Developer Pixion Games lost nearly the entirety of their $2 million seed funding round after investors pulled out of the deal, says studio founder and CEO Kam Punia.
Speaking at Games Growth Summit, Punia took part in an ‘Investor Journey’ panel discussing how to grow a business after raising capital, while also keeping investors happy.
Punia said the studio, which at the time was working on a competitive mobile esports game, had commitments and signed term sheets from investors for its $2m seed round.
But during three days at GDC in the midst of the pandemic, the lead investor “changed their investment thesis” and subsequently dropped out of the round. The investor represented 60% of the $2 million raise.
Subsequent meetings with other investors led to Punia trying to reassure them that the round was still alive and well. However, other investors then stated they were also changing their thesis and pulling out of the deal. It left the team with just a couple hundred thousand dollars from the round.
Close to closure
Puniasaid he was “distraught”, had maxed out credit cards, and at one point the studio was three weeks away from running out of money.
Despite this, Punia was careful picking investment partners and said he still didn’t want to sign deals with the wrong partners where it would be difficult to manage expectations, as that would create friction down the line.
“Investor management was really important” said Punia. “Because of that, we actually said no to a lot of capital.”
Last year, Pixion Games raised $5.5 million in an extension of its seed round to fund the development of its web3 title Fableborne.
Investors included Avalanche Foundation’s Blizzard Fund, Shima Capital, Eldridge, Merit Circle, ReadyPlayerDAO, VGC, Zee Prime, Mechanism Capital, GSR, Misfits Gaming, and others.
The studio has previously received backing from angel investors.
