TDC #07: Investing in Games with Daniel Mironov

Yuri Sokolov (00:00)
more often than not, you need capital in order to succeed.

Amit Netanel (00:03)
Mm-hmm.

Yuri Sokolov (00:04)
And today we've invited Daniel Mironov, who is one of the investors in a VC fund called VGames. Which historically known as investors for mobile games ecosystem, but recently they're also opened a indie game fund. It's not your typical publisher deal. There and you know what? We'll tell you all about it during the next two hours. We had a

Amit Netanel (00:36)
Yeah. Yeah.

Yuri Sokolov (00:39)
really interesting conversation.

Amit Netanel (00:42)
Yeah, we touched on many different topics. some of them really got really technical, like a know-how of what you should present, how to come prepared for such a pitch. But we also talked bit pi big picture stuff, right? what are dreams, what builders can learn from dreamers and vice versa. And we shared lots of I I believe we got a glimpse into a really interesting part of the gaming industry and something that interests interests lots of people, but they don't have the reach to get an actual investor to tell them what to do. So I had lots of fun. Yeah.

Yuri Sokolov (01:24)
if you want to raise funds for your indie or mobile game, I hope you will learn something new from this episode because I know I did and we had a ton of fun. please enjoy.

Yuri Sokolov (01:46)
Daniel, what are you playing these days?

Daniel Mironov | vgames (01:50)
mostly mass market titles actually. playing Horizon six when it actually came out and I don't have as much time being being a father to two little girls. I like that I can just whatever I have a half an hour I can come in and enjoy. I I play the the the James Bond game.

Amit Netanel (02:20)
Nice.

Daniel Mironov | vgames (02:20)
Yes, enjoyed a lot as well. Hitman is something I appreciate a lot and and and like combined with this IP works really well for me. I'm actually somehow came back to playing some airstems as well. so I'm playing a bit Microsoft Flight Simulator. so those are kind of probably the last big three games that that I played for my

Amit Netanel (02:50)
D do you have the whole do you have the whole flying rig hidden behind you there? No.

Daniel Mironov | vgames (02:54)
Not as much. No no no no no no no no no. I I I have a I have a joystick, like a quality one,

Yuri Sokolov (02:59)
The Hotas.

Daniel Mironov | vgames (03:00)
hot us, yeah, but I don't have anything besides that, so I'm I'm not too deep into this rabbit hole.

Amit Netanel (03:06)
Okay. I I had a friend that played Microsoft Flying Simulator as a role playing game in which he was the the guy at the tower, like guiding planes to land and dip

Daniel Mironov | vgames (03:17)
well.

Amit Netanel (03:18)
and and take off. And that was his game. Okay, so he just needed a mic and a keyboard. He didn't need all the fancy stuff.

Daniel Mironov | vgames (03:26)
Nice. Nice. No, I I I still am enjoying

Yuri Sokolov (03:28)
What are you playing?

Daniel Mironov | vgames (03:29)
like flying more probably than than being the the the the tower.

Yuri Sokolov (03:34)
I enjoyed flight simulator, not not so much flight simulators, I enjoyed the space simulators. so flight in space. It's more fun to me, I guess. But yeah, I can I why why do I know what is Hotas? because kind of did my market research some time ago, but never never bought actually a one because I'm not that into it. Amit, do you play anything else? So I understand

Amit Netanel (04:03)
Well

Yuri Sokolov (04:04)
that you've played James Bond as well.

Amit Netanel (04:06)
No, I actually didn't. My copy is still arriving from Japan. It takes it took like two months since I ordered it, because I pre-ordered another game. the yen value is really low, so it's super cheap to just get your physical game shipped from Japan. But it takes like about a month. Yeah, so my thinking is they are collectibles now, right? it's going to be like an exotic thing.

Yuri Sokolov (04:23)
don't worry, in two years, in two years you won't have physical games. So you it's not your thinking. It's not your thinking, it's it's Sony's thinking. They say, okay, we can kind of do what the diamond market did. We'll inflate the demand for physical copies. We'll say we won't ship any physical copies starting 2028, but then they'll say, no, we meant. The regular editions. You want a special edition? We have this three times the amount.

Amit Netanel (04:56)
Yeah. Maybe they invested in

Daniel Mironov | vgames (04:57)
Just pay a bit more.

Amit Netanel (05:00)
maybe they invested in company like Limited, Limited Run that does limited run games that didn't get a physical release. They actually go and do the work of like researching and coming up with art and cool packaging. And

Yuri Sokolov (05:14)
Mm-hmm.

Amit Netanel (05:15)
but to answer your question, what I got into recently is Riftbound, which is the trading card game of League of Legends. and I'm showing this off because it's a starter deck, okay. But I'm there's no digital client yet. So I'm playing through tabletop simulator with other people.

Yuri Sokolov (05:37)
Mm-hmm.

Amit Netanel (05:37)
but I really, really want to play physical games because if I'm near a computer, I'm vibe coding. Okay. I'm I'll I'll I'll find my way into the terminal and start coding. So I'm trying to find activities that aren't in front of the screen.

Yuri Sokolov (05:51)
Gotcha. Ga

Amit Netanel (05:51)
That's that's that's my line of thinking. And also I like the cards there. The art is super awesome. I mean, riot games are really just knocking it out of the park. Like the card texture itself, I can go I we can do a podcast about cardstock. I think everyone will fall asleep. But basically the cardstock and art are amazing,

Yuri Sokolov (06:08)
Mm included.

Amit Netanel (06:10)
amazing in this product. So yeah, highly recommend it.

Daniel Mironov | vgames (06:13)
But is it is it similar to Magic the Gathering or like I guess?

Amit Netanel (06:17)
Very. Yeah, it takes lots of inspiration for magic. It's it's a bit more aggressive, I'd say. Like the the rounds are shorter. It's like everyone are playing an aggro deck. But yeah, it it takes lots of inspiration from it. I also collect l magic the gathering, but we shouldn't get into that

Yuri Sokolov (06:32)
Like like like any other.

Amit Netanel (06:35)
because all the episode time will go into magic.

Yuri Sokolov (06:39)
No no I'll cut you soon enough, because I'm not into the yeah, yeah, yeah.

Amit Netanel (06:43)
Yeah, you can drop me out of the conversation.

Yuri Sokolov (06:46)
I'm into I'm into TGC games when they're digital, not yeah.

Amit Netanel (06:52)
Understandable. It's way it's way, way easier like to just hop into a game and not like taking the night off and not being in the house and interacting with real people, which is weird.

Yuri Sokolov (07:03)
And finding re finding real people that are as much as passionate and good as you

Amit Netanel (07:09)
Mm-hmm.

Yuri Sokolov (07:10)
in this game. Because it this is if you if you're good, then eventually in in our local community, for example, it will be really hard to find enough good players to not kind of get bored from one another. so you kind of drift online and searching for opponents outside. I am nothing changed for me since Our last episode, I'm still playing Bellatro. So I kind of decided that I'm going to finish Ballatro on all difficulties with all decks. I'm kind of I think I'm five decks completed in gold stake And then in the evenings, I'm watching UFC. I'm trying to. I I did play a game. I did play a game that released recently, not one that you've probably played or heard. It's UFC 6, just released, and it's one of those games EA completely messed up. once again, EA did it, they released a copy of a game they released three years ago, but made it worse. Somehow made it worse. They

Amit Netanel (08:16)
Somehow.

Yuri Sokolov (08:17)
have Yeah, yeah, yeah. It's basically except the the part of the fighting, the actual fighting, it's a fighting sim. the game is a loading simulator. It's UI screens. If you're playing if you're casual like me, I'm not a competitive player. If you're casual like me, it's and you play in career mode, it's a UI simulator with tons of loading and frame drops when when you see a UI with a couple of basic 2D cards, you know. Just stats on the screen, you go in from one screen to another, it stutters, frame drops. I don't know. I mean, if anybody from EA hears heard us, hurts listens to us right now, hire me. I'll I'll fix your lags in your UI. You know what? For free. Take me to fix your

Amit Netanel (09:11)
Just as a passionate fan of UFC. Listen, there are several okay you there are several opportunities for segues, okay, from what you just talked about. Okay. One of them is

Yuri Sokolov (09:22)
Present them to me.

Amit Netanel (09:23)
is a is Ballatro, the indie game, really an indie game, or is it like tickling ticking all the boxes of mobile games? Okay, that's one option to segue into more like

Yuri Sokolov (09:33)
Okay, okay, okay.

Amit Netanel (09:35)
dev talk. Okay, so we can we can pursue that. Or we can talk about how basically AAA companies are out of the game. Okay. They can release whatever they want. They can earn whatever they want. let's go with the first one. Let's go with the first one.

Yuri Sokolov (09:51)
I I think we can drop both of them and just ask Daniel

Daniel Mironov | vgames (09:55)
Mm-hmm.

Yuri Sokolov (09:57)
who are you? I I mean

Daniel Mironov | vgames (09:58)
Why?

Amit Netanel (09:58)
Mm-hmm.

Yuri Sokolov (10:00)
we we know each other for for some time but and we've talked. but people watching and probably at this point already introduced you somehow, but let let us heard hear from you who are you, what are you doing, what is V Games?

Daniel Mironov | vgames (10:16)
Sure. Happy happy to talk about that. So I'm Daniel, I'm thirty nine, as I mentioned, I'm I'm I'm a husband, I'm a father of two daughters, I live in Tel Aviv, I'm an investor at V Games, I'm a partner of the fund. I'm a gamer as well, so I'm actually I don't have as much time as I used to have, but I'm I'm playing games for fun. That's that's kinda like my way to unwind and enjoy just my free time. I'm happy to take you like through our journey at V Games. so I've been there for nearly six years since the fund since the fund started. the industry also evolved a lot in those six years. I believe we've we evolved with this with the industry introducing some some kind of like new products or kind of ways to support gaming founders. so starting from the beginning V Games was started by Aitan Rysel he's my partner I know him for many years we used to work together at Google. he had a dream Start a gaming focused fund out of Israel to support many founders that actually built some most interesting or successful gaming businesses out of this country, but didn't really had a dedicated investor that actually doing only only this, only gaming. as you probably know, there are I don't know, like 25 different cyber security focused funds today in Israel. but there is no one that is doing only games. and Ata started the fund. I joined like in the first few days. he called me and and and asked me if I want to join. and we ran like a very small operation. We were like three people when we started, we grew a bit, now we're eight. We started with our relatively small sixty million dollar equity fund that backed primarily mobile game developers, would I would say roughly two-thirds or so that came from Israel or were connected in some ways to Israel. and the rest were completely spread around the world. that went well. this fund invested in Superplay and in in play being two major exits in in the gaming ecosystem here in Israel and and and even

Yuri Sokolov (13:16)
And worldwide basically. The super play

Amit Netanel (13:18)
Yeah.

Yuri Sokolov (13:18)
is is a huge, huge, huge exit. Right? What wa what was the the number that

Daniel Mironov | vgames (13:25)
It's it's it's an earnout at the moment, up to two billion dollars. it's one of the

Amit Netanel (13:31)
Crazy.

Daniel Mironov | vgames (13:32)
top ten mobile gaming acquisitions in the Western world. so definitely a a huge milestone obviously for us, for the gaming industry here in Israel, and for the entire mobile ecosystem. and that's that We backed some other companies, Condivor is one of them, and we have a lot

Yuri Sokolov (13:57)
Mm-hmm.

Daniel Mironov | vgames (13:57)
others in our portfolio that are not looking for an exit yet. but such investments allowed us to raise our second fund, our third fund, to expand to growth financing, and as of lately, our most recent addition an indie focused fund.

Yuri Sokolov (14:16)
Which will have a separate separate section of this of I I don't wanna call it interview of

Amit Netanel (14:21)
Yeah. o although everyone listening right now just turned their heads like, What? Yeah.

Yuri Sokolov (14:26)
Yes, there there is an Indie Fund and you'll have to listen it to the end to know what are we talking about.

Amit Netanel (14:34)
Yeah. But yeah,

Daniel Mironov | vgames (14:35)
Sounds good.

Amit Netanel (14:36)
like circling back, like you you came into the industry in a really opportune time. I mean, six years ago, 2020, everyone is stuck at home playing on their phones. so you experienced the mega hype and now just you know, we're coming back down, but it's not it's not like people have stopped playing, it's that we have now jobs and we have to go to the office and you know, the

Yuri Sokolov (15:00)
And we have TikTok.

Amit Netanel (15:02)
Yeah, and everything, like arguing with our attention to games, what are the like most recent trends that you noticed as an investor?

Daniel Mironov | vgames (15:14)
So it's so so a few things. you're right that okay, six years ago, we we started actually March twenty twenty, so it was just like the the beginning of COVID.

Amit Netanel (15:26)
yeah,

Yuri Sokolov (15:26)
It wa it was when nobody

Amit Netanel (15:27)
the time to start.

Yuri Sokolov (15:28)
it won was when nobody believed that it can work. And then a couple of months later the the kind of the markets started to explode, right? So

Daniel Mironov | vgames (15:39)
Yeah. Yeah.

Amit Netanel (15:40)
Mm-hmm.

Yuri Sokolov (15:40)
in March 2020, companies were closing their doors. They they thought, COVID is killing our business. I was part of one of those companies that just said, it's with this with COVID, it's impossible to find investors. So they closed their door their door, I think May 2020, and then a couple of months later the mobile gaming just blew up.

Daniel Mironov | vgames (16:07)
Yeah. Those those that survived the initial months, made it. but yeah, so the the trends that are that I I'm seeing at the moment, so th they're there are multiple. first of all I would say that people will always be playing games. It's it's in like evergreen industry. there are some there are some like ups and downs Okay, yeah, like short form content is taking attention spend from from people, from

Yuri Sokolov (16:43)
Mm-hmm.

Daniel Mironov | vgames (16:44)
users, the whatever mobile ecosystem it's it's very difficult to distribute or much more expensive. but overall there are some also very positive trends. I think in our portfolio we don't have a studio that's not using AI in order to produce or or create content and it actually accelerates them a lot, allowing them to build more content with with less less resources. I think it's it's a huge trend. I'm sure it's affecting in many other industries as well, but I'm I'm seeing how it's affecting gaming and it's a it's has a positive impact. I know that's in in in PCM will touch on that later on I'm sure. it's not received very well, especially in art. but in today in mobile you cannot really survive without being without using AI extensively across the production.

Amit Netanel (17:46)
D do do you have do you have companies in your in V Games' portfolio that have suffered backlash from using AI? Actual backlash

Daniel Mironov | vgames (17:56)
Mm.

Amit Netanel (17:57)
from players, fans generally.

Daniel Mironov | vgames (18:02)
Not really. Like I think some suffered backlash when when they created a a a subpar product. because if if it's if it's if the product is not good, well the the user will look how to criticize it and and they will say that okay it's it's made with AI, they didn't put an effort, and they were cutting corners. so a hundred percent, yes.

Yuri Sokolov (18:29)
Which might be true, might be not.

Daniel Mironov | vgames (18:31)
For sure. but overall it's not because like okay, you're using AI and that's that's why we're not gonna play your game. But also it's it's kinda like worse to to remember that the majority of our portfolio is mobile, where I believe users are less sensitive to if it's built with AI or not. And also AI is doing a better job, especially on the on on the art side, right? you you won't be able to tell. if if AI was used in in producing certain I don't know like QI elements or in many cases two D graphics, it's it's doing a better job than whatever like high end triple A three D shooter for example on PC. So

Yuri Sokolov (19:18)
I think I think there's there's a misconception flying around people that that are saying that AI art okay, let's not define it art. It's it's a it's a hard topic for many people, but AI produced images that are subpar. I think the people that that believe that those images are low quality never seen images generated with AI by professionals. So it's not it's not like I'm opening Chat GPT or I don't know what or Gemini and writing a prompt to draw me a pretty young lady with blonde hair. I don't know. It's not like that. It's not like that at all. It's not like that at all. as I always said that AI accelerates what you and make it makes it better. what you already know to n know how to do. So if if I'm good with programming, AI can benefit me a lot and I will be a lot better with programming when I'm using AI. But I'm bad with art. So AI can make me bad but faster. So it's it's just that.

Amit Netanel (20:36)
Yeah, it even helps you fail faster. It's an amazing product. Okay, so I wanna I want to circle back, like I I think it touches AI as well, but let's I I think question on everyone's mind when they talk to an investor is like how many like pitches you get a day or a week or a month? S some kind of time measure, and how how many actually get Greenlit by you. How many you're actually say, okay, that's a good opportunity out of the X numbers of pitches I got.

Daniel Mironov | vgames (21:14)
say that a fund a getting fund and and I think it's it's kind of like similar to other industries as well would invest roughly into one to two percent of opportunities that they're seeing. So yeah like every 50 roughly actually getting a check. But would say from like qualified opportunities. So those that would actually though not those that I like just send like sending me a deck. That's that that number probably even like even lower from those that I I met. So mm the main job of an investor is saying

Yuri Sokolov (21:54)
So one in fifty

Daniel Mironov | vgames (21:56)
no basically. Like you're saying a lot of no's. Because you're looking for a for

Yuri Sokolov (21:59)
One in fifty

Amit Netanel (21:59)
That's a lot of nose, yeah.

Daniel Mironov | vgames (22:00)
yeah.

Yuri Sokolov (22:01)
one in fifty companies that you're actually met and heard what they have to say. And I assume one in every fifty companies actually get a meeting, right? So

Daniel Mironov | vgames (22:13)
Mm, it's more than that. I I actually prefer to meet. So unless it's like I I I I it's clear for me that it's just a waste of time, I will I will I will do like let's say it's it's like not in my thesis. Let's say we're we're not investing in in B2B. w we prefer to invest in consumers. So like there's there are a lot of opportunities that maybe the the founders don't know us or they don't know what what our thesis or what we're focusing on. So they will send us like, okay, we're we're like I don't know live ops platform for games. And like we're there's zero chance that we'll do that. so yeah, okay, I'm I'm not gonna waste not mine, not their time. But if it's if there is a slight chance that it's gonna be an investment, I will I will meet the founders and I'll like I'll spend half an hour with them and I'll like I'll talk to them, I'll understand better who they are, what they bring to the table, why they believe that they are they are competitive and why they actually want to raise capital. but yeah

Yuri Sokolov (23:15)
So what it takes to get a check from you?

Daniel Mironov | vgames (23:20)
we we need to be like I don't know it's it's a it's it's a great question

Amit Netanel (23:20)
That's a a multi layered question. Yeah.

Daniel Mironov | vgames (23:24)
and and in the end we're a financial institution. so we are here to make money for our investors, for our limited partners. so every opportunity that we back, we believe that this company can in in in like obviously in in some very positive scenario, move the needle for the entire fund. they can build a big company like those people, those people that are like sitting in front of me and and usually they would have a deck and each other and maybe ideas.

Yuri Sokolov (23:57)
Mm-hmm.

Daniel Mironov | vgames (23:58)
and that's about it and some experience in some cases and a lot of ambition. I should see that they can actually create a big company. They will get punched endless number of times in their face during this process and I And I should believe that they would won't like back up or just just like well you know, resign and and and do go do something else.

Amit Netanel (24:28)
So so tenacity is important, like grit, tenacity, however you put it. Yeah.

Daniel Mironov | vgames (24:30)
Hundred cent. Yes, yes. ambition, I think knowing their domain, like being very obsessed about what they're building. it's it's not only like okay, do you do your market research or not? Why you actually wanna do that? It's it's incredibly difficult industry, it's incredibly competitive. the chances are like the odds are against you. It doesn't matter if you raise capital, if you don't, it doesn't matter like if you raise a ton of capital. In the end, you have to satisfy a huge number of users. And it's it's

Yuri Sokolov (25:07)
Mm-hmm.

Daniel Mironov | vgames (25:07)
difficult. You're competing versus super big teams, not only in Israel, in in Turkey, in China, that are operating in kind of like in a different way. and I I should be able to see that despite all of those, I still wanna bet on this on those group of people. but besides that it's it's like there are some things that are kind of more more programmatical. I believe that you need to be a gamer to build games. You you need kind of like to enjoy and play a lot. I think it's very difficult to to win if you're not really using other products, if you're not aware of what's happening in the industry. I think it's it's it's very important. y at least one person in the in the in the founders group should be about product, about actually building and having this

Yuri Sokolov (26:03)
Mm-hmm.

Daniel Mironov | vgames (26:05)
intuition. Everyone is saying that okay, we will use data and and fine, but you have to make thousands of decisions without any data. It's it's like pure intuition. And pure like just

Yuri Sokolov (26:14)
Mm-hmm.

Daniel Mironov | vgames (26:15)
gut feeding. and I think that's it's incredibly important to have such person because without it it's it's just like almost shooting in the dark. even in like even in mobile, when when you know like maybe some would say that the product is not as critically important, it is. It is incredibly important. And there are a ton of games that are just like not good enough in in the stores. people that know each other. I think it's also very important. Like I I I I wouldn't start a company with people that I barely know.

Yuri Sokolov (26:52)
Mm-hmm.

Daniel Mironov | vgames (26:53)
I wouldn't start a fund with people that I barely know. I I any my co like my partner for for like nearly a decade, when when we started when we decided to join forces. And it's very similar in with any startup. Because you'll see each other in in in good and bad and and in ugly, you should be able to work together when things are not going well. And most of the time, unfortunately, but that's the reality. Things are not gonna go well. and you should be okay with that. You should be okay living through like those long periods of time that there's like there's no clarity if if this is working or not. You're gonna make very difficult decisions about maybe like whatever, killing a game and moving to a next one while you don't know if the next game is going to be better than the current one. so I think it's it's a lot of kind of like interpersonal skills that

Yuri Sokolov (27:49)
Mm-hmm.

Daniel Mironov | vgames (27:50)
I'm I'm looking for. you should be also be able to sell the idea because not only to me but to people that you're gonna hire right you you can build a company with with two three founders and they will have to attract talent so they will have to sell the idea to to their future employees. and if they want to hire strong employees, they need to convince them to jump from whatever their current positions and and abandon this and just come to something that's completely new. which is also it's a difficult task and it's it's kind of like it's a sales ta task. So at least someone in the company should be able like to have this sort of either charisma or or being able to you know convince others to to join them. it's

Yuri Sokolov (28:46)
Mm-hmm.

Daniel Mironov | vgames (28:47)
it's v also very, very important. and and they they better be good at it because otherwise they can just like secure top talent. They won't be able to pay them like the the the the best of the best, right? Because usually they don't raise a ton of money so they have to be very resourceful. So yeah, the it's i it's a bunch of things.

Amit Netanel (29:12)
How how do you

Yuri Sokolov (29:12)
What what

Amit Netanel (29:13)
how do you get all that from meeting the the team? I mean it's a lot it's it's a big ask to to understand all these things from just a meeting.

Daniel Mironov | vgames (29:22)
It is. we w like I think it's it's relatively easy to tell. And obviously we we're making mistakes a lot. I make mistakes a lot. Bo in both directions. In both backing those that I shouldn't be backing and and not backing those that I I should have.

Amit Netanel (29:39)
Missing out.

Daniel Mironov | vgames (29:39)
Yes, missing up. the second ones are more painful. Because yeah, like you can you can make mistake. as as a fund it's sometimes yeah well you know it's it's like the difficult statistics that company are not are not successful and and eventually they die. but if you kinda like okay, I saw an opportunity, it became something very successful, why didn't I I make the decision to back them early? so yeah, the the the second one is usually more painful. so It's it's it's kinda like relatively easy to tell if it's if it's a no. and usually I don't know, a meeting of like thirty minutes, forty five minutes is sufficient to tell if it's like it's it's not it's okay, but it's not as exciting. Like I'm not I'm not getting thrilled about this opportunity. and since we're seeing a lot, right? Like you asked me about how many opportunities, I I would say that at least I would say three quality opportunities we're seeing a day. so w we're we're getting a lot of the inflow. I'm I'm so I'm I'm I'm talking about those that we're actually meeting. in terms of approaches we have a lot more. so that's that's kinda like what I'm doing all day long. I'm I'm I'm spending my time with founders, listening to their ideas, listening to their pitches, trying to understand if I believe in what they believe in.

Yuri Sokolov (31:13)
Mm-hmm.

Daniel Mironov | vgames (31:13)
And in in so y like in half an hour you cannot make a decision for a yes. But you can make a decision if it's a no.

Amit Netanel (31:23)
For I know.

Daniel Mironov | vgames (31:23)
yeah, and and then if it's if it's interesting, we'll spend a lot more time. and if it's a person abroad, I'll do my best effort to actually travel and and spend time with them in person, ideally in in actually one room, and talk about about the business, about life, about who they are, about what brought them to to building this company. And I think it's it's it's the best way to feel a person or a group of people. and I think that's it's very difficult to do over over Zoom or over like video video conference. and eventually yes like you you can spend a a few hours it's I would say maybe it's it's similar in a way to hiring, right? Like when when you hire a person to your team, you you have a few hours with them and you have to make a decision if they're good enough

Yuri Sokolov (32:19)
Mm-hmm.

Daniel Mironov | vgames (32:19)
to work with you and they're gonna spend a lot of time together, and you

Amit Netanel (32:23)
Mm-hmm.

Daniel Mironov | vgames (32:24)
don't want to make a mistake either. So hundred percent. Yes.

Yuri Sokolov (32:27)
But the stakes are not that high, first of all, and and second of all, I think I think you do it also because I don't believe that you're you're investing purely on a hunch. I think you're probably doing your homework and you're doing some background research for the founders, for I don't know, is it is it part of the process?

Daniel Mironov | vgames (32:47)
Yes. Of course. Yes, we we're doing references. we we're reviewing the product if there is something to review. in some cases it's it's it's it's basically just a deck, it's an idea. though today I'm always asking myself and usually the founders, why don't they have some sort of MVP or something to to touch and try? Yes,

Yuri Sokolov (33:12)
Or a prototype.

Daniel Mironov | vgames (33:13)
because it's it's A lot easier to build now or or let's say to create some sort of some sort of prototypes.

Amit Netanel (33:19)
Mm-hmm.

Daniel Mironov | vgames (33:21)
and if if there is a certain an itch in their team to build, why they're not building something, right? Even for themselves.

Amit Netanel (33:29)
Yeah.

Daniel Mironov | vgames (33:31)
it shouldn't be like it's it's not polished, it's not ready, it's not feeling great, it's fine. But like they should have something.

Amit Netanel (33:38)
I talked I actually talked to several like young inter young entrepreneurs

Daniel Mironov | vgames (33:43)
Mm.

Amit Netanel (33:44)
that are trying to raise or thinking about raising capital. And I actually got to talk to them about their proof of concepts or their MVPs or whatever. And I asked the same question like, isn't it super easy nowadays to just, you know, vibecode a product and come up with that?

Yuri Sokolov (34:03)
A prototype.

Amit Netanel (34:03)
Instead, yeah, instead of you know. In instead of just a slide deck and here's our team, yeah, just trust us and give us your money. So yeah, the the product speaks speaks louder. And some of them express their concern that if they already have a product, the stakes and the questions will be harder to answer. For example, the they they will get asked, so why aren't you trying to market this already to get us concrete numbers? It will raise more questions that they they don't have the the time to answer properly. Okay, so that's what they're afraid of. so I don't know.

Yuri Sokolov (34:42)
I think, and Daniel, maybe maybe you can correct me if I'm wrong. There is a distinction between a product and a prototype. Because prototype, I might I might want to build my company around, I don't know, in you I'll I'm going to build my game in Unity, I'm going to build a team in Unity, but I can produce a prototype in any other technology with with awful graphics, with blocky pixels just to test out. The how it works. So, in terms of product, I actually know a couple of founders that had a product and they try to raise capital and they hit this wall that people say, Okay, you have it. you have a little bit of money. Let's do instead of investing into you like a regular investment, we'll give you marketing money, but we'll give you 50% of what you invest. So You're putting 50% of your money into marketing and we'll add in the 50%. We're ready to give you up to X millions of dollars.

Daniel Mironov | vgames (35:48)
Mm-hmm. Yeah.

Yuri Sokolov (35:50)
As long as you're investing your money, and if you're earning, you can reinvest what you're earning. So basically, yeah, if if you have a product, you might reach a deal which is not ideal, maybe for some founders.

Daniel Mironov | vgames (36:04)
Mm, mm-hmm.

Yuri Sokolov (36:05)
but prototype is prototype. I can build a ton of prototypes in one day and just kind of before I'm going to an investor I can see that maybe my idea is not that good. May

Daniel Mironov | vgames (36:17)
Amazing. That's that's a very good thought, right?

Amit Netanel (36:19)
Yeah. Yeah.

Yuri Sokolov (36:20)
because because on paper on paper I have a ton of amazing ideas.

Daniel Mironov | vgames (36:25)
Mm.

Yuri Sokolov (36:25)
And over the last year I tried to build a couple of games and basically I had three months where I built prototypes and Every prototype ended in a trash because it wasn't playable. It was not enjoyable, at least for me. And I say if I'm not enjoying the game I'm creating right now, I won't be able to finish it. I won't be able to continue with it, even if there is a market for this game. So kind

Amit Netanel (36:56)
Mm.

Yuri Sokolov (36:56)
of you can do prototypes today. It's it's easy.

Daniel Mironov | vgames (36:59)
Yeah. And and I think it also this kind of like thought process brings you closer kind of like to how a company a gaming startup actually operates. like this ideation, throwing ideas to to trash. Because in the end we're actually investing in a team, not in a product. Th this

Yuri Sokolov (37:20)
Mm-hmm.

Daniel Mironov | vgames (37:20)
product can change in in one week, in two months, in three months, in one year, etcetera. In the end we invest in people that are gonna build it and If if it's it's like you know, it's if if you're like I don't know, talking to an artist, they they will create their art no matter what. You will bring them money, you won't bring them money, you tell them like you're not allowed to create art, they will still make it, right? Because they're they're passionate about it and they wanna

Amit Netanel (37:47)
Mm-hmm.

Daniel Mironov | vgames (37:48)
they wanna

Yuri Sokolov (37:48)
Mm-hmm.

Daniel Mironov | vgames (37:48)
create it no matter what. I feel that in like good teams they're like like that. They they will they will they will never stop. building doesn't matter if if you're talking to investors or or not because it's it's kind of like there it's it's the process that happens in their company almost spontaneously. and

Yuri Sokolov (38:09)
Mm-hmm.

Daniel Mironov | vgames (38:10)
and we want to invest in in builders, those people that actually are are creators. And it might create some more difficult questions. Well yeah but I think it's it just creates some kind of like difficulties from our side to to to get convinced unless it's like an unbelievable team and I don't need anything from them because I don't know they they prove themselves so many times and they're I don't know like second time fathers or or whatever. I I I think it's still better to come with with something and just explain why why they believe in what they're they're they're building and why they're thinking that way. I think it's it creates an interesting conversation. While again, like I still understand, this can be killed two days after and they can completely get convinced that they're building another game. Like another another thing completely. So,

Amit Netanel (39:10)
Yeah, so while while you were g you guys were talking, so I I and it finally clicked for me that the the reason they resisted to presenting a mock or a proof of concept is just it had it it had to conflict them conflict their dreams with reality. And that's

Yuri Sokolov (39:28)
Mm-hmm.

Amit Netanel (39:28)
that's that's tough, okay. That's pain to understand that the thing you're super excited about isn't that interesting to other people or or in the in the worst the the The worst case, it's just it does it doesn't it sounds good, but it's not a game. Okay, or it's not an experience.

Yuri Sokolov (39:45)
That's the distinction. That's the distinction between dreamers and builders. Like Daniel said, in if you're if you want to be the next two billion exit company, you can't be a dreamer. You you can, but I think you should have a little bit more than just dream. so yeah, I can get it. But what's make a good game these days if if we're talking about mobile market? so Market that I'm most familiar with. What it's so saturated. So I know Turkey is really great these days in terms of you know puzzle games, right?

Amit Netanel (40:25)
Mm-hmm.

Yuri Sokolov (40:26)
they they're they really build something that other countries it's kind of cultural, right? the way they approach puzzle games. I know that there are a couple of trends, but what makes you say, this is a nice game? I I want to A slice of that pie because it's kind of hard for me because I'm not in the pers not talking from perspective perspective of an investor to imagine saying, I'm going to invest in a company that's developing a game in an oversaturated market. So a company that coming and saying, We want to develop a a puzzle game. Do you invest in those? What what what makes you invest? We talked about the team. What What's a good game for you?

Daniel Mironov | vgames (41:14)
Yeah. So w we invest in in in all kinds of genres and specifically about Turkey. We have five companies in Turkey today that we we backed and it's the second biggest country for us after Israel in terms of like how many investments we have. so happy to talk about those. I would say like a few things. first it's also like if I believe that this team can compete in in the genre that they they want to compete in. Some I believe can. Some it's it's kinda it's it's too much or like the scope is not matching the team. I can give you an example. Mesh three being an incredibly competitive market.

Yuri Sokolov (41:58)
Mm-hmm.

Daniel Mironov | vgames (41:58)
incredibly.

Amit Netanel (41:59)
Mm-hmm.

Daniel Mironov | vgames (42:00)
to start a company today and say like, okay, yeah, that's gonna be my first game, I'm building Mesh three, I'm gonna compete with Dream with Royal Match and and and such. Well, good luck. You you'll need a lot of capital for that and you probably will make a lot of mistakes as as you build. and I'm not sure that you have like you should have access to very, very strong talent to to execute this on on a level that will move the needle. you can't build a mastery game, but it if if you want to actually make money from it. yeah, exactly.

Amit Netanel (42:34)
You want to build the match free game? It's a lot harder.

Daniel Mironov | vgames (42:37)
it's it's it's a lot harder.

Yuri Sokolov (42:37)
I I kind of want to I kind of want to to inject a clarification here for maybe maybe the people that usually listen to our podcast and they're more builders in terms of they kind of like to get their hands dirty, they developers, programmers, artists. but when you're talking you need top talent to compete, it's not that like I imagine that some developer sits somewhere in the world and says It's not hard to build a match three games. I think you're talking about talent, not in terms of developers, but you're talking about marketing, user acquisitions. And when you're saying that you need a lot of budget to do it, because in mobile you need to buy users, you you need user acquisition is is the most expensive thing in mobile game development. So it's this

Daniel Mironov | vgames (43:32)
Yeah. Yeah. So

Yuri Sokolov (43:34)
and the sec A second clarification sorry I wanted to bring is that when you're talking about so you're saying, okay, I can invest into this company and maybe they'll do something, but I'm deciding to not to. if I'm understanding correctly, the aim of any VC is to invest into next unicorn and not a company that you're let's say putting five million dollars and that will do an exit of four or forty million dollars. Which for someone like me will be wow i i it's a huge ton of money, but for you it's not moving the needle. You need a billion, you need five hundred mil something like this. Right. Okay. So those clarifications aside, we can proceed.

Daniel Mironov | vgames (44:19)
Sure. yeah, so I think again, let's remember that mobile gaming industry is a is a kind of like winner takes all or winner winner takes most. so by definition, many teams will try and won't be good enough to become number one, two or maybe three in the in a particular subgenre that they're operating in. if they're not in their one, two or three in in their subgenre, they are not gonna move the needle for us as a as a as

Yuri Sokolov (44:54)
Mm-hmm.

Daniel Mironov | vgames (44:55)
a as a as a V C fan. So so obviously if if they believe that they're they can compete with with like the top of what they're looking to build that's That that might be interesting. They they might be mistaken, but at least they they they need kinda like to want it, right? Or or to think big enough.

Yuri Sokolov (45:19)
So you need to make you need to make a due

Amit Netanel (45:21)
Mm-hmm.

Yuri Sokolov (45:22)
diligence and see if they're not delusional.

Daniel Mironov | vgames (45:25)
Hundred percent.

Amit Netanel (45:25)
Yeah.

Daniel Mironov | vgames (45:29)
I mean, they have to be naive to some extent. and I have to say that when we

Yuri Sokolov (45:32)
Yeah, probably.

Daniel Mironov | vgames (45:34)
came to to to the V C market, right? When we became a a venture capital fund investing in games, we were naive as well. and I think it's it's something that it's quite easy to lose. when you become more experienced and it's like so easy to say no, and like okay trying to become very, very pragmatic. you it's it's a combination of both. You have to be a dreamer as well, right? Like you have to be a little bit delusional about who you are and what are your

Yuri Sokolov (46:05)
Mm-hmm.

Daniel Mironov | vgames (46:06)
capabilities and and how the market will receive it. but it's it's like it's a it's a fine combination of those like being a builder and being being a dreamer. you cannot be like only dreamer. It's just not gonna not gonna work. And in terms of so user acquisition for sure it's it's it's a big part of the mobile gaming ecosystem and you cannot really you can't really build a a a game or like or I'm not even talking about big game without it. but you need a fur like first you need a a a great product. You need a retaining product. so a game that actually is interesting enough for users to come back. And play again and again and again, right? Like af after after a day, after seven days, after after 30 days, and so on. it's always a chicken and egg problem because not necessarily you have enough content.

Yuri Sokolov (47:03)
Mm-hmm.

Daniel Mironov | vgames (47:04)
but really good games. you see it pretty much not straight away, but early. You kinda like you notice that there's something very special in in your hands. the indicators are not like, yeah, it's it's okay plus. It's like, whoa, what what is this? And I have

Yuri Sokolov (47:28)
Mm-hmm.

Daniel Mironov | vgames (47:29)
to say and kind of address a bit what Turkish founders are really good at. They are not emotionally connected to the product that they're building. They I I know many founders that will try to convince you that their game is good and it's maybe good but not great and the the difference is huge,

Yuri Sokolov (47:49)
Mm-hmm.

Daniel Mironov | vgames (47:50)
huge. and then they will kinda try and keep working on it and try to improve it and and do another sprint and another sprint that won't move the needle enough, let's say on on retention metrics. and I know some of our Turkish founders, I mean general Turkish founders, they will just kill a game. They will say like, okay, it's not interesting, I'm moving on. i they they're not they're creating beautiful products but they're not really connected to them in the same way that many other founders I know are connected. and they can kill a game with with an okay potential just because it's not it's not gonna move the needle enough for them. and they are

Yuri Sokolov (48:33)
Mm-hmm.

Daniel Mironov | vgames (48:34)
not afraid to take like a leap of faith into something into the unknown. Because there's always like okay, you have something and there's something with with certain numbers and usually it's not it's not very bad, right? but if you build something new, you don't know, right? It it can be even worse. It can be like it can be anything. and they're not afraid of this unknown. They they're not afraid into building something that like they they have zero knowledge about how it's gonna look like.

Amit Netanel (49:09)
Yeah, it took me years to internalize the fact that you shouldn't fall in love with your creations if you intend to like check them on other people. Like if you're working in your garage building a game for yourself, like many founders I'm sure have told you, we're building the game that we want to play. Like the the

Daniel Mironov | vgames (49:28)
Mm.

Amit Netanel (49:29)
types of games that we want to play. I assure you hear this every day. so it took it took me, I don't know, like ten years. Of work to just detach emotionally from what I'm working on to be able to do what you just said. Like to pivot, to understand mentally, not emotionally, that this doesn't work. I can continue to work on this if I like it. Okay, if it's that's a piece of art that I want hanged on my wall and I'll be happy. Or I can just move on and try to to do something else.

Yuri Sokolov (50:01)
I mean, weren't we just discussing in WhatsApp how great of a game could turn out the game we've been working on six years ago that was cancelled and it could be an amazing game. So no the if only one more year. Yeah, so that the detachments

Amit Netanel (50:15)
Yeah. It could be an amazing game. If only we had one more month to work on it. It could be an amazing game. Yeah.

Daniel Mironov | vgames (50:21)
Mm-hmm.

Yuri Sokolov (50:25)
never never left, but it's

Amit Netanel (50:27)
No, it's it's there, but but I can tell you that in in the six years that have passed since then, I've laid so many ideas at the side of the road, just abandoned them there, you know. because I don't know, that that specific game we're talking about was was something special. And it ended before we abandoned it. But maybe that's the emotion

Yuri Sokolov (50:49)
Yeah. But regard

Amit Netanel (50:51)
talking.

Yuri Sokolov (50:52)
regarding the market research. so I'm I'm a big fan of Brendan Sanderson, the writer, and reading a lot of his books and recently I saw his interview, so he said something like he was asked about how does he decide what to write, what book to write, what to approach, does he do a market research? And he was interviewed by another fellow writer, sci-fi writer, Joeb Crombie. and he says, like, for me, for him, for Sanderson, it's always been, I'm going to write something I love, and I'm blessed with the fact that the market goes my way. So basically, people love what I do. So I don't need to research the market, it's kind of the stuff and then Joe said like it's not like that for me. I actually need to to review the market and understand what people are actually want. And a lot of writers it's doesn't work for like this for them. Same thing I think goes with games. So I can dream about a game that nobody will like. I will enjoy it really much, but nobody will like and people will say it's an awful game. And then there can be a game developer that anything he produces, the people just gonna die. Just give me to play one more hour in in your amazing game. So yeah, it's kind of I think the the the dreamer side here is you need to be a dreamer, but you need you need to know what you're bringing with you apart from from the dreaming that that you can deliver. But Let's let's say I I came with a pitch, you did your due due diligence on me, you decided to sign me in, gave me a check. what's the average check today? I know it's kind of changed since the the AI took over, right?

Daniel Mironov | vgames (53:05)
Yeah, I think I think it changed, but like I would say that the at least for us, the the check size changed. It's like what you can accomplish with it changed. Yeah. Yeah.

Yuri Sokolov (53:14)
It's the expectations that comes with the check.

Daniel Mironov | vgames (53:17)
So our check size is around for seed stage usually mobile gaming studio is around three three, four million dollars. in most cases we'll take the entire round, so like we will That's like it's not we're gonna share it with anyone else. We're just gonna fund you completely so you don't need to do fundraising after that. I mean for for this for this run.

Amit Netanel (53:42)
And that's that's just for companies that are at the seed stage, right? That's the initial investment.

Daniel Mironov | vgames (53:46)
Yeah. Yeah. That's that's kind of like the first money that they get into their company. so that

Yuri Sokolov (53:56)
So it's the most high high risk, higher world kind of kind of money. Mm-hmm.

Daniel Mironov | vgames (53:59)
Yeah, exactly. You come in very, very early. obviously the the risk is is huge and you're essentially backing a team. There's not much to look at

Yuri Sokolov (54:10)
Mm-hmm.

Daniel Mironov | vgames (54:10)
in terms of the the product. Even though if there's an MVP, it's it's just like sort of not necessary to actually go and and meet the market. so but like the what what's changed is the velocity, especially on on mobile development. So For those three million dollars, more will actually go into marketing than the development because the the developers need to test their products, right? Like they they they can

Yuri Sokolov (54:41)
Mm-hmm.

Daniel Mironov | vgames (54:41)
build it, but they they need to iterate on it and see if it's if it's actually interesting for the audience or or not. and this this kind of like ratio changed because a few years back, Most went into development. they had less attempts on on goal for the money that they were raising and then they have to commit to maybe one product or well, maybe more than one, but it it depends on on obviously on on the genre. Today they can bring more mature games to the market even when they're

Yuri Sokolov (55:23)
Mm-hmm.

Daniel Mironov | vgames (55:23)
when they're testing them. And also the the the user expectation is changing because when when a user is seeing a new game, it doesn't matter if it takes that they saw an ad or doesn't like someone told them about it. they are considering if they should invest time into this.

Yuri Sokolov (55:43)
Mm-hmm.

Daniel Mironov | vgames (55:43)
and if they see that the game is sort of like yeah, they're like it's an V P it's it's very kind of like not not baked. most will say like I'm yeah, I'm I'm I'm not thrilled about being a bet beta tester. It's it might be it's a bit different on PC but on mobile people just will churn because it's like, okay, it's not a full experience. Yeah, I'll I'll come back when when when it's ready. because the competitors yeah,

Yuri Sokolov (56:09)
And probably w never come back.

Daniel Mironov | vgames (56:10)
or or never come back really.

Amit Netanel (56:12)
Yeah, yeah, yeah.

Daniel Mironov | vgames (56:13)
because the competitors are are kinda like showing them a lot of content. Always something is happening in in their game. there's ton of live ops. It's It's kinda like a full on experience for the user. And they're expecting it from any other game as well. So the products that are coming to the market are more they have more content in them because of a AI. They're quicker to ship, a lot quicker to ship now, and more effort or more resources going into actually testing and fine tuning in the products

Yuri Sokolov (56:50)
Mm-hmm.

Daniel Mironov | vgames (56:51)
rather than just building them sort of in the dark. it's it's still kinda it's it's a it's changing, right? So it's they're still they're they the teams need time to build. but I feel it's a bit less and they have more again more attempts. So they can actually comfortably kill a game, move to a next one and they will still have budget for that, especially if they're operating in in

Yuri Sokolov (57:17)
Mm-hmm.

Daniel Mironov | vgames (57:18)
casual genre. I would say that in in in core or mid core it's it's probably not. It's still gonna be quite expensive. But if we're talking about mobile and casual, usually teams would have more than one game that they can develop and try before they run out.

Amit Netanel (57:38)
Yeah. I can share from my experience, by the way. since that cancelled game, Yuri, that you talked about six years ago. I've I've been feeling that what I'm working on, I've been working except for one year, I've been working on in in startup companies. by the way, maybe I should have mentioned it at the beginning. I worked in two companies that are part of the V Games portfolio since then. And I I felt like what I'm working on is Kind of an experiment more than an actual game with that's whose GDD and concept is written in stone, right? we're trying to see how we can get a good retention, a good seven-day retention. If that works, we're trying to get 21 and 30-day retention. we're trying to optimize ROAS, we're trying to see, okay, maybe we can, since we've started developing This game, the market has shifted. Maybe we can add a twist to it that will improve the statistics. and sometimes that change is completely changing the game, by the way. to a different

Yuri Sokolov (58:45)
Mm-hmm.

Amit Netanel (58:45)
genre. it so it became more of like, how can we build stuff that's reusable and modular? I am totally talking about the builders side, as you've called them. we we need to go and build something that's That that can and probably will change after we ship and see the results. And initially, I have to admit, it was super frustrating because of the emotional attachment, okay, to the initial idea and the fantasy that we're going to build a certain type of genre. And then we said, okay, the numbers suck, so we need to change a trajectory, basically. use the same assets. It's not like an asset flip. but it's really it felt really close at the beginning. but that's probably what it takes in this day's market, right? it's probably required.

Daniel Mironov | vgames (59:43)
Yeah, I

Yuri Sokolov (59:44)
Question.

Daniel Mironov | vgames (59:44)
I would say that obviously like I I understand how how difficult it is. It's you have something in your mind, you wanna build it, but like the market doesn't doesn't

Amit Netanel (59:53)
Mm-hmm.

Daniel Mironov | vgames (59:53)
receive it well. and it's it's not a great feeling to to pivot, even if it's like within the same game or like w within another for sure. But it's just the alternative is worse, right? Because if you keep keep doing something that that that it not working, you're probably just wasting time, right? Because it's it's not magically gonna change.

Yuri Sokolov (1:00:18)
Mm-hmm.

Daniel Mironov | vgames (1:00:20)
just because you believe in what what what you're doing. so I I would say that I know it's very difficult and those are kinda like the the most difficult decisions that the companies or whatever the founders or the leadership of a company has to make. but those are the necessary ones.

Yuri Sokolov (1:00:39)
The so what are the expectations from from a three, four million dollar check? what do you expect? When do you expect a first product that hits market? What

Daniel Mironov | vgames (1:00:51)
Yeah.

Yuri Sokolov (1:00:51)
size of a product it is?

Daniel Mironov | vgames (1:00:53)
It it depends a lot on the on the on the genre and on the category. the good teams are shipping within a few months. from from like again, like from over for overseeing a lot of studios, I can say that the quicker ones have an advantage because they have more time to iterate. They have more time to make a good decision if their game is good or not. the those that are are spending let's say year plus in building again and let's let's talk more about casual in in other genres it might be

Yuri Sokolov (1:01:30)
Mm-hmm, mm-hmm.

Daniel Mironov | vgames (1:01:31)
different. but those that spend like a year plus in developing for any reason, they're losing momentum because th they're building something again like that they don't know if the market or the users like or or or receive well what what they're doing.

Yuri Sokolov (1:01:48)
Mm-hmm.

Daniel Mironov | vgames (1:01:49)
And this momentum is critical in in a high velocity startup environment. It's kind of like I don't know, it's like a it's like a sports team that's not not winning or or it's the the everyone is feeling a bit down and I think it's slowing them down even more and kind of creating this sort of vicious cycle. so I would say that teams that ship a title in in a few months time, let's say three, four, five, six months, have a better chance of actually building a a successful company. And in terms of expectation, ideal to to have a game that actually can have have ROI. So like they can show that if they put in some marketing dollars they can get more in in the like the lifetime value is higher than the acquisition cost, even at small scale. So even at like a few thousand dollars per day of spend. and that's that's again like that's very realistic for games that are outliers, which are relatively easy to see when this is happening.

Yuri Sokolov (1:03:03)
Mm-hmm.

Daniel Mironov | vgames (1:03:04)
and if not, they like there are basically like two two routes here. Either you bring ROI and then okay it speaks for itself. Or you have retention that is so good, so exceptional That basically us or whatever another investor will say that okay, they will be able to monetize it down the line. It's not as important now. the retention is so good, this is a super high quality product, it will make money and and will become a big business. So those are kind of like two

Yuri Sokolov (1:03:34)
Mm-hmm.

Daniel Mironov | vgames (1:03:34)
routes, and I would say that most founders in Israel they are going towards the ROI path. they are are much more on the on the monetization. side and and on kind of like actually building an an arroy machine rather than building some like state of the art product that is just okay it's pure retention, it's it's amazing and it's way higher than than like play the sa the genre or subgenre benchmark.

Yuri Sokolov (1:04:05)
But I I want to I don't know if it's to challenge this approach or something. It's not the challenging appro to challenge the approach, it's more like a belief system. So basically, in order to understand what you're saying right now, you need to have experience. so if I want to build for ROI, I need to have this experience, what it is like not to build for RY and and to deliver a product in one year. So I need to know what what I'm looking for, what numbers to look for, what what is a success. I need to know what a success or not success looks like. And then what you're talking about, and correct me if I'm wrong, it's probably most of the found founders that you're talking about. They're second, third time founders, they're not newbies in the industry. And today You can't really start a company with a product, at least in in our environment, in mobile games and casual games, that will say, Okay, I I'll deliver some kind of a product in a year or two from now, and then we'll see. It's just not feasible, nobody will will invest in you, and it will break. So, how do new founders that don't have this experience working in today's environment can enter this market and and you know find funding and the other thing you said previously is that people are kind of looking at games in the market and if the game has not delivering enough value they they're abandoning the game, they're churning and so I don't believe a a team, a small team of startup in a couple of months can deliver enough enough content so when we're looking at numbers for a game for a prototype game that was shipped in two three four months maybe those numbers are incorrect because the game is not big enough because so kind of a chicken and an egg no

Daniel Mironov | vgames (1:06:27)
Some extent, but let's let me let me answer those. so first part on the experience. Most founders that start a gaming studio usually they would have experience working for a gaming company. so at least they saw a cycle of production, they saw an an operating game, most are coming from successful gaming companies that have some big and successful titles that are making money. There are very few today that are going into the gaming industry with like completely zero experience. And we actually saw some of those. We we suggested that maybe you wanna go and work for a year in Moonactive and just just see how how how this how this kitchen works before you start your own restaurant.

Amit Netanel (1:07:17)
That's very gentle of you to to tell them to do it do that. I think.

Daniel Mironov | vgames (1:07:22)
but again like if if you if you decide that you want to become a founder, it's well maybe life journey it's it's a big statement, but it's gonna be like big part of your career. You're going into an adventure of of years. it can easily take five, ten years, right? So

Yuri Sokolov (1:07:42)
Mm-hmm.

Daniel Mironov | vgames (1:07:43)
coming more prepared for this battle might make it easier, right? especially when again, like the the the odds are stacked against you all the time. Everything like doesn't matter if you're a first time founder, second time founder, doesn't matter how many f times founder, the market is still tough. So anything you can do like to to shift it even a bit in your favor, yeah probably it's a good idea. so and also i if if you ask me, I think there are there are not as many founders today that are going into the gaming industry. with a with a little experience. let's say like new grads, either from the army or from the

Yuri Sokolov (1:08:22)
Mm-hmm.

Daniel Mironov | vgames (1:08:23)
university, most of them are going into to work into other industries, right? cybersecurity, creating a ton of like attracting a ton of young talent from whatever elite IDF intelligence units Probably the best developers are going into cybersecurity, into some other AI startups. very few of them are are building in in games. In my opinion, that's one of the biggest problem for us as a as a as an industry here here in Israel.

Amit Netanel (1:08:56)
As an industry. Right.

Daniel Mironov | vgames (1:08:59)
In Turkey it's very different. Best candidates, best grads are going into gaming. that's that's

Yuri Sokolov (1:09:07)
Really?

Daniel Mironov | vgames (1:09:08)
that's and that's that's a kinda like they're attracting top talent. They're also paying them really, really well. They have super successful companies that can that can afford it and and it's like part of their strategy. but that's

Yuri Sokolov (1:09:22)
I think it's it's because Turkey is on the rise with the with the gaming environment. So like like cybersecurity is for Israel, gaming is for for Turkey. Yeah, I I can I can understand it.

Daniel Mironov | vgames (1:09:34)
For sure. Mobile gaming is is probably one of the most important industries today in in Turkey. well especially in like in in the same tech. and it kind of creates a lot of hype around this, right? So like a lot of people that are like are are are graduating they they want to work in this industry because it it it pays well. people are getting rich from whatever being either initial employees in some startups or or just being like joining some some big companies and advancing their careers there. so I would say yeah like some experience in games definitely important because it's very difficult to kinda like wing it and and just like you know I'll I'll figure it out.

Yuri Sokolov (1:10:27)
Mm-hmm.

Daniel Mironov | vgames (1:10:28)
but I think like a little experience is is so is needed and and actually it's it's good for founders to have. And if if like you need certain detour before you're starting a company might be not necessarily a bad idea.

Yuri Sokolov (1:10:42)
Mm-hmm.

Daniel Mironov | vgames (1:10:43)
now the the second question on the on on retention and on expectations. yes there there's there's it's it's always like a chicken and egg, right? You're you're you're chasing something but you're like you're not fully equipped for this. You also operate

Yuri Sokolov (1:11:01)
Mm-hmm.

Daniel Mironov | vgames (1:11:01)
on a small scale. So I can always say that, okay, a a huge competitor of yours that have a million of DAO, they they have a very well-established game in terms of features, in terms of whatever people that are operating this game for sure. but you have much less users, right? You have like thousands of users, you should be able to keep them well satisfied and excited about about the game because it's it's kinda like those are like your biggest fans. If you can't

Yuri Sokolov (1:11:36)
Mm-hmm.

Daniel Mironov | vgames (1:11:36)
make them happy with with a little resource then yeah probably it's not gonna scale well. but as as as I mentioned earlier, yeah teams are kinda trying to create more content into their game to indicate to the users that it's worth to spend time on it, right? There there's a lot more in this game. So there's there's there is content. it's like it's the game is operated as well. But usually eventually the if the core loop is tight and it's good, you'll see the indication in the retention numbers without all the bells and whistles like around it. maybe you won't be able to see see like incredible day thirty, but day one and day seven it's much more about the the actual core game rather than

Yuri Sokolov (1:12:30)
Mm-hmm.

Daniel Mironov | vgames (1:12:31)
everything around it.

Yuri Sokolov (1:12:34)
how do you see the future of this industry? Because we have a lot of disruptions. We have the AI naturally that taking over and making things different somewhere it's more difficult, somewhere it's Less difficult, it's vice versa. And there's also a trend of hybrid casual on the rise. And hybrid casual usually not invested by VCs, if I understand correctly. It's it's more like publisher deals. The same that all the publishers that worked with hyper casual so far, they're trying to make a shift towards hybrid casual. So How do you see the future? How many games we will produce in the casual market, or maybe we'll shift to something else until you'll say, Well, you know what? That's enough. I'm shifting to other businesses.

Daniel Mironov | vgames (1:13:38)
So a few observations. So first, yeah, the that like the the industry becoming more and more competitive, some founders decided they want actually to go into other directions, some kind of like emerging markets. We discussed microdrama as one of like emerging trends in consumer

Yuri Sokolov (1:14:01)
Mm-hmm.

Daniel Mironov | vgames (1:14:03)
space and some are kind of like going in that direction. Consumer in general, consumer apps is also a domain that I know some previously gaming founders went into this direction. but I don't think the industry will change dramatically. there will be more attempts or kind of like more content created. But they're still like it's still gonna behave in the same way, right? Like they're the the winner takes most or winner takes all economy will will will prevail in mobile gaming in all of the all of the categories. hybrid casual it's sort of like an evolution of hyper casual. actually

Yuri Sokolov (1:14:53)
Mm-hmm.

Daniel Mironov | vgames (1:14:53)
VC funds including us are investing in such studios. I I don't think it's it's kind of like more similar to casual rather than hyper casual. Depends on the studio. yeah,

Yuri Sokolov (1:15:06)
Yeah, yeah, yeah. It's casual with live ops.

Daniel Mironov | vgames (1:15:10)
exactly. the quality of production I wanna believe that for for winning titles will go up. Also the expectations from the user is constantly going up. the distribution will remain expensive and probably become even more. So like if like the the industry becoming even more competitive. And most of the competition is coming from the from the Far East. Chinese developers are are doing an unbelievable job

Yuri Sokolov (1:15:40)
Mm-hmm. On the rise.

Daniel Mironov | vgames (1:15:44)
in into kinda like penetrating and and in certain genres and almost completely owning them. And I don't think that will change. So we will come to more genres and and create good games that

Yuri Sokolov (1:15:59)
Yeah, they're start they're starting even to to come really strong into PC market and PC and console market, they they're really

Amit Netanel (1:16:08)
Sure. Yeah.

Yuri Sokolov (1:16:09)
strong in in this regard lately. yeah, the competition is strong there.

Daniel Mironov | vgames (1:16:15)
A hundred percent.

Amit Netanel (1:16:15)
Yeah, every time I look at the every time I look at the the gacha games ranking, I have to remind myself these are numbers just from iOS and Android. Okay, that are public. We don't see the Steam numbers and all the other like platforms these games are available on. It's cross progress. it's kind of scary. Gotta admit, it's kinda scary.

Daniel Mironov | vgames (1:16:41)
it is but we also can learn a lot from from our competition. I think studio should definitely pay attention on what's what's what's happening, what's emerging in in China or like in in in Asia in general. I would also think that a lot of IPs would look for to make deals with with gaming studios. I'm talking about

Yuri Sokolov (1:17:10)
Mm-hmm.

Daniel Mironov | vgames (1:17:11)
like whatever Hasbro Disney. obviously there are there are some huge success stories in the past few years like Monopoly Go, Disney Solitaire, that were able to create a fantastic collaboration between an established brand and a strong gaming studio that's giving an edge on on distribution and on retention. so I'm thinking that those kind of collaboration will continue and probably will even tighten because that's that's one of the differentiators that would be very difficult for to secure for Chinese studios. So the Western studios can actually unite forces with with IP holders in kind

Yuri Sokolov (1:17:53)
Mm-hmm.

Daniel Mironov | vgames (1:17:54)
of trying to create a a distribution edge. I don't see any new emerging platform capturing like the the audience the same way mobile did in in like whatever early like late two thousand, right, two thousand eight or something. Well that's yeah that that that didn't happen.

Yuri Sokolov (1:18:13)
What about metaverse?

Amit Netanel (1:18:16)
A what? Yeah.

Daniel Mironov | vgames (1:18:19)
So I think like the VR didn't really happen, AR didn't really happen, so it was it was and probably will remain as kind of like emerging edge platforms. so AI maybe, but like I I still don't see how it's actually working as a as a distribution engine. which means that gaming will remain mostly on mobile PC and console, at least for for the near future. so I think the the industry's gonna be more competitive. there's still there always gonna be like winners that came out of nowhere. We're gonna observe it all

Yuri Sokolov (1:19:06)
Mm-hmm.

Daniel Mironov | vgames (1:19:07)
all the time.

Yuri Sokolov (1:19:09)
Mm-hmm.

Daniel Mironov | vgames (1:19:10)
and and that's kinda like that's that's what the industry is about. you can actually make a game and make a successful business out of it. It becomes more difficult but it's but people are still looking to play new games and explore new ideas. and There there always will be like some emerging stars that combine different mechanics that no one thought that can be combined

Yuri Sokolov (1:19:38)
Mm-hmm.

Daniel Mironov | vgames (1:19:38)
and executed at well. and also had a little bit of luck, which is also very important in this industry and and and think not many whatever realize that. and and they will do really, really well. But yeah, it's a hit driven business. not everyone will be able to to create a a big business out of out of their gaming studio. but that's always was the case. it's it's

Yuri Sokolov (1:20:07)
Mm-hmm.

Daniel Mironov | vgames (1:20:08)
kinda more difficult now, but I mean it's it's always was like a a a head driven business and winner takes most.

Yuri Sokolov (1:20:17)
Yeah. Before we move to one of the topics I really liked to talk during this conversation is about your new indie fund. I had this idea just now, I thought of it just now. so I'm really curious your perspective on the matter. Are you familiar with the game pal world? Yes. So as an investor, if somebody reaches out With an idea like a Pileword, and you're looking at it, and it's obviously Pokemon, right? It's

Amit Netanel (1:20:53)
Pokemon but with guns.

Yuri Sokolov (1:20:55)
yeah, yeah, but they they had multiple other games, they have mobile games right now, so it's you see Pokemon. How how fast do you say no to them? That's basically the question. Or

Daniel Mironov | vgames (1:21:09)
That's a good question. look, I'm I'm not a legal expert. That's that's why we have

Yuri Sokolov (1:21:14)
That that's exactly why I'm asking.

Daniel Mironov | vgames (1:21:16)
that's that's why we have very strong legal partners that are helping us on on the due diligence when we're coming to invest in a company. And I might say, that that's amazing, that looks fantastic, let's let's let's back them. but that there is a process that's called legal DD. And we're a financial institution and we kind of we have to do this and we have

Yuri Sokolov (1:21:41)
Mm-hmm.

Daniel Mironov | vgames (1:21:41)
to receive our red red flags and warnings from from our legal partners. And they probably might say, Look, yeah, I mean, i you're not a cowboy, you can do that. look for something else. there there are a lot of there are a lot of opportunities out there in the market. so th there are some guardrails for sure. but also remember that games in general are are like there there are a lot of things that were adapted or or taken from one game to another. It it happens all the time. the the main question is how how similar it is. and and and that's kinda like the where where you need to decide if you want you know if you want to do that or not, how close it is if it's if it's too much, then yeah, probably we're not gonna do that. but you can find references almost from for for almost any game that looks similar to to something else. I think

Yuri Sokolov (1:22:51)
I'm talking as a as a fan. I'm

Daniel Mironov | vgames (1:22:53)
Mm-hmm.

Yuri Sokolov (1:22:53)
looking at and and we need to we need to remember that in a lawsuit, Nintendo lost. They powered retain the right to continue. So basically, for from legal perspective, somebody, nobody expected, right? I didn't expect it. Because from where I stand, I'm looking at it. It looks exactly like Pokemon. You you you see monsters there, and you can put a Pokemon next to it and say it's exactly the same thing. And I'm not talking about the the Pokéball mechanics that they did, actually about art assets and well, they they kind of succeeded in their lawsuit and intend the lost. So it's theirs as their side, but That's what got me curious. If you're looking at something like this, would you take a leap of fate in in such a product?

Daniel Mironov | vgames (1:23:54)
Yeah. Look, it's difficult to answer.

Yuri Sokolov (1:23:58)
Mm-hmm.

Daniel Mironov | vgames (1:24:00)
I don't know, right? there there are some again, there are some cases that's like I like an idea. it's not happening very often. But I get the legal opinion that's saying that for for any reason this this let's say is it's not an IP infringement, this is like whatever borderline gambling, whatever they're doing. It's it's like not

Amit Netanel (1:24:21)
Mm.

Daniel Mironov | vgames (1:24:24)
you know it's a very gray area. It's it's risky and

Amit Netanel (1:24:24)
It's risky. It's just risky.

Daniel Mironov | vgames (1:24:26)
and you're like

Yuri Sokolov (1:24:27)
Mm-hmm.

Daniel Mironov | vgames (1:24:29)
you you have to be aware of of of this. and yeah in in some cases that okay that's that's too much for me. I I don't want to do that. on IP and and we didn't have such cases that like okay it's so similar

Yuri Sokolov (1:24:47)
Mm-hmm.

Daniel Mironov | vgames (1:24:48)
and also again when usually we come in to invest it's way earlier. There like it's

Yuri Sokolov (1:24:56)
Mm-hmm.

Daniel Mironov | vgames (1:24:56)
it's not that I can see a game like, my god, it looks exactly

Yuri Sokolov (1:24:59)
Mm-hmm.

Daniel Mironov | vgames (1:25:00)
like Pokemon. It's it's way earlier than that.

Yuri Sokolov (1:25:04)
Mm-hmm.

Daniel Mironov | vgames (1:25:05)
so usually I don't have to make this decision of like, okay, this is like whatever finished product, it looks exactly like someone else. and also I know that in most cases, the the whatever the court or or authorities decide in favor of the of

Amit Netanel (1:25:27)
Mm.

Daniel Mironov | vgames (1:25:27)
the small studio rather than unless it's like in it's it's like just purely stolen. Because if if there's just

Yuri Sokolov (1:25:35)
Mm-hmm.

Daniel Mironov | vgames (1:25:36)
a little bit of difference it's it's good enough for them to kind of remain independent and not to remove their product. but yeah it's it's it's always like an open open question. I I'm wondering like what what their metrics or like what what their retraction was before they released. I I don't remember, to be honest. So

Yuri Sokolov (1:26:02)
They they did a huge buzz before the release. I think mainly thankful thanks to to the similarities between their game and Pokemon game. And yeah, they they hugely successful.

Amit Netanel (1:26:14)
Yeah. They they also they also released their early access where while survival build your own base game had a huge moment because of Welheim the year before and many other games in that genre. So they had luck as well. Yeah.

Yuri Sokolov (1:26:29)
And now there's multiple mobile games. I I don't think they even build the mobile games themselves. I think it's third-party companies that develop them with their IP. So yeah, yeah, they did they did a leap of fate. And if I'm thinking about it, so as an investor, let's say they actually do an IP infer, let's say one of your companies, your portfolio companies. doing IP infringement. So for you it it doesn't really matter, right? So it's it's a loss, it's a loss of the money you invested. If if the company will be closed, then you won't kind of gain the rewards you you were hoping to to get. But isn't it like it's not really touching you the legal matters? It's it's kind of going over your head.

Daniel Mironov | vgames (1:27:23)
No, o of course it does. there first there's a reputational risk, right? Like usually there are not as many buyers on the market and if they own the AP, it would be very difficult for me to sell companies for them if I if

Yuri Sokolov (1:27:40)
Mm.

Daniel Mironov | vgames (1:27:41)
I if I like one of my whatever portfolio companies stole from them. So that's that that's kind of one. Second in many cases I'm a I'm I'm on board of those companies and I actually can get sued. So th there is a responsibility that you

Yuri Sokolov (1:27:59)
Mm.

Daniel Mironov | vgames (1:28:00)
take as an investor in the company. You're a shareholder, you're a board member, you can do whatever you want. It's it's it's not that like, okay, I can just like abandon this ship. also

Yuri Sokolov (1:28:12)
Mm-hmm.

Daniel Mironov | vgames (1:28:13)
think think about the founders, right? They they're they're building something, it's their life.

Yuri Sokolov (1:28:18)
Mm-hmm.

Daniel Mironov | vgames (1:28:19)
You can just ditch them and say like, okay guys, well it's it's your problem. y you're responsible for them both on the kind of like the official level, as as

Yuri Sokolov (1:28:31)
Mm-hmm.

Daniel Mironov | vgames (1:28:32)
as kind of like part of the company governance, but also interpersonal. the the relationship between us and our founders is is is very tight. We we go a long way together, we see them across very different stages. both in their lives and their professional lives. so going through something like that would be very emotional for for us and for them for sure, because for for for many of them, for most of them, that's that's their kind of like life bet. so if if something is happening to their life bet, which is like not even the market, it's it's it's some kind of like external cause, will have a huge impact both on us and on them. So

Yuri Sokolov (1:29:19)
Mm-hmm.

Daniel Mironov | vgames (1:29:19)
I yeah, prefer to stay clear and clean as as much as I can.

Yuri Sokolov (1:29:28)
Happy happy to hear this. It's actually it's actually nice to hear it. so an Indie fund.

Amit Netanel (1:29:36)
I th I think I think yeah, they they waited long enough. The listeners from the beginning of the video.

Yuri Sokolov (1:29:40)
Yeah, an Indy fund. What what's what's this all about?

Daniel Mironov | vgames (1:29:43)
I'll I'll I'll tell you. when we started V Games again six years ago, we were investing primarily in mobile gaming companies, but we actually did a few PC investments as well. And I think I as I mentioned w we we're doing mistakes as well and we're doing mistakes all the time. and one of the mistakes that we did was investing in PC and console focused. founders or companies and trying to measure and expect from them the same that we expect from mobile gaming studios. And it was a it was a big mistake. First we went into backing mostly and basically only free to play PC and console gaming companies and and and games eventually and we were expecting the same kind of returns from them as we expect from mobile but The life cycle of of of a gaming studio for for PC and console, it works in a very different way. usually like the successful ones are building IPs, it takes them a lot more time to get to the market and and like create in one game, second game, third game, and so on. Then they might become successful if they can like survive all of it and found their audience. they don't have they they don't gain from capital as much as mobile gaming companies do. because if if you have a successful mobile gaming studio, more money means more user acquisition, you can actually grow. Well it's it's not

Yuri Sokolov (1:31:20)
Mm-hmm.

Daniel Mironov | vgames (1:31:22)
as easy but i money helps you. for PCM console you can create a bigger project but it doesn't mean that you will actually will be able to transform it into more sales. So we were approaching it in a way that I wouldn't do this now having this having this experience and we decided we want to focus more on mobile for our kind of like main fund. But since since we're operating in in gaming in general we're getting approached a lot by founders that are building in in both in PC in console in in everything right and

Yuri Sokolov (1:32:01)
Mm-hmm.

Daniel Mironov | vgames (1:32:02)
as as our strategy we do want to To work with founders across all platforms. We don't want to be like only mobile focused fund. want to be to be to become like a a brand or a financial backer or a partner for gaming founders. that's it. Doesn't matter what kind of

Yuri Sokolov (1:32:24)
Mm-hmm.

Daniel Mironov | vgames (1:32:25)
platform they're building on because today it's mobile, tomorrow it's gonna be, I don't know, maybe there will be some AI kind of games. so we don't want to focus only on one. And we came with the idea that we need to change our strategy about PC and call. So we still wanna cover this market, but we need to think of it in a different way. and our our way of thinking changed that instead of doing equity investment when we invest in in actual the company and wait for many years for it to for them to kind of to sell and to to exit and then that's the way we're making money, which works. Pretty well on mobile because that's usually the the goal of the vast majority of founders that are starting the mobile gaming studio. They want to sell eventually. for PC, not necessarily the case. so we change the model from doing equity investments when we're investing in the in a company. we do project financing, so similar way to how publishers are operating. when we're we're still providing capital and still taking a risk on the capital. But we're partnering on a specific project or on a specific game. And then we're doing a revenue share deal with this with this with this group of founders. and what what makes us different compared to to publishers, that we are not taking any IP rights. I'm not sure if how how if if you're aware or not, but usually the publishers

Yuri Sokolov (1:33:55)
Mm-hmm.

Daniel Mironov | vgames (1:33:56)
would want your entire franchise forever. because that's that's basically how they are making money, right? They they want I I yes, exactly.

Amit Netanel (1:34:04)
Mm-hmm. They want the sequel and the sequel sequel.

Yuri Sokolov (1:34:04)
Mm-hmm.

Daniel Mironov | vgames (1:34:07)
Exactly. They want if if this is gonna be a successful franchise, they want a piece of it forever. so we're not we're not doing that. we're not distributing the game as well for you. We're taking a risk for capital. What we're we're looking to work with founders that want to distribute their own game. and we understand that's that's not all of the founders. but I actually believe that if we're talking about indie developers, they're the best people kinda to market their own game because they're it's much more genuine. They're talking directly to their community. There's no like someone in the middle. It's it's them who built it and they're they're

Yuri Sokolov (1:34:44)
Mm-hmm.

Daniel Mironov | vgames (1:34:44)
kinda talking on their own behalf. so I I I really believe like that that distributing on your own is especially for an indie developer is is a good strategy. So we we're not doing this for them. we're not taking any equity investments, we're not doing any tranches, so like there's no like milestones or anything like that.

Yuri Sokolov (1:35:10)
Mm-hmm.

Daniel Mironov | vgames (1:35:11)
we wanna see a budget and we fund the entirety of it until the game can hit the market. and our revenue share is more modest compared to publishers, again because the the services that we are providing are not comparable to what publishers are doing. and yeah we're we're usually competing with publishers' deals and I have to say that this the speech or this strategy resonates with many founders that prefer to stay truly independent. they still need capital to bring their games to the market but they actually want to remain in control. of their game as as much as they can.

Yuri Sokolov (1:35:59)
Mm-hmm. So but you're not investing in in newly in a fresh game. You're actually expecting some well while in mobile you're kind of taking all the risks, right? You're you're investing on a deck sometimes. Here you're expecting some results before you're putting the money, right?

Daniel Mironov | vgames (1:36:23)
Yeah, I would say what I wanna see is some some distribution signals. I I don't want to see a community that is passionate about an upcoming game. no wish list obviously it's it's very easy to to measure, but that's that's a also a good signal if the game is interesting for the audience or not. the game itself it can be relatively early in the production, but I want to make sure that the capital that we are investing will be sufficient to take the game out to the market. And that's actually a

Yuri Sokolov (1:37:02)
Mm-hmm.

Daniel Mironov | vgames (1:37:02)
a big it's that's a big risk. because if if they won't have enough, because I know something went wrong and they didn't calculate their budget correctly or they didn't whatever, it took them longer. that's that's actually it's it's it's a huge risk for the for the studio because it's very difficult to raise more after you already have some

Amit Netanel (1:37:26)
Mm-hmm.

Daniel Mironov | vgames (1:37:27)
some revenue share partner on board. So we do take a risk for this. We do want to see some distribution signals to come in to a deal. in the end again we we're we're we're a financial investor, we want to make money from from the deals that we're doing. the the expectation is is not the same as with equity that okay we want you to be a two billion dollar company. y you still can make a good game and keep us happy because also the money comes way faster. usually most most indie developers would be expecting to to launch their game a year after taking the money or in that ballpark. so it's it's it works for us. we're we're kinda like we're seeing if if this investment went well or not relatively quickly compared to equity investments

Yuri Sokolov (1:38:26)
Mm-hmm.

Daniel Mironov | vgames (1:38:27)
in

Amit Netanel (1:38:28)
Mm.

Daniel Mironov | vgames (1:38:28)
in a studio that usually takes years.

Amit Netanel (1:38:30)
So what I would suggest for listeners that hear this, if your game is in early access right now, it might be good to to approach you because games in early access have some sort of measurement on concrete data of people buying the game. Okay, because to play it you have to buy the the early access and it's relatively close to being finished.

Yuri Sokolov (1:38:56)
Or Post Demo Steamfest.

Daniel Mironov | vgames (1:38:57)
Hundred percent.

Amit Netanel (1:38:58)
Yeah. Or post demo. Right.

Daniel Mironov | vgames (1:39:00)
Demo, playtests, early access, might be as well. Depends if if like if if you feel that you already captured because today some games are making are already making good money from the early access. but yeah, definitely. what what we want to see is again like distribution signals because we expect the the founders to distribute the game for themselves, right, with with the capital that we're providing. So we want to see that again, someone else someone

Yuri Sokolov (1:39:33)
They know what they're doing.

Daniel Mironov | vgames (1:39:34)
else besides us and the founders are excited about the this upcoming title. I I think it's it's it's very important also because you know I I I can tell by just looking at the game if it's gonna be successful or not. if no one else knows about this upcoming game, it's probably it's gonna be very difficult for me to kinda like underwrite and come into this deal. but on the other side, right, if if this is a game is like okay, it's it's not finished, it's okay, there's like maybe I don't know, whatever, one chapter or or something that's relatively small that it's done. But everyone is super excited about what what's coming and and and they're really anticipating this game. That's that's a very interesting deal.

Yuri Sokolov (1:40:22)
Van regarding the revenue share, how does it structure? Do you share from the first dollar you take some percentage of each dollar or you first recover your investment and then revenue share starts? How

Daniel Mironov | vgames (1:40:38)
Mm-hmm.

Yuri Sokolov (1:40:39)
how does it work?

Daniel Mironov | vgames (1:40:39)
So usually it would work that we have a revenue share until we recoup in our favor. So let's say just like a hypothetical example, usually we

Yuri Sokolov (1:40:51)
Mm-hmm.

Daniel Mironov | vgames (1:40:52)
we do like obviously deal by deal and case by case, so we we price it in a way that fits both us and the opportunity. But let's say we'll do like seventy thirty recoup towards us until until we hit hundred

Yuri Sokolov (1:41:06)
Mm-hmm.

Daniel Mironov | vgames (1:41:07)
percent on our investment. And then we can we reverse it and then we take thirty percent and seventy percent goes to to the founders. My main idea that we do want to have a recoup, or we do want the company to have a cash flow during this recoup period. It might be very short. It it might be like a few days or like whatever

Yuri Sokolov (1:41:27)
Mm-hmm.

Daniel Mironov | vgames (1:41:28)
first month, so it it might not be even like relevant. but if we're going into this recoup period, we want the studio to have a cash flow because they they they want pay salaries of course and we want to keep maintaining the game and and and their business. And after this recall period, we usually would go at like either reverse or or just significantly lower than than 50% because we want the studio to have the upside and again kind of like retain the the value of what they actually built.

Yuri Sokolov (1:42:06)
Uh-huh.

Daniel Mironov | vgames (1:42:07)
Again, the publisher's deal would look similar, but usually would have a lot more on the on the revenue share towards the publisher, and a lot of things that will like limit the upside for future titles under the same franchise if those would come.

Yuri Sokolov (1:42:28)
So kind of I would recommend to people the people that should go to you, I think they're they should be professionals, they should know what they're doing and know and probably not with not a first game that they're coming because publishers

Amit Netanel (1:42:49)
Probably.

Yuri Sokolov (1:42:50)
at the end of the day, publishers provide services. They take in a lot from you, they're also making you work in milestones, as you mentioned. But they also can help you with porting to consoles. They can help you get and and if you never work with consoles, just go try to find a dev kit for Nintendo Switch 2 right now. It's impossible. You need to find a publisher that has has the ability to provide you with with a dev kit or a team that can port your game. They they are providing value, they can help you with marketing the game because they know they have channels so. In in case where you just a builder and and opposed to mobile market, in in game dev in indie game scene, it's often the builders that the dreamers that I'll

Daniel Mironov | vgames (1:43:41)
Yeah.

Yuri Sokolov (1:43:42)
I'll name them the dreamers are succeeding. not by a bulk, but they are. And if you're if you don't know what you're doing, go with a publisher. If you are know what you're doing and you want more freedom, it's more likely, I think. to succeed with with a VC fund, right? is this the direction?

Daniel Mironov | vgames (1:44:03)
I would say to s to some extent. so shipping a game on Steam would give you a lot of knowledge about what actually how it actually behaves, what what do you need to focus on? So

Yuri Sokolov (1:44:19)
Mm-hmm.

Daniel Mironov | vgames (1:44:19)
yeah, some are okay, it's not their first game, some like it's it's even studios, like they they they work as work for hire, now they want to work on their own game. they know a lot about the the production, so they're they are experienced and now they actually want to fund their own kind of like their own IP. but we actually see some some solo devs, some like well dreamers as as you call them, that have

Amit Netanel (1:44:47)
Mm-hmm.

Daniel Mironov | vgames (1:44:48)
a lot of signals on their upcoming title. and yeah they they will probably be deciding if to to go with a publisher or to go with like more kind of independent source of funding such as ourselves. and they need to decide if if they want how much involved they want on this kind of like side of business.

Yuri Sokolov (1:45:09)
Mm-hmm.

Daniel Mironov | vgames (1:45:10)
do

Amit Netanel (1:45:10)
Mm-hmm.

Daniel Mironov | vgames (1:45:11)
they do they want to build a team that actually will do the distribution in house? Do they want this kind of like muscle? Or or they want to focus just purely on building and then yeah like publishers will cover it for them. it It's it depends a lot on on the founders and what actually they want to achieve down the line. I would argue that they will learn a lot more from going the independent route. I also think

Yuri Sokolov (1:45:35)
Mm-hmm.

Daniel Mironov | vgames (1:45:35)
that they will gain probably financially more from that because the the trade off, in my opinion, obviously I'm I am biased, but in my opinion the trade off is not worth it. You're giving too much to for for like for the for the services that you that you mentioned, like yeah

Yuri Sokolov (1:45:55)
Mm-hmm.

Daniel Mironov | vgames (1:45:56)
like QA distribution, porting maybe as well. but I think and also again like i you you're you're you're moving slower as well, right? Like both on on the contract side. the publishers

Yuri Sokolov (1:46:10)
Mm-hmm.

Daniel Mironov | vgames (1:46:10)
are incredibly slow in in the way that they're operating. but also in like okay you have a partner that you work with. you're you're not independent in the same way and and some would actually prefer this and some are not.

Yuri Sokolov (1:46:24)
Mm-hmm.

Daniel Mironov | vgames (1:46:24)
So I I don't think there's like one answer that would work for for all.

Yuri Sokolov (1:46:28)
Yeah.

Daniel Mironov | vgames (1:46:29)
but I'm sure that there's a segment in the market that there are some that there are people that really want it really like carve this independency and want they want like this full experience of of them owning everything end to end. and maximizing the value that they can get from it.

Yuri Sokolov (1:46:51)
Mm-hmm. So the question that comes to mind with this fund is is a hard one.

Daniel Mironov | vgames (1:47:00)
for

Yuri Sokolov (1:47:01)
what it is for you, like at the beginning of this conversation, we talked about the fact that when you're investing in a mobile company, you you don't want the 30, 40 million dollars sell. You're expecting billions. that's what you're aiming for. And here you're opening a fund and correct me if I'm wrong, the ten million dollars fund and something roughly up to half a million per per company per game, sorry.

Daniel Mironov | vgames (1:47:31)
Mm-hmm. Yep.

Yuri Sokolov (1:47:33)
And and the expected reward from this would be much probably probably much smaller than any mob success relatively successful mobile game.

Amit Netanel (1:47:44)
Than than the unicorns

Daniel Mironov | vgames (1:47:45)
Yeah, yeah.

Amit Netanel (1:47:46)
that you're hoping for with the mobile map.

Yuri Sokolov (1:47:46)
Even not unicorns, I I'd assume I'd assume a game that that earns three, four, five million dollars on Steam i is is really successful game. So how does it work in your in your world?

Daniel Mironov | vgames (1:48:03)
Yeah. So a few things. first I I I believe that the multiples for this fund are gonna be great. just because it's it's relatively small fund. It's easier to make money on smaller amount of money.

Yuri Sokolov (1:48:18)
Mm-hmm.

Daniel Mironov | vgames (1:48:19)
and I do think there are enough opportunities to back those like ballpark half a million dollars companies. we're in to find about twenty of those. and and like Yeah, make those good multiples in short period of time. It's also very important because as as a fund we're measured on IRR, like the the the annual return rate that's

Yuri Sokolov (1:48:42)
Mm-hmm.

Daniel Mironov | vgames (1:48:44)
we provide to our investors. And in Indie developers I do believe that the cycles are gonna be way shorter. again, to to

Yuri Sokolov (1:48:54)
Mm-hmm.

Daniel Mironov | vgames (1:48:55)
to hit our returns, we don't need to wait for five, six, seven, whatever years. It's either either it's happening in those like a year well or year and a half or or it's not. So it's it's way clearer where where you actually stand. I also it's it it helps us on our our strategy. We don't want to cover only like half of the gaming market. it's it's not right for us as a as a fund. We want to work with all gaming founders, w with the best ones. and doesn't matter w what they're built for. I think it it s significantly increases our our network. It also increases our knowledge on on how those platforms are operating. And you know like I'm I'm I I do believe that some of those games can can become mobile titles at some point in time. Maybe it's like not realistic with current

Yuri Sokolov (1:49:51)
Mm-hmm.

Daniel Mironov | vgames (1:49:52)
technology, but good games should be cross everywhere right like they should be played on on all platforms possible. so I just don't want to yeah

Yuri Sokolov (1:50:03)
We just talked about Pellworld that moved to to mobile.

Daniel Mironov | vgames (1:50:07)
b ballotry you mentioned, right? Like it's you're you're playing it

Yuri Sokolov (1:50:09)
Mm yeah, yeah, yeah. It started

Amit Netanel (1:50:10)
Mm-hmm.

Yuri Sokolov (1:50:12)
across the board. It I I think it started on all platforms, including mobile, and I'm playing it mobile exclusively.

Daniel Mironov | vgames (1:50:21)
Yeah. So so we don't want to turn a blind eye for for such a big part of the industry. and I would say that so this fund also is it's it is some sort of a pilot for us. we

Yuri Sokolov (1:50:37)
Mm-hmm.

Daniel Mironov | vgames (1:50:37)
are I'm I'm very aware that we're relatively new to this particular market. I I I do believe that there are some good opportunities that we can back and judging by like the attention that we got from the PR, the market is is really looking for for any financial backers at any

Yuri Sokolov (1:51:01)
Mm-hmm.

Daniel Mironov | vgames (1:51:02)
size, shape or form. So when when we bring our fund to the market it's it's very well received. We have a lot of opportunities to back and I do think that we'll be able to choose those. That will make us and our our investors very, very happy. to say that I know how to deploy a hundred million dollars into the same strategy, well I don't see it yet. but ten million I think we can do really good.

Yuri Sokolov (1:51:32)
And what about AI here? It's it's just that the PC console community the the the re they receive AI really poorly. So today if a game is suspected to use AI and naturally the the the shaming on Steam that you have to put a tag that I've used AI and how

Amit Netanel (1:51:58)
And exactly what for and

Yuri Sokolov (1:52:00)
yeah yeah how does This effect. So naturally in mobile, when you're when you're evaluating a game for a mobile market, you're saying how founders can utilize the modern technologies to improve their chances to succeed. Would you evaluate the same things here with with indie titles, or it's not necessarily because of the situation let's call it that

Amit Netanel (1:52:32)
Yeah. Or or is it just background noise that you shouldn't even consider? Which is also an option.

Daniel Mironov | vgames (1:52:39)
It's I would say the following, like speaking to many Indi developers, most are using AI today. Even i like they they're using it in a way that you won't be able to tell, like that their user base or their players won't be able to tell. so almost everyone, almost everyone I spoke to saying that they're using it in code. So like they're not writing code. on their own, they're using whatever tool of your preference to help them scale. because I think it's well it's it's impossible to tell if if it was done by a person or not and no one really cares as well. Like no one's gonna like whatever r research that

Yuri Sokolov (1:53:25)
Yeah, nobody cares about code. Our our our craft is disposable. It's the art that

Daniel Mironov | vgames (1:53:32)
Yeah.

Amit Netanel (1:53:31)
Yeah.

Daniel Mironov | vgames (1:53:32)
And art it it depends, right? Like if it looks like AI, then yeah, you'll get backlash. If it doesn't, no one will really gonna know. and I feel that over the time we'll see more and more AI application in PC games as well. just because AI is gonna get better and and you won't be able to distinguish between human work and and AI work. so I think it will eventually it will become a a noise, right? So like it won't it won't be very it i it wouldn't matter. but today obviously again th they're building for their audience. If their audience doesn't want them to use AI for art, then well they they they won't. so they should still ship their game on and I mean work work fast because if if you're like too slow then then you're creating like issue with hitting your own deadlines and then you can run out of cash which I imagine being like one of the most significant risks for for the indie studio just because it's much more difficult for them to raise like another round or another portion of capital.

Yuri Sokolov (1:54:54)
Mm-hmm.

Daniel Mironov | vgames (1:54:56)
so I would say that it's They they have probably like less tools than mobile gaming studios, but still kind of like measured in a similar way that working fast and and knowing how to manage a production cycle is is very important.

Yuri Sokolov (1:55:19)
So this Amit is a perfect place to

Amit Netanel (1:55:23)
Mm-hmm.

Yuri Sokolov (1:55:23)
to do what we haven't did in this episode, is to mention Jonathan Blow regarding working fast, because the dude worked ten years.

Amit Netanel (1:55:31)
I I really thought that you know since our last last recording and now Jonathan Blow has released a huge demo for Order of the Seeking Star. And yeah, he's he's the he was one of the real stars of the most recent Nextfest on Steam.

Yuri Sokolov (1:55:54)
Mm-hmm.

Amit Netanel (1:55:55)
And yeah, I mean. He he will always be an outlier and a counter example to everything each guest will come and say, right? Because they took ten years to write their own engine and every time they they exhausted their

Yuri Sokolov (1:56:09)
On programming language.

Amit Netanel (1:56:11)
money, like he came up with another way of getting more of it. And it looks like the game is going to be a hit. I don't know if it w it will recoup like the millions of dollars Hundred and twenty, I think, million dollars it costs to develop that game, something like that. Something crazy. But it's ten years across ten years in with different team sizes. So I don't know. It's not that exaggerated. So

Yuri Sokolov (1:56:39)
Hey, if anyone listening to this podcast knows Jonathan, we'd love to to to speak to him and maybe get him back a few dollars through a couple of listeners that we have that might buy the game. So

Amit Netanel (1:56:55)
I don't think he needs the money. And by the way, I'm willing to bet that he gets invitations for podcasts daily. But he he actually he actually appears sometimes, so I don't know.

Yuri Sokolov (1:57:05)
Yeah, yeah, and he visits them. He appears on a lot of them. So as a closing word, we first of all I really enjoyed this conversation, as always. It's it's always a pleasure talking to you and kind of learn a lot new things. Do you have anything you would recommend and we're in in terms of maybe a game, a movie? You you watched recently, a book you read recently to our audience.

Amit Netanel (1:57:35)
An activity like touching grass and going outside, anything you would recommend our listeners to do.

Daniel Mironov | vgames (1:57:43)
well it's spend

Amit Netanel (1:57:46)
That's the usually the toughest question we pose.

Daniel Mironov | vgames (1:57:49)
spend time with your kids if you have them. I I think it's Yeah.

Yuri Sokolov (1:57:53)
If you don't have them, don't spend time with them. Please don't.

Amit Netanel (1:57:56)
Yeah. Please don't.

Daniel Mironov | vgames (1:57:59)
but for me that's that's what's kinda like giving me a lot of energy. I'm learning a lot from them. It's nothing comes close. kinda gives you the purpose in life in a way. So I know it's not applicable to everyone, but with all the busy schedule and everything, you know, like spending time with them, watching them grow, giving them I believe some some some tools or or ways to to live in a world that's that's changing drastically. that's that's kinda what gives me energy, so I think it's it's a time that's were very well spent.

Yuri Sokolov (1:58:46)
Yeah, I I can definitely relate. We

Amit Netanel (1:58:47)
I agree. Definitely agree.

Yuri Sokolov (1:58:49)
and if you don't have kids, the other best thing you can do is go make them. Even if you don't succeed,

Amit Netanel (1:58:56)
Ha ha ha.

Yuri Sokolov (1:58:57)
it's it's a pleasurable activity. So yeah. thanks thank you all for listening. I had a huge pleasure. Thanks, Daniel. See ya.

Amit Netanel (1:59:09)
Thank you so much for

Daniel Mironov | vgames (1:59:09)
I fell guys.

Amit Netanel (1:59:10)
spending the time and see you in the next one.

Daniel Mironov | vgames (1:59:13)
Thanks so much.

Amit Netanel (1:59:16)
Right.