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Faced with hesitant investors who Cameroon’s Kiro’o Games believe failed to realise the potential of a games development studio, the startup is using an equity crowdfunding platform that it has developed itself, to raise $1-million in seed funding.
The crowdfunding route has worked for the Yaounde-based startup in the past. In 2015 Kiro’o Games raised €49 774 — against a targeted €40 000 — from 1310 backers on Kickstarter for development of its first title, 2D African fantasy role-playing game Aurion: Legacy of the Kori-Odan.
Kiro’o Games founder and CEO Madiba Olivier told Ventureburn in an email on 15 May that between 2013 and 2018, Kiro’o Games raised a total of $305 000 through equity crowdfunding.
Kiro’o Games sold its first title to 95 000 people in the US, Germany and China
It’s latest fundraising campaign which kicked off last month on its Equity Crowdfunding Rebuntu platform has already helped the studio raise $90 000 from 89 investors.
The platform enables investors to buy shares from $500 (about 275 000 FCFA). In turn investors receive voting rights and get to participate in the management of the studio.
Olivier explained that in its quest to raise $1-million, the startup has already received commitments of $340 000 from about 287 investors. It is not quite clear how much equity the studio intends to give up for the funding. However Kiro’o Games intends to close the round next month.
One of the round’s lead investors is Cameroonian tech entrepreneur Rebecca Enonchong who Olivier said has committed to invest between $100 000 and $300 000 through her business angel network (Cameroon Angels Network) before the end of the year.
Enonchong, he said, is also mentoring the Kiro’o Games team to help them to structure their business model better.
Plans to add more revenue streams
Kiro’o Games intends to use the funding to upgrade its equipment, hire more staff, create a smartphone game catalogue for the African audience and to build a community of about 520 000 users in Cameroon.
In addition, the studio intends to channel the funding into marketing for its existing games and comics in the US and European markets, as well as towards conversion of five percent of its community into paying customers.
The studio currently employs 13 full-time members and recently hired 10 more staff who will join the startup next month.
PC game sales and B2B animation services make up Kiro’o’s main revenue streams. But Olivier said this will change once it closes its seed round as the startup plans to generate revenue through comic sales and micro-transaction in its smartphone games.
He explained that the company sold its first title to 95 000 people in the US, Germany and China. “But the game has been mainly sold through bundles so we haven’t yet got a big cash return on the sales,” he added.
In 2017 the startup generated $70 000 in revenue, this shot up to $94 000 last year.
Kiro’o Games second and latest title, mobile phone game Aurion: Kajuta Gem Fighter, is sponsored by MTN and will be offered exclusively by the telco on its MTN Game+ platform. Olivier said it is likely to be available for download in August.
The studio also has another mobile game, a social parody simulation called The Boss, which will be released next year.
“It’s a game where everyone will have a chance to become “the boss” of a funny African town with a career in public services,” he explained.
Business skills holding industry back
Olivier believes a lack of human resources, business skills and funding is holding Africa’s games industry back.
He said most African game designers are very passionate and don’t yet have the business skill to see beyond the games they develop.
“I made this mistake too, and African is a really hard place to get three chances on something like that,” he added.
Olivier said when it comes to funding games studios, investor’s don’t realise the potential of the sector.
“So they are waiting for results without watering the seeds. That’s why we decided at Kiro’o to build our own fundraising platform,” he said
Despite this, he believes Africa’s games industry is growing but that it will take some time before the sector is fully developed.
Olivier said he sees potential in mobile e-sports, but cautions that the vertical will likely face “big challenges” around funding and talent for the next decade.
However, Olivier believes people want to feel connected through games and that it is crucial that each African games studio works on mobile esports in a bid to boost the industry.
He also advised that it is important for African developers to be innovative and not to try build African versions of games that have been built elsewhere around the world. “We have to observe our social behaviours and build games based on them,” he added.
NYSE, Nasdaq listing by 2030?
Kiro’o Games plans to expand beyond just the games sector.
Olivier said the studio also wants to get into fintech in a bid to support other entrepreneurs raise investments like Kiro’o has.
The studio also intends to prove its business model in Cameroon before the end of 2021. “Then we will we have to scale in 12 countries and get build a community of one to 10 million customers around our brands,” he added.
The firm also intends to reinvest up to 80% of its profits in the studio before 2030 to ensure investors receive more dividends over the long term.
Kiro’o’s games and service roadmap stretches out for the next five years.
After that, Olivier wants the studio to have listed as an “African unicorn” on the New York Stock Exchange (NYSE) or on the Nasdaq bourse by 2030.
Big hopes, but this startup is definitely not thinking small.
Featured image: Kiro’o Games founder and CEO Madiba Olivier (Supplied)