed, there is an avalanche of deals this year around the social gaming and virtual world’s area. Some recent investment rounds like the Big Fish Games one are very large (83 million $). Fellow entrepreneur Jussi Laakkonen did a list of a lot of the deals on his blog here.
Of course given that Erepublik is a massive multiplayer online strategy game based on a mirror world, it is right in the middle of that hot space, although we take a different approach to most (the reverse approach). So I am obviously excited by the interest of the investment community for our sector.
This is of course good news. On the other hand I do worry about the size of some of the deals. Of course I can understand the logic of trying to raise as much money as possible in particular in times of financial crisis. I don’t understand it just from a security perspective (ie: surviving); I understand it in particular from an opportunity one and there are more opportunities in times of crisis. But I still do worry that too much money can also be a bad thing. I have been involved in both over funded and slightly under funded start ups before and I have to say that the later are often more creative and have a better ROI. Also another danger of doing a very large round is that you might set unrealistic expectations on how much your business might be worth both for your investors but also for the people in your team. The pressure around that might actually make you a less successful company or even kill you, forcing you to take decisions at the wrong time or worse ones that are just wrong. I have some of my entrepreneur friends that have lived that situation and that is a very bad one to be in.
For Erepublik, we are in advanced beta and about to launch V1 and have had pretty good momentum so far. So after bootstrapping the company we had a relatively easy angel round and are lucky enough to be receiving a lot of interest to do another round.
So for the Erepublik institutional round (yes we do plan to do one) we will be careful to aim for the right balance between having enough cash to seize opportunities but not to much, so that we don’t loose our creative edge and our common sense :o)