James Portnow knows how the economic turmoil can upset the best-laid plans. After he started his online game company, Divide by Zero, nine months ago, he tapped his network and rounded up six investors who promised to contribute $600,000 to his startup.
But a few weeks ago, one of the angels told him that a promised $100,000 wasn’t coming. Now Portnow is in a scramble to find a new angel to replace the other. It’s a pickle that’s familiar to many startups out there, according to a story that ran in the New York Times recently.
Portnow’s Seattle company has had to keep its angel round open as it seeks the replacement investor. The problem is that the time has come to move its game from the prototype stage toward full development. The good thing is that one of Portnow’s remaining investors is venture firm Spyglass Ventures.
Closing the angel round quickly is important because Portnow has to raise a full institutional round soon. It’s tough, he said in an interview, because his own network of angel friends is tapped out. (Anyone out there got $100,000 to invest at a $1.1 million pre-money valuation?). Once he gets that money, he’ll have a more comfortable cash cushion. And then he can move into talks with publishers and venture capitalists about doing a more substantial round at a different valuation.
It will be interesting to see if he can pull this off in a tough economy. Portnow (pictured sitting) has 10 employees now and will add more once full-scale development is under way. He is founder and chief executive at Divide by Zero. He writes columns on game development for a variety of publications, including Edge magazine, and formerly designed games at Activision. His team members have worked on hit games such as Pirates of the Burning Sea, The Spoils, and Aion.
The company’s first game, dubbed Empire Online, sounds unique and addresses some holes in the market. First, it’s an online-only real-time strategy game where you control military units and try to conquer territory as the enemy tries to do the same. The battles are anachronistic, since you can use someone like Isaac Newton (with gravity weapons) to take on someone like an Egyptian chariot rider from another era.
The play is simultaneous, not one turn at a time as with many online strategy games. These kinds of games are very popular in single-player PC games. Age of Empires comes to mind, but there aren’t many of these games being made.
On top of that, the company will have collectible cards and persistent characters. You play a game for a short time in battles of eight versus eight or four versus four players. If you win, you can capture the loser’s cards and gain veterancy for your own character. The next time you play, you’re better equipped. You can play with famous heroes from a variety of mythological or historical periods. Since the creatures are mythological, no one owns them, so they are in the public domain. The wide variety of myths and cultures means the game can have worldwide appeal.
Portnow is making Empire Online into a free-to-play game, meaning it costs players nothing to start. Players start dishing out money if they want to upgrade their units or characters. These so-called micro-transactions for virtual goods are a hot business model these days. Players will be able to auction their goods off to other players if they want.
Portnow won’t have any easy time pulling off his plans. But some good thinking has gone into the preparation. Overall, the company’s burn rate is low at $35,000 a month. Portnow said the company is going to do a massively multiplayer game that can support millions of players, but he won’t try to compete with the 12-million strong subscription game, World of Warcraft. Rather, each game session will be short. The targets are gamers, but not hardcore players with lots of time to play.
I think this is the sort of idea that should be funded. But then, I don’t have $100,000 to give him. If you’ve got the cash, Portnow can be reached at jportnow@dbzcorp.com. I’d love to see this sort of company enter our startup competition at GamesBeat 09.