Funding challenges in the era of evidence-based investing

gamesindustry.biz:

Yes, it's been a particularly rough start to 2024, especially for studios seeking funding. Finishing out 2023, it felt like venture capital funds closed the faucets of years' past, and publishers hit the pause button. Thankfully, the vibe at GDC was slightly more positive, with new deals being announced by both publishers and VC funds.

While the checkbooks are back out, there is a sneaky shift that's been occurring over the past few years: The burden of proof that an audience exists for a game is falling more and more on the shoulders of the developer.

This need for evidence, or traction, is a whole layer developers need to worry about beyond just building a great prototype and putting a strong team together. This was very much echoed in the investor update article posted on this site prior to GDC.

The next logical question is, 'What kind of evidence do I need to produce?' Sadly, the answer is, 'It depends.' Several vectors to look at are the degree of social proof, the level of community engagement, and your funnel metrics.

Social Proof: This is all the stuff that shows others think what you are doing is interesting and worth paying attention to. This is often manifested via social media likes and follows, or trailer views, or even your number of wishlists. Newsletter subscriptions count, too. The more the better, of course. This can also cover stuff like juried festival selections, winning pitch competitions, or press preview coverage (eg, "the most exciting RPGs coming next year"-style articles).

Community Engagement: Going one level deeper than just liking a tweet, to what degree are you building an engaged community around your game?

This may be manifested via active Discord members, playtesters giving feedback, and streamers engaging with early builds of the game. For example, the average playtime of your demo or beta build is a critical data point to demonstrate that your core gameplay is engaging and sticky.

Funnel Metrics: Now we're getting down to the nitty