# 15 Advice from a Founder on Fundraising for your Web3 Gaming Startup w/Kam Punia from Pixion / Fableborne

In this community call from the Gaming Startup Collective, we share a conversation with Kam Punia to talk about Web3 gaming fundraising best practices for first time founders and small teams.

Join the conversation 
https://discord.com/invite/FHZzMfBBqa

Follow Kam and his work
Linkedin - https://www.linkedin.com/in/karmveerpunia/
Fableborne - https://fableborne.com/
Pixion - https://pixiongames.com/

Follow us on Twitter - https://twitter.com/GamingStartUp_

Transcript

0:00

Awesome. So I want to be respectful of your time. Uh, I think we snagged 30 minutes and we'll probably have some folks kind of trickling in as we go. But, um, if you want, let me kind of give like a quick intro to what we're trying to do here. And then we can kind of get right into the, uh, question answer stuff. Yeah, let's go. All right. Um, yeah, so my name's no autopilot. I attempted to, um, become a first time founder earlier this year. Was working on a layer three, um, blockchain, um, that we were hoping to roll up immutable as immutable rolled up Ethereum. And through that process, we really struggled with a lot of different things, made a lot of mistakes and ultimately kind of had to put it on hold. And at the end of it, I wished that there was a place I could go to get advice from people who have kind of. I've done this before to make my journey a little less painful. Um, so we created the gaming startup collective, which is where you are right now. Uh, 90 percent of the folks in here are founders. So they run the gamut between, you know, successfully exited first time founders, a single dev, and it's all around web three gaming. Um, so yeah, so we, we invite folks like yourself to come in, share information with us and we record these sessions, put it up on our socials and trying to disseminate to founders to hopefully help them as well in, in their journeys. But yeah. Awesome. Yeah. I think a great, great initiative. Like you say. There's a lot of founders out there and, um, I think that a lot of us feel the same way about it. It's a lonely journey, there's a lot of mistakes, but you have to bear the brunt of all of them, all the good and the bad. And, um, Having a really close peer network that understand, you know, the decision making and context switching and the challenges that just come with being a founder. Uh, you know, it's great to have. So I'm super happy to be here and great to see someone like yourself putting in and building a resource for everyone else. Yeah. Well, and thank you too for, for coming in and joining us. Um, Graslow, if you want, by the way, so if you want to come up to the stage, if you have questions to ask, like, just raise your hand. This is very casual. Hey, Davey. Uh, same for you, Davey. If you want to come up, if you have questions to ask, feel free. Um, while we're doing that, I have a couple of initial questions for you. So if you can, can, can you just give us like a quick rundown on Pixian and what kind of your journey has been to create the studio and at least for me, you know, I saw the news of your, uh, raise this past summer and it was like a beacon of hope in a very, very bleak market. So I would love to. Yeah, get, get more into that as well if you can. Yeah, sure. Uh, so my background, fortunately I've, I've been in gaming for, you know, my entire career and I, it's almost 15 years now and my, my first gig in the, the gaming industry was, again, super fortunate. I was a game designer at Konami, a Japanese game studio, and I was working on two of their IPs as a game designer. Firstly, Silent Hill, uh, on console. And then eventually moved. To working with konami and kojima productions on the metal gear series And that was a great learning experience because I was working on two huge family ips that had a huge amount of history Big budgets, but very big expectations, too And so I did that for a few years before then transitioning from the product side to the more operational side and that's where right place right time konami was taking over the yugioh brand, which is Best known for its anime and maybe TCG's and they were about to launch. All their Yu Gi Oh, I guess their Yu Gi Oh brand in in Europe and luckily I was given the role to build the European division for Yu Gi Oh um I still question as to why they gave me the role because I had no operational experience at that time But they saw something there and it helped that I did a good job as a game designer I always spent a lot of time trying to learn and do more outside of my role And of course I was And also someone that used to import a Yu Gi Oh! trading card when I was younger from I knew a little about a game and maybe that, that helped, uh, and, and that was an incredible experience because we went from zero, um, to over 75 people internally, 50 externally, uh, hundreds of million in revenue per year, uh, budgets that are several million per year. And the goal was we want to overtake Pokemon as the, in terms of. Uh, gross revenue. Um, and so we wanted to not only do that, but build Yu Gi Oh! as a brand, as one of the best and well known PCG brands in the space. Fortunately, we did that in free, and we overtook Magic the Gathering and Pokemon in gross sales. We overtook them in terms of airtime, and we took a few of their primetime slots on European TV. We built out, and this is probably the thing that I was most passionate about, we built out what was our grassroots, um, competitive, what we called organized play, and now we call it esports, but 12 years ago, no one called the East back then. And so that was really working with small bricks and mortar stores, tolerant organizers to give them the tools to be able to run. Yu Gi Oh! clubs, the Yu Gi Oh! tournaments, whether it was for four players, six players, 128 players, they all had different skills. And that really created this, you know, really strong grassroots ecosystem that propelled us. And like I say, that was a great learning experience. I was able to build, launch, and scale a massive brand and everything from the hiring to building the marketing, BD team, the sales, the product. Expanding across different verticals from the PC to the animator. I remember licensing toys to the video games or mobile. So it was a an incredible experience and that's after after five years. I I learned okay That's a real knowledge gap that I did have that i've now been able to to plug and I feel confident in myself as a founder uh, or as an individual to now be a founder and start pixion and so that's when I took the leap and Here I am with pixion Wow, you know, you know what's interesting about your story is it um, there's there's no shortcuts You know, like you didn't jump 10 steps, like you put in the time really within all these different positions, kind of leveling up your skills, maybe jumping into things that you weren't entirely prepared for, but then like being successful, like digging deep to find a way to be successful and you have the results to kind of prove it. Which, I think, and I guess correct me if I'm wrong, but I would think when you go to teams around fundraising for your own project, those are, especially in the early stages, those are things that they So, yeah. Uh, weigh very heavily in their decision making on, you know, potentially supporting you in, in your journey. Yeah, for sure. I, I think that that experience, you know, was really important. And, um, one, one thing that I, I'd say is, was, was fortunate for me is that, you know, I, I, I was almost from a training wheel, the building. This huge brand and those huge expectation, but I also had a huge amount of resource and support. I could eventually lean on to, you know, this is a public listed company with billions of dollars in revenue and expectation is. You come out swinging and you make hundreds of millions of dollars a year. Uh, and, and you know, they have goals like overtake Pokemon, you know, that that's not, it's a big something. It's a big goal, would've ambition to do. And so, um, that gave me, I guess a, sort of a safety net where I knew if I made errors or if I made it a wrong decision. They had the resources to help me, you know, back myself up and get out of it. And that's a completely different story like as as you know when it comes to startup life where One dollar has to be worth a thousand dollars You know, you have to have a different level of resilience Uh, and you have to jump into, I think, different characteristics of yourself to find, like I say, stretch as much efficiency out of every fiber you have and everything that you're able to build. So, for like, teams, I guess it's kind of a hard question to answer because there's so many different ways, or so many different types of people right now who are building. So like, you have maybe someone who's making their first game. Then you have... Maybe people who have built products in web two, like with well known studios. They're like creating MVPs, like playable MVPs or getting like some initial community traction. Um, what would you, I guess, what advice would you give those early stage founders on how to think about getting, getting to the point where they can successfully raise Their seed round, like, like what steps would you say you have to check these boxes before you go knocking on doors? Or it's, you know, it's kind of a waste of time. Yeah, I think it's a, I'd say there's no 1 size fits all, but I can definitely provide like a general schema of what I see and what I know from speaking to, you know, hundreds of investors over the last few years. First, I'd say don't go into your seed round, raise a pre seed round and, and work with and bring on incredible angel investors, because those angel investors are really going to work for you. If you find the right ones that are really aligned, they're going to be an incredible resource. And we're lucky that we went that way. And I was able to call upon, you know, the VP of King and the director of marketing at King and they scaled King and Candy Crush. You know, they were at King before it was. the behemoth that was sold to Blizzard, um, what, seven, eight years ago now. And so they have some incredible history and a track record for me to be able to now just try and knowledge share and soundboard off. Um, and those first seven, eight months after we brought them on board, Not only does it give us even more credibility, you know, because now we've got these incredible investors that have built billion dollar or incredible angels that themselves have been in the operational speed, have built billion dollar companies or have been influential in building billion dollar companies, and they've backed us when we've got, you know, nothing more than an idea. And so that I think is important in in the narrative and coming into your priest into your feed round. I mean, I'd say some of the things that you want to be able to check off is, you know, the more validation you can show the better. Of course, investors are always. Investing early on, you know, is a risky business, but investors are risk averse, you know, if they could, they'd want as much validation, as much proof points as you can show them, so they can hedge against and say, okay, well, this is a team that I can bet on. But having said that. Depending on things like valuations, I think if you if you don't have maybe the background of someone that has been in the industry and someone that has been able to scale or have success, then I'd say you definitely have to go down the route of proving yourself a lot more and showing that there's validation in the idea that you have. Um, you know, there's ex VPs at Blizzard and Riot and they come out and they go to A16Z and they raise 20 million with just uh, an idea and their portfolio and their background and That continues to still be a case for some of them, but for those that aren't VPs at Riot, uh, for the last 10 years, yeah, I'd say first have, if you can, um, validation from Angels that they back you.'cause that's going to create a more credible story for investors to say, okay, I want to follow, um, going into your feed. The second is have more than just a pitch deck. It's really important. That you've got more than an idea at this stage, uh, if even if it's a playable demo, even if you've only, um, shared it with a small discord server, even if it's a friend and family or qualitative or quantitative feedback, however, you've been able to do it, you know, some. I guess, proof points that you've been able to validate your thesis and your vision in the product that you're building. Interesting. Okay. So, um, in, in my time, I have not interacted with angels. Uh, we went from bootstrap and again, I told you, we made a lot of mistakes. We went straight from bootstrap to trying to raise 3 million in a bear market as first time founders. Not, not the best, not the best plan. Um, but for, for someone who maybe doesn't have a network of angels just yet. But you built something, you validated that the market's kind of reacting to it positively. Like how, how would you advise someone to find angels? Like how to start those conversations. Yeah, sure. I mean, we're, we're blessed that we're in, you know, a digital age where everyone is either an email or ping a DM away. Now, not everyone will, of course, respond, but there's no shying away. You just need to put the hours in, uh, you know, actually one of our early angel investors. I, I actually got through to him those. Because i messaged him on an app about sports that we were both on and we were both talking about sports and then we realized well i've been in the gaming industry and actually he's just built and he's building a billion dollar plus company a king. That is just executed. And so that's when we started to talk about gaming. Um, and that's when I started to talk about pixie on. And so, you know, reach far and wide, you, but you have to put the hours in, you have to just go knocking on doors, connecting on linkedin. Uh getting warm recommendations from your peers and eventually that network effect grows, right? And so today you might have a small network, but if every day and I was doing this as part of my role So I would do My day to day job at pixeon and then at maybe nine ten eleven i'd spend one and a half two hours Just completely bd just networking where that's online with that Going to local workshops, conversations, um, meetups, whether that's just pulling out 100 DMs that night to speak to or get introductions, every single day I would do that, and I did that for over a year, and that was on top of obviously me already having. Fortunately, quite an expansive network from my time already being at an army and being in the industry. And when you're at Konami, you know, everyone wants to speak to you because you're a billion dollar plus public listed company. And I was in a leadership position for Europe, and so it's much easier to build those connections. Right. But as a startup founder, maybe if you don't have that, right. That background, you know, you just have to hustle and there's, there's no way around it. There's no magic formula. You have to hit the ground. It's nice to hear like that validated. So when, when we were raising, I had, uh, actually it's in the discord somewhere. It's a list of like 250 VCs. And I would chase them down to the best of my ability across LinkedIn or Twitter DMs or whatever. And at times it's hard because, you know, obviously the response rate is very low. But then you start wondering, man, is there a smarter way to do this? Like, is there a more efficient way? Should I be spending this time improving my product and then like circle back? Like there's just a lot of things that I think... I overcomplicated maybe trying to find a shortcut and to your point, there is no shortcut. Just, just keep going. Yeah, like I say, you know, 1 plus 1 equals 2 and you keep doing that every single day. Eventually, it really adds up. So, you create that compounding effect and um, you know, I'd love to be able to go from 0 to 100, but like you say, there's no shortcut and um, you just have to put in the hard work. I wouldn't see as, you know, um, separating what you just said, whereas, you know, should I spend time on my product? Yes, you should spend time on your product. And then, like I say, after I finished my day at maybe 8, 9 PM, I go right now, this is my networking time. This is where I grow the value that I can bring to the studio by the connections and the people that I can connect to. And so see that as a really important part of any, any founders role. Interesting. Yeah. So, so it's almost like, I mean, so you have your like, um, what do they call it? It's like a builder manager schedule in essence. It's like, you have your focus build time and then you have your focus BD time and you know, it more than likely is going to be an exceptionally long day, but you know, that, that is the life of running your own company versus working at nine to five for somebody else. Yeah. I mean, I, I I'm, I'm all full balance, right. But Equally, I think any startup founder, I'd be lying if I'd say, you know, try and strive for a balanced work life environment because it's not going to happen. I've, I've not found it personally, and I don't know how are you finding this first few years. I think you have to realize that the first few years are going to be unbalanced and that's okay. You know, I personally think that's okay as long as you don't do that for, you know, decades or even. You, you don't go past the threshold where you know, okay, this is now detrimental to my own health, my own mental sanity. So you have to know yourself, but I don't think you can realistically go into starting your own studio or your own company, or business, whatever it may be, thinking, well, you know, I'm going to, I'm going to clock in at nine and finish at five and, uh, I'll come back tomorrow. Because ultimately everyone else isn't doing that. And, and, and while you're, you know, clocking off at five. People are starting, like i say, their BD time, they're starting to build on their product, they're looking at research, they're doing something else, and they're getting ahead. And you're also then competing against much bigger incumbents, right, that have more people, more resource, more time, more money, more data. Um, maybe more knowledge. And so one thing you can beat them at is speed and time. You can put in more time and you can work faster because you're a small agile team that you don't have the bureaucracy or the red tape to navigate. You just make decisions. You go and you move forward and execute. Oh, so I told you we record these sessions. That last little segment is going to be cut into its own little short and shared. Cause I feel like that is. That is awesome. Like, we don't have the big budgets of everybody else, but you can work harder and you can work faster. Be more nimble. Yeah, exactly. I think, you know, that's every startup's superpower. And it's one of those challenges as you scale, you need to figure out, you know, how do we still remain nimble while, um, obviously being able to do more, uh, and tackle more vertical or, um, let's see here. So we have 7 minutes, by the way, folks. So if you have any questions you want me to ask. That I haven't already covered, just drop them in the chat box or come up to the stage either way. Um, when, when these teams are approaching angels pre seed round, uh, should they be demonstrating revenue at that point? Or is it understandable? Like the stage is so early. So it's, it's very, um, it's a lot more projections than actual income at that point. Yeah, sure. So. I'd say if you have revenue, great, you're raising an investment is, you know, negotiation, particularly at that stage. But if you have revenue, and it's it's strong revenue about showing month on month growth and double digit growth, then even better. It just puts me in a more powerful negotiation. But I would say certainly a, a pre-seed and even seed full gaming specifically, I, I won't reference other sectors because I'm not as knowledgeable in there. Um, but for gaming, I'd be really surprised if an investor is telling you, Hey, I, I can't invest because you, you're not on, you know, 1 million a month run rate or a hundred KA month run rate. Uh, generally at that point. Investors are backing you, your vision, the team, and the belief that you can execute on the vision that you have. Um, if you don't have that track record, then of course, adding a few more strings to your bow will help, like a demo that's really polished, maybe some incremental revenue, maybe validation that you've got a thriving Discord server and the community is super hot and they can't wait for your game. You know, just doing some validation in some area. That this is something that's that's backable and it can do well A pet peeve of mine is when investors ask you it's a complete waste of the founder's time, by the way, and I I I challenge every founder to have the courage to say this is Bullshit um And and not to give any forecasts that definitely precede round because anything you say I say When you've not got your your business and your product up and running when you've got no users playing The numbers that you you forecast are, you know, absolute rubbish That's not disrespectful to you. The numbers I'd give are rubbish because they're so hypothetical They're based on so much theory that the reality is going to be very different And so all it does is it just waste the founder time unless an investor is wanting to gauge your commercial acumen. Then sure, maybe that's an exercise that's worthwhile, but you could ask them if that's something that that's the goal, because if it's, hey, tell me, I'm going to make 10 million next month. Anyone can do that. Doesn't mean you will, right? So the numbers really mean nothing at precede stage. I didn't say it's the stage. It's only once the product launch and you've got monetization in, Okay. That you can then start forecasting what your, your payback cycles are, and it's based on your game, not what you're seeing on SensorTower or Data AI or some, um, report that's been given to us by a third party because, you know, that's not your game, it's other studios games, and that can give you directional insight as to, uh, Maybe the capabilities and the potential, but it forecasts, like I say, the personal pet peeve of mine. We had the VC and one of the things we talked about were like moving milestones. So, you know, 1st, it was, you have to have a playable demo and then you show them the playable demo. It's like, well, now you need to show, you know, user engagement. So you come back, show the user engagement. And so it's like. Um, staking, staking like your flag in the ground as to having confidence going into those negotiations and not chasing their metrics. But, you know. Really having the courage to lead the conversation, lead the negotiation as best you can. Um, yeah, it's it's a really Good lesson and one that I also learned pretty quickly is that move on fast You know learn and figure out is this investor interested? And if they aren't just move on because they're just now eating into a time that you could spend with an investor that is actually really excited about what you're doing. And ultimately you only need a couple of yeses depending on how much you're raising. And so spending your time chasing a no, and. Raising around the funding is already a big time sink that distracts you from, you know, your operational and core responsibilities, depending on your role within the studio. And so, yeah, I would say, figure, figure out who's really interested. And if they're not, I know. Instinctively, we always think, well, maybe I can persuade them or change that note to a yes, but investors won't say. Give you a clear signal that, hey, it's too early, or we need to see X, Y, Z, just move on, um, obviously keep the door open, remain, um, professional, keep the lead warm, because you never know that they might be interested in 2 months time, and we've had that before, and invested to tell us no, and then 6 months later, they saw what we were building, they played it, we progressed and shown validation, and went around, and so, I think it's, yeah, it's, it's, it's always a challenging time fundraising, but, um, like I say. Have a clear plan and move on from the conversation if it seems like it's not moving forward. All right, cam. So we are at the 30 minute mark. Um, if if you have time and don't feel obligated, it looks like we have 2 remaining questions. Um, yeah, I have, I know Davies here as well, and I have 10 more minutes. So why don't we try back through the questions and Davey if you have 1, happy to try and answer that as well. Yeah, go ahead, Davey. Thank you. This has been extremely rewarding. Of course. Uh, you said a couple of insights. I'm a builder. I'm a dev. You said you gave a couple of insights that are not new, but which I need to keep being reminded of one of those is that, um, investors aren't going to hunt you down unless you make the news somewhere and somehow haven't been invested in yet, which means you do need to have the marketing and you do need to be building your audience instead of just debbing and making something really cool. I've fallen victim to that many times. And the second, it sounds like, uh, the process itself, because you want to be able to move on quickly, um, is to is to have a good pipeline of, um, the people to reach out to so that you can really be efficient with your time, um, schedule the meetings or make contact, schedule the meetings, have the meetings, move on, et cetera. So those are a couple of new insights for me from a developer perspective that were very valuable. Thank you. Yeah, no problem. I think for me sharing a little more, what I do is I have a spreadsheet and I actually rank. The investors specifically for what we're doing and who I think would provide the most value add. Um, and then as much as I can, I try and have meetings as close to back to back in a period of time. And so it might be. In the next 4 weeks, I want to speak to 75, 80, 90 investors. Um, and so I will luckily be able to reach out if I have a connection with them and book my calls. And then, of course, there's follow ups, and then there's demos, and then there's meetings with general partners, if I'm not already speaking to a general partner, but I would say, try and treat this as like a time box task. Of course, it's always going to run over because it's not something that you have full control of, you know, there's If you speak to 100 investors, there's 100 diaries and calendars that you have to try and work around too, but as much as you can, get your list of investors, know who's there that you want to speak to, timebox it and say, I want to try and get through this in the next X amount of time. Um, and hopefully that means that you have a very clear goal every day. Every day and every week, we have a number of calls and hopefully get closer to that. Yes. Great. Great answers. Great conversation to, um, we had another 1 from building dwarf. Any advice around tokenomics when you go in for, let's say, your angel or your pre seed round? Um, what I have heard is making sure, like, the vesting schedule, the cliffs are in alignment with the core team. So you don't have to worry about, like, who's rugging who. Um, any other, I guess, uh, best practices or feedback around this? Yes, I would say... We were quite, what's the right word? We were, we were quite bullish on ourselves that we were going to go into fundraising saying that we actually have no token on it. And that's what we did. And the reason why we did that is, firstly, we've been able to learn a lot, obviously, like, I'm sure of what's happened over the last few years and see what worked and what hasn't, a lot hasn't. But equally, when we think about building economies that are, you know, open economies, it means that players are able to enter and exit at points where you've not really designed for that to happen. And so... I personally and the team internally, we don't believe an open economy can be really balanced. Uh, However, what we're looking for is do we have levers in our metagame in our progression in the core game itself? That allow us to you know Counter any inflation pressure on the token, for example We won't know that until we've actually got the game live and we're able to measure with players month on month And make those tweaks ourself with maybe soft or hard currency and then we have a lot of data to be able to distill and go through that gives us a clear insight into well, can we launch a token and will it actually be something that we can manage not balance. Can we manage it? And do we have a game that allows us to manage it? Is it deep enough? Are there enough sources and things that will allow us to still continue functioning with this token and not destroy the game? Because that's what's happened a lot, right? Where you've got a lot of games, and some of them are actually really cool and fun, but. Because they don't have enough sources or enough things in most cases, that token just has very little utility that's backing it. And so it's therefore not resilient to any price action movement that you're seeing in the market. It's almost completely dependent, and that's why you see nearly all tokens once we hit the bear market drop to, you know, 90 plus percent, um, to what they were at all time highs. And so, I think our stance was we're not going to launch token yet. We don't know if we're going to launch token yet Um, we're going to make that decision though once we've launched and we're not going to Entertain anything before that and so if that's something you're you're cool with great If it's not we're not the right project for you. You're not the right investor for us. And so I think have have I guess An understanding of whether you want. To take that risk now, uh, whether you want to build a token before you've got a game. Personally, I'd always say no, because it's almost impossible for you to have all the answers and your game is absolutely going to change from what, what you think it is right now. And, uh, I would then say, you know, if you are going with tokenomics, then of course, like, like autopilot said, is making sure that you've got a clear investing schedule, knowing that the incentives are aligned with you and the investors that would come on board. And so you're not building something. So investors can just dump on you and your community in 12 months time or vice versa, because investors will spot that. Uh, and it will be, um, it'll be something that will turn them away. So, hopefully that helps. My, my stance, like I say, for Pixian was, I think, an unusual one. We were very adamant that there's no token, uh, and it's not something that we're going to be discussing until the game is launched. You can really sense, like, the, uh, the confidence that you and your team bring into these things because of... Like your experience. And I think that's what a lot of, a lot of, well, I know I missed. So when some VCs would pressure me about like token generation events and. You know how quickly they can get it. I wasn't as steadfast as I probably should have been, which I mean, that's a red flag, right? Because an investor first saying, Hey, look, when can I get these tokens that you're already selling to me at a huge discount, most likely, uh, compared to what it will be a public, uh, when can I get them? You know, why do they need to know that? And why are they interested? Because for you as a studio or certainly for us, we're here to build long term value. And so our timeframe is a month, it's a year. And so if an investor is saying, Hey, how do I get some exit liquidity in the next six months? Already, there's complete misalignment. Uh, and we've actually said no to investors, uh, and it's difficult, you know, particularly in the spare market where we wanted the capital and we needed the capital, saying no to investors that are ready to put money in was, was tough. Um, but again, we think long term and, um, it was, it was for us, I think the best decision because there's clear misalignment. We're not right for them and they're not right for us. Alright guys, I'm gonna go ahead, I'm gonna cut it, I'm gonna make sure I get Cam out of here on time, um, Cam, thank you, uh, so much for, for joining us, um, as an aside, your game is the only Web3 game that I've played so long that my phone battery died. Twice. So, uh, really love what you guys are doing over there. Appreciate it. Thanks. All kind words. Yeah. All right, everybody. That's a wrap. Y'all have a great rest of your morning, afternoon, evening, and we'll see you next time. Peace.