This document discusses angel investing and the gaming market. It provides background on the author's experience as an entrepreneur and angel investor. It then discusses the start-up financing market in Finland and describes the typical roles of angels, VCs, and other investors. It provides tips for startups seeking angel funding, including preparing your materials and avoiding common claims. Finally, it shares the author's views on recent developments in the gaming market over the past 12 months.

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