GameFounders : Half a Million Euros Wasted
Does Estonia really need another incubator, paid for by the taxpayer?
GameFounders was launched last year with great fanfare, billing themselves as "The First Gaming Accelerator in Europe", a claim disputed by some in France, where a gaming accelerator was launched the year before that.
GameFounders attracted a lot of attention, and in the end, 122 gaming startups from 41 countries applied to join the 3-month program in Tallinn, which provided funding of up to 15,000 euros per company, along with coaching and access to a mentor network.
Speaking about the high interest in the program, Dimitri Burnashev from Enterprise Estonia said "I am happy to see that so many gaming startups see the benefits of bootstrapping in Estonia." (Apparently his definition of bootstrapping is different from ours.)
While there was talk that up to 10 teams may be accepted in the first intake, in the end only 6 out of 122 applicants were selected.
With all that interest, and such selectivity, the teams must have been pretty good, right? That selection took place last summer, so let's see where they are now.
Our friends over at PocketGamer wrote their own analysis of the teams in November. They know a lot more about games than we do, so their analysis is helpful from that perspective.
So it's been been about half a year since these teams finished up at GameFounders. How are they doing?
- Akira Mobile. Last update to their website was in September 2012, when they joined GameFounders. No updates since then. We tried to find their game online, but no luck with that either.
- Bad Seed Entertainment. This is an interesting one. Their apps are listed on their website as "Coming Soon!", and what did they do after GameFounders? They joined another gaming accelerator, this time in Silicon Valley. This accelerator appears to have provided some benefit, as their app was finally released on Apple's App Store about 2 weeks ago.
- Baila Games. This Estonian company makes a physical game (yes, some people still play those) and also has an app. Their app has not been updated in over a year and ranks below the top 200 in the gaming category in their home country (Estonia). On another note, they also received 6,092 euros from Enterprise Estonia.
- GlowForth. No game released. They did receive 4,000 euros from Enterprise Estonia, which apparently they used to make a trailer video that reminds us of only a slight improvement over Super Mario Bros on the original Nintendo.
- Mind on Games. Their Manager Mania product was supposed to be released for Android, but we couldn't find it.
- Plan B Labs. On the plus side, this company has actually released some apps. On the minus side, there doesn't seem to be much success. Based on App Annie statistics, their apps rarely make it even into the top 1,000 in their category and also by revenue. We have not heard of ThinkInvisible nor LearnInvisible (their apps) before. Have you? Oh, and they received 5,000 euros from Enterprise Estonia.
We've had a lot of requests from readers to write about GameFounders, including from some teams who were planning to apply to the program. One reader pointed out that none of the people behind the GameFounders organization actually have any experience in the gaming industry!
The only member of the team with real experience and a successful track record is Paul Bragiel, who does not even list GameFounders on his LinkedIn page. Perhaps he doesn't want to be associated with them any longer?
A Risky Business
Some may say we're being too critical. After all, isn't the gaming industry risky to begin with? Sure it is, and we even wrote about that in our profile of Creative Mobile, which is an example of a successful Estonian gaming company. Not only are they successful, but they did it without taxpayer money.
Others may point out that we looked only at the first batch of GameFounders teams, and they have since accepted another cohort of teams that is currently being incubated. We feel that it is too soon to look at their success, compared to the first batch which have had at least 9 months (a lifetime in this industry) to produce something.
Bring in the Taxpayer
What do we have? An incubator with little to no success in nurturing successful gaming companies, with an inexperienced team running it, and in a country with plenty of incubators already.
What kind of project does that sound like? One that EAS (Enterprise Estonia) would eagerly fund, of course!
We said the management of GameFounders was inexperienced, but not when it came to riding the taxpayer-funded gravy train. Here's a tally of all the funding they were able to obtain:
- 501,000 euros from the Start-Up Estonia program via EAS.
- 5,305 euros for Summer of Games program from EAS (section VII.3.2)
- 7,700 euros for IGDA program from EAS (section VI.3.2)
- 1,900 euros for start-up from Tallinn city government.
- 1,500 euros for start-up from Tallinn city government.
Then add in the EAS money for their incubated companies and that's another 15,092 euros, bringing the total taxpayer money wasted to 532,497 euros.
Should incubators receive taxpayer money at all? The co-founder of TechStars thinks they shouldn't, and he's probably a lot smarter than the people who decided to give money to GameFounders.
An EAS Cover-Up?
One reason it took us a while to get this post written is it took us a while to track down all the numbers. Let's just look at the EAS funding for GameFounders, so numbers 1-3 in the list of funding above. A search on their database of funded projects will reveal no results related to GameFounders.
Other incubators, like the Viljandi incubator we reported about earlier, are listed there.
Let's just give them the benefit of the doubt for a moment. They would probably say that the GameFounders funds were provided via a special program, so were not loaded into their standard database of funded projects.
Surely then, they would mention it in their press releases about the program instead, right?
The answer to that would be no and no. They do mention how the funds are provided by ERDF (EU money), but not how much. Isn't that an important fact? Why was it left out? Are they trying to hide how much money is being wasted?
Well those are old press releases. Maybe they've learned from their mistakes (perhaps even from reading this blog - imagine that!).
Sadly, nothing has changed, and in fact it's gotten worse. Earlier this month, EAS announced a second stage of the same program that provided funding for GameFounders. They must have liked how well GameFounders is doing, according to the press release:
"In the summer of 2012 Enterprise Estonia provided financial support to launch the first gaming accelerator in Europe, Gamefounders. Positive results of the first batch of start-ups completing the Gamefouders [sic] program have proven suitability of vertical accelerator format." (emphasis ours)
Again, EAS never mentions the amount of money involved, but luckily that can be found in the public tender. They have increased funding by 40%, to 700,000 euros!
Is EAS trying to cover up how much money they waste? Wouldn't it be better just to stop wasting the money in the first place?