We are a group of angel investors who pool their financial resources and expertise to invest collectively in video game startup studios.
Our members are investors, high-net-worth individuals who provide capital for startups in exchange for a share in future revenue.
The Video Game Funding Problem
Good games are not being made due to the misalignment of the investment and the game studios.
The misalignment comes from a financing model that is not aligned with how games succeed.
Equity financing only gets the ROI when the company is sold, either via acquisition or to the public (IPO).
The value of that future acquisition is based on revenue that comes from hits, short term not long term, AND gamers move on. Investors want to sell the studio to get real money not just spreadsheet money. So they push all revenue. Now.
Game studios lose twice.
(1) If they push all revenues now, the game will not be good and gamers will feel like they have been taken advantage of because they have. There is nothing worse than a scorned gamer.
(2) The game studio sticks to their vision to make a good game, the patience runs out, the money gets turned off, and it never gets done.
Either way, the studio closes, they either make a bad game, losing money from bad reviews, also losing the ability to make another, or the investment runs out and the studio never finishes the game.
One Possible Solution
The studio and the investors need alignment on what creates a good game.
A good game makes money as it also creates a future while it’s being bought now by satisfied gamers. It has both a short-term effect in that a good game gets instant word of mouth (revenue) and long-term, as it also builds trust in the studio (value). It’s not about one or the other, it’s both.
Good Alignment Maximum Effect.
Good Alignment Means Everything.
Yes, we made up a “backronym”.
GAME Financing is a possible solution.
Ready to Invest? Curious?
About LevelUP Games Syndicate
The Level Up Angel Syndicate is a group of angel investors who pool their financial resources and expertise to invest collectively in video game startup studios.
Our members are investors, high-net-worth individuals who provide capital for startups in exchange for a share in future revenue.
LevelUp Game Syndicate is led by a team of experts in the gaming industry.
How the Syndicate Works
After you join, LevelUp Games sources, curates and filters deal flow for you. You will receive deal memos in your email inbox.
You can select which deal pitches in the form of online webinars to attend and/or review on recorded video. As a member of the LevelUp Syndicate, you decide and then invest as an individual.
Our Angel syndicate allows you to spread your risk across multiple investments while potentially increasing your influence, portfolio mix and access to qualified deal flow.
Overview of the GAME Investment Terms
Your investment is used to build, market and launch the game. Your Investment gets paid back as a share of revenue, typically at a higher rate until you get your initial investment re-paid. The investment gets paid back every time a game is sold. No waiting, no fantasy unicorns, pipe dream exits or Series D funding.
In contrast to pre-seed and seed tech investing via convertible notes, or equity purchases, game investments are returned as a percentage of game sales. The method operates similarly to an unsecured loan, yet the interest is in the form of revenue share, and the timeline is shortened.
SAFE vs. GAME
The SAFE is future equity, a discounted share, valued and paid at the time of acquisition. It’s spreadsheet money until the company gets bought.
The GAME is not equity, it is calculated revenue share. It’s like a loan, but the payback is at every sale.
Here is how the GAME terms work
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The Principal is returned via revenue share upon game launch. The revenue share enables the company to operate effectively, maintain profitability, and continue expected growth.
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The Return on Investment (ROI) is returned via revenue share after Principal Payback. The revenue share enables the company to operate effectively, maintain profitability, and continue expected growth.
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The Royalty is generated via revenue share perpetually for the life of the game.
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The Right of Pro-rata Participation to invest in the studio’s future games and equity in the studio.
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The Principal amount is structured as debt related to Iris Road Studio LLC, and the Principal is paid back from all revenues, the Return on Investment (ROI) portion and ongoing Royalty payment comes from the game specific revenue. As an example, if the first game does not pay back the initial principal fully, the revenue from the second game pays the principal debt based on FIFO.
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The Triggering Event clause is in place if the studio gets acquired prior to your payout.
Example GAME terms & calculations
Principal payback period: 80% of Net Revenue until the principal is paid.Return on Investment payback (ROI): 30% of Net Revenue until a 50% return (1.5X) Perpetual payback: 5% Royalty for the life of the game with no Royalty Cap.
There are six variables:
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Investment Amount $ (The Principal)
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Principal % – This is the % of revenue that gets paid back on every sale until the investment amount is paid.
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ROI $ – The negotiated dollar amount expected to return on top of the principal
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ROI % – this is the % of revenue that gets paid back on every sale until the ROI $ amount is paid.
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Royal % – This is the % of revenue that gets paid back on every sale until the Royalty Cap is paid.
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Royalty Cap $ – A maximum amount to be paid from royalty. This can also be set to “no cap”, where the royalty pays forever.
Utilizing a detailed P&L financial model below are the anticipated payback periods
Investment $1.5M / Launch – Month 16
Principal
Months: 16 – 18
Units: 83K
Revenue (a): $1.9MM
Payback %: 80%
Payback $: $1.5MM
Return on Investment
Months: 19 – 29
Units Sold: 110K
Revenue (a): $2.3MM
Payback %: 30%
Payback $: $750K
Royalty
Months: 30 – 48+
Units: 62K
Revenue (a): $467K
Payback %: 5%
Payback $: $23K