How to spend your funding ?

Many venture capital firms or professionals would want you to spend wisely and most importantly get break-even point before spending more. One of my VC told me recently that the next trench of money coming in will be for me to expand the company fast. While the 1st trench is for me to get the company towards break-even. This sounds logically.

Here's a real case in China.

2 similar companies in the same internet P2P download industry, both obtained a few million USD in funding. Company A upon receiving the funding move into low gear, calculate their financials and base their new business plans towards ensuring the company will survive for the next 7 to 8 years. While Company B designed their financials and business plan to only last 12 months, basically going to spend all their money away to get market share. Today Company A is still around, became a small player in the P2P download business. They still have their Series A money in the bank with a good small healthy profit margin each month. Company B on the other had become China largest P2P download site and a key player in the online games cooperative publishing business racking millions of RMB each month. VC are chasing to throw money at them everyday while Company A is seeking their Series B funding to expand its business.

I meet another VC friend based in South China and had a long chat with him after reading one of his term sheet which requires the company to pay back the investment within 5 years if the company do not go IPO or being acquired unless the company cant last 5 years. I asked him the reason why ? He said that all the money they invest into a company is for them to spend and make a success out of the company. It is not for survival so the founders shouldn't design the company for survival. If they lose all the money in the right way then be it ! But if they dont spend and slowly spend the money for survival then its better for a VC to invest in stocks.

So in theory the money is for you to either grow BIG and HUGE or just simply die and close down. I strongly believe in this method whereby the entrepreneur should plan to use the money to grow, expand and make the business huge or if he wants to do it slowly then dont take VC money.

Many may not agree with this notion and concept tho' for many reasons. Many VC wants a healthy portfolio that's alive and kicking. Some believe that survival allows a company to sit and wait for the right time and moment to come just like gambling we need patience.

Facebook will never be in China

Facebook growth is slowing down at 500 million + friends suddenly it seems everyone you and I know is on Facebook. Where and how are they going to further grow the numbers ? Many experts predicts China and possibly India or Russia.

Maybe Russia but even then Russia have its own FB version already today.

China will never happen not because MySpace failed in China but simply because the Facebook Mark Z. attitude and character will never get pass the great China firewall. Take - "Facebook Refuses To Take Down Tributes To UK Murderer" as a good example.Facebook isunder fire in the UK today for its refusal to take down tributes to UK murderer Raoul Moat, the man who killed one and shot two others in a rampage across the North of England.

Sorry I have to stamp Facebook Failed in China unless the attitude changes.

China Online Games Market 2010

China has 400 million Internet users, a quarter of them avid gamers, according to the China Internet Network Information Center. Despite that enormous market, shares of Tencent, the Chinese market leader in Web-based games, has dropped 23 percent this year. Perfect World, another major operator, is off 47 percent, and Shanda Games (GAME) is down 42 percent.

With more Internet users in China than any other country, the Chinese game market seems ripe for growth. Two-thirds of Chinese have never been online and nearly half of China's Web surfers are under 25. Gaming companies have lot to worry about : while they see plenty of potential growth in poorer regions, it's getting harder to find players who aren't already online in Beijing, Shanghai, and other big cities.

The industry's revenues are likely to grow 22 percent this year, to $4.5 billion, that's far below last year's 40 percent. All that means the search for new hit games is urgent. This year, Chinese companies will launch 400 new titles, vs. 250 in 2009, competition is getting really hot. It's hard to stand out in the market because many operators have been churning out similarly themed medieval fantasies with titles such as Battle of Immortals and Dragon Power. Just search how many "3 Kingdoms" (san guo) MMO are there in China?

The there is the Chinese government new regulations to worry about, the Ministry of Culture on June 22 announced regulations setting guidelines for the look and feel of games and requiring that social gamers register under their real names. The ministry also set limits on sales to minors of items using virtual currency, or points earned playing online. But what's most scary is the poaching of games development teams that is happening in the Chinese MMO industry now. Companies are hiring head hunters to practically steal competitors or potential game development teams with x2 the salaries sometimes. Some are using unethical techniques to WIN at the game by way of obtaining source codes illegally. Such practises are what killing the industry today.

Gameforge to publish STAR TREK Browser-Based Games

German online game publisher Gameforge announced today that it had closed a licensing deal with CBS Consumer Products to create two browser-based free-to-play games based on the Star Trek license. These games will be casual offerings designed to complement the Cryptic/Atari subscription MMO Star Trek Online.

One of Gameforge's Star Trek games will be for Facebook and developed by an unnamed external German studio. Another unnamed external studio in California will handle development of a second browser-based Star Trek game. The games will be published simultaneously in the US and Europe. One will be based on the original Star Trek series while the other will be based on Star Trek: Deep Space Nine. It is not yet confirmed what type of game either title will be or how it will monetize.

*MOVIES ONLINE GAMES is becoming a trend now and we will see its streams of successes and also failures in 2011 to come.