A Q&A with Socialspiel co-founder and CEO Mike Borras. The Vienna-based startup, which partners with brands to develop free-to-play mobile social games that also serve as a marketing channel, completed a €200,000 Angel funding round in late August. The investment was led by German Angel fund FLOOR13.
SUB: Please describe Socialspiel and your primary innovation.
Borras: Socialspiel is an award-winning social and mobile games developer based in Vienna, Austria, founded by a group of ex-Rockstar Games developers. After working for over a decade on some of the largest and most successful game franchises in the world, we’re now working together with major brand and agency partners around the world to combine our technology, design and development talent, and IP with the brand recognition, characters, and marketing reach of major brands to open extremely deep, engaging marketing channels in the form of social, mobile, and tablet games.
SUB: Who are your target markets and users?
Borras: From a geographic perspective, we are working primarily with Western brands, so the U.S. and Western Europe are our primary focus. We have had several discussions with Asian companies in the past, however haven’t had the honor to work together with any companies based in the Pacific Rim yet.
SUB: Who do you consider to be your competition?
Borras: A perfect example of an excellent competitor who executed their vision perfectly was Spooky Cool Labs in Chicago, who were around 40 people creating games experiences around the Wizard of Oz brand [and its] IP, such as a city-building social title and a social casino title. They were recently acquired by Zynga.
SUB: What differentiates Socialspiel from the competition?
Borras: Our team has been making games for almost 15 years, so we have a rich history of game design, development, and production, and we’ve managed some of the largest gaming franchises in history.
SUB: When was the company founded, and what were the first steps you took in establishing it?
Borras: We founded Socialspiel in 2010, shortly after Deep Silver Games closed their Vienna studio—responsible for Cursed Mountain and Dead Island. Some of Helmut’s [Helmut Hutterer, co-founder] team members from Deep Silver, Team Vienna Games, and Rockstar were looking for work, so myself and my business partner, Clemens Beer, advised Helmut in forming the company, raising funding, and a lot of the other overhead that comes with launching a startup.
SUB: How did you come up with the name? What is the story or meaning behind it?
Borras: It was a play on the combination of ‘social,’ as in social games, and ‘spiel,’ which in German roughly means ‘game’ or ‘match.’ As we’re headquartered in Vienna, where German is the native language, we thought it would be a cute combination of our gaming heritage and our geographic location.
SUB: You recently raised a €200,000 Angel funding round. Why was this a good time to raise outside funding?
Borras: Well for Socialspiel it’s a perfect time for us to raise funding. This year will be our first profitable year, so the funding we did raise was to give us room to breathe and grow our team as the browser version of Asterix & Friends prepares to launch in partnership with Sproing and Deutsche Telekom, and our other mobile projects enter production. In general though, it’s a difficult time for many Central European early-stage startups, as follow-on funding—Angel, A, B, C, etc.—is getting much more difficult to raise. Vienna, and many other cities in Central Europe, has always lagged behind the more mature ecosystems of a Berlin and London, who lag way behind the ecosystems in New York City, the Bay Area, and Los Angeles, due to things like geography and the lack of a mature private capital ecosystem.
SUB: How do you plan to use the funds?
Borras: We’ve used the funds primarily for growth. We’re preparing to launch the Asterix & Friends browser game in Europe, and our team there is growing rapidly. Additionally, we have several other projects which are entering production which will also mean more growth as we recruit to keep up with the demands of our ongoing games.
SUB: Do you have plans to seek additional outside funding in the near future?
Borras: We’re currently in discussions for raising funds from several strategic partners in the U.S. and Asia, but there are no immediate plans for closing another round in 2013. Naturally that doesn’t mean we aren’t open to the possibilities should an awesome strategic opportunity present itself this year.
SUB: What have the most significant obstacles been so far to building the company?
Borras: Geography has been difficult. There are a lot of great developers and game designers in Vienna, however funding for social games startups, and startups in general, is a very difficult thing in our local ecosystem. Seed funds throughout Central Europe are plentiful, but when you’re looking for follow-on funding, say, $250,000-plus funding rounds, it gets much more difficult, especially when your focus is international growth and partnerships. Many U.S.-based funds or partners are apprehensive to even invest in London- or Berlin-based startups—though this is improving rapidly, but investing in more ‘exotic’ areas outside of those European hubs is downright scary to many investors who worry about high taxes, legal differences, large amounts of regulation, and smaller things like cultural and language differences.
SUB: How does the company generate revenue or plan to generate revenue?
Borras: We are a revenue-positive company, which we generate through a hybrid, ‘co-development’ model. By partnering with major brand owners and their advertising agencies who fund the development of cross-platform, free to play games based on their IP, we develop and design long-term and engaging games experiences which can last many years.
As such, we’ve taken the traditional short-term nature of contract work found in the PC and console industry and added a maintenance and revenue-share model on top. This delivers an incredible ‘games as an engagement platform’ service to our major brand partners, and delivers to Socialspiel a long-term and profitable partnership with some of the most-recognized brands in the world.
SUB: What are your goals for Socialspiel over the next year or so?
Borras: 2013-2014 will be focused heavily on growth—both corporate and revenue. We’re expecting Asterix & Friends to grow into a major gaming franchise, and together with Deutsche Telekom and Sproing we’re expecting it to last a long, long time. In addition to our other projects together with agencies such as Bartle Bogle Hegarty, and brands such as Chupa Chups, we expect to continue growing our co-development model out and hopefully having several major live games across browser, mobile, and tablet platforms by the end of 2014.
Socialspiel – www.socialspiel.com