Petri Lehmuskoski's presentation at the GameSpring event in Oulu, 22.3.2012

1. Do angels exist ?
Email: petri.lehmuskoski@gorillaventures.fi
Twitter: @petrileh

2. Background
• Started first company in 1983 at age of 18
– Build company to 120 M€ with over 180 man-years pa. employment and
operations in 7 countries
– >30M games sold
• Portfolio entrepreneur
• Angel financer since 80’s
– Initially project financing and more active since 2008
– Presently eight ”alive” investments
– Best angel investment 100 % ROI during first year. Overall ROI – 60 %
• Co-Founder at Gorilla Ventures accelerator/incubator
• One of the Founding members of Fiban ry

3. Start-up financial market
• Finland has one of the largest no. Of start-ups per capita
• Capital available for start-ups 7th in World (2010)
• So far ROI on angel and VC financing being close to 0 %
• Traditional VC trying to improve their ROI
– Increasing demand for angels
– Opening possibilities for new generation of VC’s

4. Financing profile
Demand
2nd VC
for ROI/
ownership VC
Angel + Veraventure
Angel
FFF
Own Capital

5. What is angel activity ?
• Business operation combined with ”pay forward” culture
– Wanting to help others to succeed and avoid pitfalls
• Angel wants to secure own business in long-term and with
realistic ROI
• Invests both capital and knowledge
• Part of angels financing portfolio
• Being an angle is not money loaning or charity, as the money
is typically earned with hard work by the angel

6. Finnish angels
• There are about 400 ”angels” (not counting FFF’s)
– 3-10 professional angels
• Several angel financing operations
• Average investments per angel €15.000-100.000/company
• More information www.fiban.org

7. Angel syndication
• Large share of angel investments in US and Europe. Coming
into Finland
• Choice for VC financing
– less demand on ROI
– Less demand for ownership
– Shorten engagement time
– Able to finance through growth phase
• Suitable for profitable growth companies

8. How angels work
• Typically a arch-angel (lead) leads investment
• Angels are investing on people
– Not for people
• Typically Investing in early seed stage companies with
extremely high risk
• Lean thinking expanding fast among angels evaluations
process
– Fail fast – fail cheap

9. Before you get in touch with angel
• Evaluate what kind of angel you need
– Competence, money, knowledge
• Think and prepare your materials well
– KISS
• It is not about product pitch

10. Challenges angels face
• Too early and too little preparation
• Looking only for money
• Looking for ”employment”
• Company’s and entrepreneurs personal things mixed
• How will the angel exit ?
– Typical VC exit in 12 years
– Typical angel exit in 5 years

11. Avoid the following claims
• Our projections are concervative
• Research company estimates market growth/market
• Big customer is shortly buying our product
• Key employees will join us shortly
• No one is doing we are doing
• No one can do what we are doing
• We have multiple interested investors
• Competition is too slow/dumb
• We have proven management team
• We need to get only 1 % of the huge market
• We are driving millions of visitors to our site

12. My views on gaming market
being 12 months outside it ?
Email: petri.lehmuskoski@gorillaventures.fi
Twitter: @petrileh

13. Recent developments
• Traditional gaming market still going strong
– Low/negative turnover growth
• Overall profitable
– High turnover
– High number of games
– Entry barriers
• New formats developing – mobile and social
– Reasonable turnover growth
• Low profitability
– Low turnover
– No entry barriers

14. At least three simultanious
disruptions effecting gaming
• Value chain changing
– From EVA*13 to EVA*2
– Knowledge how business is being done missing
• P*P*P*P=results
• Earning logic changing
– To freemium and add-financed etc.
• Consumer behaviour changing