Gaming industry has seen substantial growth, as evidenced by the $39.4 billion revenue from video games in the United States during the first three quarters of 2023, compared to the $9 billion box office revenue for films in the United States for the entire year. Despite this, gaming companies are facing layoffs, prompting one gaming startup to explore new fundraising avenues.
Frost Giant, a venture-backed startup developing a real-time strategy (RTS) game called Stormgate, is turning to its community to raise additional capital ahead of the game’s launch this year. The company’s decision to test the waters for an equity crowdfunding round follows a successful Kickstarter campaign earlier this year, where it sold millions of dollars’ worth of bonuses to supporters.
TechCrunch spoke with Frost Giant’s CEO and production director, Tim Morten, about the company’s choice to pursue community capital, which they believe could bring more marketing and operating resources.
The venture capital market for gaming companies has pulled back since Frost Giant’s last funding round, and with Stormgate expected to launch this year, additional funds could provide the company with the flexibility to navigate the game’s release and generate early revenue to attract further venture funding.
Gaming, venture and the state of RTS
RTS titles like StarCraft and StarCraft II were pivotal in the early development of esports. Frost Giant, comprised of a team with experience in acclaimed games like StarCraft II and Warcraft III, is working on Stormgate, a spiritual successor to the StarCraft franchise. This familiarity has resonated with fans, as the company’s Kickstarter event sold $2.4 million worth of bonuses to over 28,000 backers.
Morten mentioned that the Kickstarter campaign was not intended as a fundraising effort but rather as a way to offer something special to fans before the game’s launch. There has been interest from individuals wanting to invest directly in the company, both before and after the Kickstarter campaign. Frost Giant expects some overlap between the audience for its upcoming community raise and the gamers attracted to its Kickstarter event.
Thus far, Frost Giant has secured $611,421 in reservations for its community fundraise. This momentum indicates that the company will likely raise operational capital when its equity crowdfund goes live.
Reg CF offerings are limited to $5 million, and financial disclosures are required. This will provide insight into Frost Giant’s financials and its capital raise from the community.
The company has stated that Stormgate is fully funded for release, but the additional capital could extend its post-launch runway, giving it more time to grow revenue and attract potential venture funding, which has seen a significant decline in the gaming industry globally and in the United States.
Stormgate will be a free-to-play game but will offer in-game purchases. Fans of StarCraft II appreciated the increased amount of content in that game, indicating potential for similar offerings from Stormgate in the future.
Although Kickstarter wins, equity crowdfunding, and in-game monetization can contribute to a game’s success, building an active and passionate player base is crucial. Stormgate has made promising strides, currently ranking as the 36th most wishlisted title on Steam with over 50,000 followers on the platform.
While these are positive signs, the true test will come during the early access phase.
