Eric Fritz came to me with a problem. He has been working with two angel investors for a year attempting to create a profitable game. He made a game for them. They kept saying metrics, he kept saying fun. The focus on metrics, and attempting to repeat Zynga’s success, didn’t go as well as they would have liked. That company has been wound down, but they offered to give my friend funds to start his own company. This is how we founded Dormouse Games.
But Eric hates business, one reason why he was emphasizing fun being on an equal level as metrics. There are many things which he does not enjoy doing; forging corporate culture, thinking about the corporate culture, how to grow a company, money management, networking with the games industry. He loves creating fun games. So he approached me to help him start a company.
I agreed to act as an adviser to take none of the start-up funds out of the company, but to handle those things which he does not handle. In return we decided on an appropriate amount of ownership (small), I would be a co-founder. I met with the Angel Investors. They put a deal on the table. And the stress began.
For him this is where having a business partner, like me, who cares and enjoys the ‘un fun’ parts of running a business, is valuable. The lawyers said the deal was completely unacceptable, and recommended Eric offer the investor’s common stock. My advice was to ignore that, Angel Investors are not going to accept shares of common stock as that represents no controlling aspect of the company, and therefore more risk.
From the investors point of view we are a super risky bet so the offer on the table was for a very large percentage of the company. I took Eric and the offer to my friend, mentor, and sometimes client (I’ve done QA and game mechanics contracting work for Tap City and Tiny Tycoon) Dave Biscelgia. Having acquired multiple rounds of funding for his own company The Tap Lab, he was a wealth of great experience and suggestions. We learned of a convertible note, the current industry standard for angel rounds of investing.
The investors felt, however, that as we are an extremely risky team (and they are correct we are completely unproven) the deal had to stand. They also stated that they were our only option for funding because we’re so risky and because our plan involves a lot of learning on our part. Our counter offers were turned down. And we realized that they were completely correct.
So we decided to become a proven team. We did accept the terms as offered, and used them to found Dormouse Games. To prove ourselves we came up with a small, quick, short game. Just for the experiance. We learned what we needed to and moved on to our next project.