SM: How did you finance the different phases of the company? Seed? Angel? VC? Corporate?
JW: I supplied a very small amount of seed capital that basically covered expenses while we secured our first round of venture funding. The $5 million Series A was led by Trinity Ventures and Mayfield Fund in mid-2004. Rustic Canyon led a $5 million Series B in December 2005.
SM: What financing stage are you at right now? Will you be raising more money? What timeframe? What is your ideal investor?
JW: PlayFirst is approaching profitability. We may raise growth capital at some point, but this is not currently a focus.
SM: You are in a “Hits” business. It’s like films. You have to produce hits to be able to keep growing. Silicon Valley VCs largely hated that model. How did you get past that in your initial funding?
JW: Well, Semiconductor is also a hits business … you spend $20 Million and then figure out whether the chip is a success or not!
SM: You got that logic from Gus 🙂
JW: Yes, but you know what I am saying, right? Also, we are not “just” in the hits business. We also also spreading the risk across and diversifying the revenue stream by selling other people’s games, as well as taking a portfolio approach with multiple titles in parallel.
SM: Yes, in that sense, your risks are lower than the semiconductor industry, because these days, its takes 20-30 Million to bring one chip to the market. There’s not much room for spreading risks. You only need 250k per title. They need Millions.
JW: Yes. But I think VCs are actually starting to even take the $20-$30 Million risks on games. The Massively Multi-player games cost that much to build, and they are investing in MPP games now.