7 Ways a Gaming Startup Can Succeed

You're starting a game company, and you already have an experienced team. And the idea for your first game is just great.

You go to your first meeting with a venture capitalist (VC for short). You want to raise money to start making the game. The meeting went well, and you expect to hear back from the investor within the next week.

The venture investor calls you back. They decided not to invest. They really liked your team, and the idea makes sense. They just want to see something built before investing in your company.

After the call, you ask yourself, what is 'traction' and how can I show 'traction' when the game needs to be built with investor money? And how much is enough? Let me try to clarify the rules and what needs to be done to convince a venture investor of real traction.

Traction for a Gaming Startup

Let's first define what traction is. For gaming startups, it is showing the investor evidence that your company is making progress.

The most important requirement for demonstrating progress is that the founders must approach the startup from the perspective of building a company, not just a game.

When you understand that it's about building a company, what problems often arise? What hinders their progress and prevents traction from showing?

#1 Progress in Team Formation

If the team lacks key people, such as a product specialist or a COO, you can demonstrate progress by bringing in new talent to the founder team or 'first employees'.

Many experienced people have a mortgage on a purchased apartment, children and a family to support, or other financial obligations, and they can't take a 50% pay cut. In such cases, you'll have to be creative. Maybe they'll work part-time at first or wait until you raise a seed round so they only have to take a 25% pay cut.

By showing that you have experienced people ready to join the team, you can demonstrate to investors that you have progress in team building.

#2 A Prototype is Built and Playtesting Has Begun

The sooner you can build a prototype, the better your chance to attract a seed round.

As you bring in people to test the prototype, you'll start gathering data on what works and what doesn't. All this data is evidence that you're on the right track, that you're making progress.

An excellent tool for conducting playtests on mobile devices is PlaytestCloud. They provide developers with the ability to put their game in the hands of testers from around the world.

#3 Decide on Measuring Traction

When you have a game ready for launch, you'll need to define metrics.

My first recommendation is to take the initiative in defining traction metrics for your startup.

In free-to-play games, the primary metric is player retention. How many players return to your game the day after they tried the game, called Day-1. Then you start looking at Day-3, Day-7, and so on. The more content in your game, the longer you want to retain players.

After that comes monetization, which is related to the game's user acquisition costs. These costs are important because you want your marketing spending to pay off through player monetization over a certain period.

Then you need to define benchmarks. Find out what your peers in the industry consider normal, good enough, and star metrics. Ask around, and people will share this data.

As ballpark figures for mobile free-to-play, you want Day-1 retention to be above 40%, and you want to at least have signals that ad spend can be recouped.

Once you've defined metrics and benchmarks, the work begins. Every step toward those metrics is evidence that you're moving forward.

#4 Launch Doesn't Take Forever

Let's look at an example of what not to do: A gaming startup followed advice that you build the game and finally launch it in soft launch when it's polished enough. That's when you'll start acquiring players and see engagement numbers.

If it takes 12 months to show a result, you're way too late. But that also says something about the founders. Why are they waiting so long to get the product in front of real players? Are they blinded by their belief that this game idea is too great to fail? There could be countless reasons. Maybe you're working with a partner who can't release the game until it's polished enough.

Launch the game as early as possible to get proof that you're working on something that will work.

#5 After Launch, You Don't Drag Your Feet

The company launched the game. Now they're building feature after feature, but the work seems to be going nowhere.

Many developers quickly follow others. Often they build monetization features when they still can't keep their players, because their engagement and retention numbers suck. It's like a leaky bucket. You pour in players, but they don't stay.

Work on getting players to play the game first, and then focus on progress in monetization.

#6 Making Changes When Something Isn't Working

I've often seen that tutorials don't improve a game with bad retention numbers, for example, Day-1 under 25%.

Developers who analyzed the situation, made a decision, and drastically changed their game usually achieved more significant results.

If the numbers just aren't improving, there's a chance that the game is simply a complete misfit for the market or platform. I often see that early-stage founders don't know they should pivot the company to a new type of business until it's too late.

#7 Launched the Game and Can Clearly Articulate Next Steps

Often founders don't have enough experience in the domain to understand what comes next. They may have good numbers but are unsure what to do next.

The optimal path is to quickly release updates for the game, improving retention numbers, and then tackle monetization.

Going Back to the Investor

Even if the investor passed, you can keep them updated. The key point they'll want to hear is that you've made progress. Repeat this process until you get a 'yes' from investors.

Once funding is secured, you should continue the same process. You must be prepared to keep demonstrating progress to existing investors and investors in future funding rounds.