The Business of Games!
11 May 2016
What is unique about the gamesGRABR platform?
gamesGRABR launched at the end of 2014 is a community for gamers by gamers, a social platform where gamers play, share, discover and buy games.
Our unique recommendation engine is based around ‘Crowd Sourcing’, unlike traditional ones that are based around ‘this game is similar to this game’ or ‘people who have bought this have also bought’. Our recommendation engine is based on people that have behaved in similar ways. For instance, we track cohorts and communities of people that are grouped together based on likes, actions, habits and preferences. People who think and behave in similar ways to you have 78% probability of buying product X in the next 7 days. This method in probability and statistics categorization and data augmentation had not been used on the web before.
What are the pain points particular to your business model and how do you tackle them?
For gamesGRABR the challenge will always be the cost of user acquisition and customer retention. As a start-up, we can’t afford to spend on large marketing campaigns so we have focused on partnering with YouTube influencers to promote gamesGRABR. We create tailor made collections just for YouTube influencers and fill them up with all their favourite games. Each YouTuber promotes their collection in their video as a place to buy the game or accessory the are reviewing, in return they receive a revenue share on any sales in their collection, think of their collection as their very own shop. We are now working with some of the largest YouTube influencers with a combined subscription base of over 8 million viewers.
Every product on gamesGRABR has a buy button, gamesGRABR monetizes via sales through our own e-commerce platform or via affiliates such as Amazon and Apple. The pain point via sales through affiliates are that the margins on each sale are very small, around 5% of the RRP, so you need a massive volume of sales to make high revenue.
We have recently launched our own shop and now have publishing deals with large games companies such as Disney, Sony, Warner’s and Codemasters to sell digital PC games. As the sales are through our own store, the margins are far higher than affiliates. It’s our intention to sell more and more content directly through our own shop.
Advertising and sponsorship on the site is another revenue generator, but when we first launched we had zero users so it took a while to get our user base up to significant numbers before we started to see revenue from ads. We now have around 100k new users every month and high engagement with over 50% returning each month.
What are growth opportunities for gamesGRABR?
Having proven the success of the platform in the games industry, we recently launched our second social network, bookGRABR, which is targeted to all the bookworms out there! bookGRABR uses the same technology as gamesGRABR and connects users with similar book tastes along with user recommendations.
In addition to running our own niche social networks, we also have a SAAS (Software as a solution) business. We now licence the platform to brands, retailers and publishers who want to use our technology to create ‘fan’ social networks around other brand verticals such as wine, fashion and travel.
The platform that runs gamesGRABR is called GRABR. A brand or retailer using the GRABR platform can launch their own social community quickly, owning the customer and all the benefits and data that come with it. This is a great solution for brands that are struggling to connect with their users and fans, especially as Facebooks organic reach is plummeting and Ad Blockers are becoming more popular.
You have raised more than £15m in the last 14 years as a serial entrepreneur; how would you describe your funding experience in London?
Over the years, I have raised money many times by almost all routes of financing, including bank loans, Angels, VC’s and most recently crowdfunding. My experience of raising funding in London has been very positive. London now has a great tech community and a wide range of different funding options.
Although the prospect of securing funding can seem daunting at first, there are all sorts of different ways to finance your start-up idea once you know where to look.
Tell us a bit more about your recent crowdfunding round?
I was so impressed with crowdfunding that we did it twice! I’m a great fan of crowdfunding and I think this route really helps to bridge the gap between the seed and series A round.
Our first crowdfunding campaign was in Oct 2013 and we achieved our target of £150k in just 5 weeks and ended up being overfunded by 20%. In January 2015, we raised a second round, which totalled to £450k (again oversubscribed) and included investment from the London Co-Investment Fund.
There is a lot of work to running a successful crowdfunding campaign. Once you’ve decided which crowdfunding platform you want to use, you then need to create a compelling introductory pitch. Explain clearly why people will need your product, what’s your value proposition? Set an achievable funding target and if you are going down the equity route set a realistic valuation. First impressions are everything so create a compelling promo video and try to have the founder present the introduction. Once your pitch goes live market your proposition shamelessly and relentlessly. Create as much PR and hype as you can. There’s no point having a crowdfunding campaign if the crowd doesn’t know about it!
How have the investments been helpful in order to scale the business?
The early seed round, the subsequent crowdfunding campaigns, and the LCIF investment have been incredibly valuable in growing the business quickly. We were able to hire very talented developers and actually launch the platform ahead of schedule.
In addition, we were also able to build a comprehensive analytics and customer insight platform. We also launched our new SAAS business to licence the GRABR platform out to brands and retailers. Without these investments, this speedy growth would not have been possible.
What are the three factors that you think influenced investments in GamesGrabr?
Our proposition was unique in the games market, a platform where you could curate your favourite games collections and then get peer-2-peer recommendations. We wanted to develop a social platform just aimed at gamers, a place where gamers could go and discover other games, accessories or videos via other people with similar interests.
Valuations and exit possibilities are a key factor for investment and in the games and social platform markets both are very strong.
Finally, we have a very experienced management team that have built and sold businesses in the past. Having a proven track record and a team that has worked successfully together in the past really helps when it comes to investment.
As a serial entrepreneur, what have been your key learnings?
There are many highs and many lows. There will be times when you think of giving it up all, but the true entrepreneurs are the people that smash down barriers and don’t get bogged down by obstacles. Never lose faith, but do your research before putting your house on the line.
Never be afraid to ask for advice and listen to those with experience in your field. Stay focused and motivated. You need to dream big, but in your first year concentrate 110% on establishing your business.
Finally, always have fun and enjoy what you are doing.