Internet Gaming Software
A privately held Internet software company specializing in large scale, multi-user interactive applications, it had reached a critical juncture in its business. The company had already developed and distributed two multi-players games as well as a proprietary framework that facilitated rapid application development known as COMRAD™. Management knew they could execute. What they did not know was how to expand their markets beyond their own distribution efforts – efforts that were not generating the customer volume they needed. Like many early-stage companies, they had limited financial resources to work with.
We were engaged to help the company break through its market ceiling with three specific objectives:
- Oversee the development and implementation of a new strategic financial plan;
- Identify and negotiate a partnership and distribution relationship with a larger established operator in the online gaming industry; and,
- Ensure that the operational and development capital were available to allow the company to continue to deliver the platforms and games its customers and partners required.
The results were dramatic. FinanceNorth assigned one of its senior consultants to act as interim CFO during the development and execution of a new financial plan. FinanceNorth further provided private placement funds to finance the company’s operations for a 12-month period.
A deal was negotiated with a French online gaming company, which paid the company US$2.25 million for limited (French language) publishing rights for its online games. Strategic partnerships were negotiated with leading interactive gaming portals including www.sega.com and www.games.com. Finally, a partnership was established with a foreign computer programming company to outsource non-proprietary software development, significantly reducing the company’s development costs.
Case Study Summary:
|The Company||The Challenges|
|Privately held Internet software company developing multi-user, interactive games and 3D web applications.
Proprietary client / server middleware enabled rapid, highly-scalable application development.
|The company lacked senior management experience.
Funding for product development, support and marketing was insufficient.
Product distribution, and consequently sales, were limited.
Product development was not cost efficient.
|FinanceNorth’s Role||The Outcomes|
|Oversaw management of business and financial operations, in an interim advisory capacity.
Provided debt and equity financing.
Negotiated strategic partnerships, licensing and publishing agreements.
Developed long-term strategic and financial plans.
|A senior FinanceNorth advisor served as Chief Financial Officer for nine months, providing guidance and oversight for all significant company transactions.
An early-stage business development and financing strategy was developed and executed. (A long-term strategic and financial plan was also developed in collaboration with the company.)
A private placement investment, with provisions for subsequent equity financings, was structured and executed.
A three-year, international licensing and publishing agreement with a French gaming company (Monte Cristo Games) was negotiated. The deal included a cash payment of US$2.25 million and a commitment to fund promotion of the company’s games outside of North America.
Strategic partnerships with leading interactive gaming portals (www.sega.com, www.games.com, etc.) were established.