Spotlight on Mike Mawbey, Portfolio Risk Manager
// investment
Applications close on 14th September for Creative Enterprise: Evolve, Creative England’s investment readiness programme. During this time, we’ve been catching up with some of the screen businesses supported last year. For our next spotlight piece, we’ve spoken to Steve Cottam, the founder and CEO of Antstream Arcade, a retro games platform with over a thousand carefully curated games to choose from.
“Our ambitions were to build something similar in scope to Spotify and Netflix,” admits Steve Cottam, founder and CEO of Antstream Arcade, a streaming service specialising in retro gaming. “I think we always knew it was going to need a lot of investment. The question was: how do we go about doing it?” It’s a good quandary – and one that Cottam and his team were ultimately able to answer to great success. After noticing an asteroid-sized gap in the gaming market, these East Sussex developers spied an opportunity to pair this lucrative sector with another digital space on the rise. “I was looking at what was happening with music and movies,” continues Cottam. “Things were moving to streaming which obviously made it really easy to find pretty much anything you were into – but nothing like that really existed for games.”
Exploring this idea further, Cottam soon noticed the stumbling blocks. While movies and music had the luxury of versatility, game titles were often limited to specific consoles – and when those consoles were discontinued, so were the games they supported. Then, during a trip to a local gaming conference, he had a breakthrough. “There was a queue around the aisle to play a game and it was an old Atari cabinet,” recalls Cottam. “It was the most popular game in the show by far. The thing that really struck me was that I could see gamers in their 20’s queuing up to play it. I realised there was an audience for these amazing games,” he says. “That’s what we do at Antstream. We take incredible intellectual properties that everyone’s heard of – Pac Man, Space Invaders, Asteroids – and make them available to all gamers, on all devices.”
Antstream’s goal was set: bring a host of beloved, retro gaming titles to a new generation of players for a low-cost monthly fee. After years of development, their hard work paid off – not only by customers embracing their product but with leading Chinese gaming and social giant TenCent leading their 2019 investment round. However back in the concept stage, it was just another big idea from a small company – and one that required extensive funding and support. Luckily, Cottam had a unique approach to boosting his chances at success. “I wanted to learn about the investment process so I became an investor myself,” he reveals. “It was only on a very small scale – but it felt like the right thing to do was to go and sit in on meetings and be on the other side of the table when people came in and pitched. I wanted to see the criteria investors were looking for and what it is that makes a company stand out and be investable. It helped a lot.”
It was a role reversal that clued Cottam in on exactly what it takes to secure the financial support necessary to help your company achieve early growth. “I learned that the most important thing is your team. You’ve got to have a great idea and a great concept,” he tells us, “but if you have a great team you’ll find a way to make a product work. Whereas you can have an absolutely incredible product but if you haven’t got a team that connects the dots and makes it happen, you’re going to risk a lot of things going wrong.” Cotton wove this insider information into Antstream’s structure moving forward: “That was something that, strategically, I did from day one,” he remembers. “I brought people into the business who had the right skills, experience and background to help us not only build the product and raise investment but also scale the business as well.”
Being on the other side of the pitching process also helped with selling the Antstream concept to potential backers – some of whom were unfamiliar with the gaming sector and its scope for return. “One thing I learned very early on was: know the audience you’re pitching to,” says Cottam. “Investors are comfortable investing in things they know and understand. If you’re pitching to a room full of healthcare investors but you’re coming in with a gaming product, they’re probably not going to invest,” he rightly reasons. “That was really evident when we were doing our first round of investments; everybody who invested in the business was either a gamer or had a passion about gaming. Trying to convince investors that knew nothing about gaming was almost impossible.” As for his pitching advice? “Keep it simple,” he suggests. “If you bombard investors with too much information it just confuses them and makes it harder for them to understand what you’re offering.”
With the sector doing incredibly well – especially so during 2020’s Coronavirus pandemic and subsequent lockdown (“almost every gaming company I’ve spoken to is reporting the best numbers they’ve seen,” reveals Cottam) – more and more investors are starting to take notice. However for all new arrivals looking to spend, Cottam has some advice before they open their wallets: “I think if you’re going to invest in anything, you need to understand it. You need to understand the market, its growth potential and the risks,” he says. “Gaming, like anything else, has its risks – but you can see patterns as well, particularly if you look at the types of games that do well and the teams that produce them.” Learning about the sector’s audience is also critical: “When I was first raising finance, people were always surprised at how broad gaming is. There are two and a half billion gamers now – and nearly half of them are women. The age spectrum of gaming is everything from three to seventy,” adds Cottam. “It touches everyone.”
Through his understanding of the sector, hands-on investment research and refined pitching process, Cottam and his team were able to convince TenCent to back Antstream in 2019. So how has it changed his company? “It’s night and day,” says Cottam of the difference. “The team has jumped from around 10 to nearly 40. The management structure and our executive team has grown and gotten much stronger, and having credibility from an investor like TenCent has helped us attract talent that otherwise may not have felt as comfortable making the jump,” he says. “Having a strong investor behind you adds a huge amount of credibility which goes right across the business. When we’re trying to license games, hire people or do distribution deals, having that name behind you really helps back up what you’re doing.”
For Cottam, it’s also highlighted the importance of finding the right investor for your specific business: “When you’re a start up trying to raise money, it’s a hard process. It takes a long time and a huge amount of energy so I can understand why companies end up taking an offer that perhaps might not be ideal for them because they need to get going and if they don’t, they won’t succeed,” he reasons. “The key thing is to leave yourself enough time to raise investment so you’ve got time to select the right investor for you. For us, it wasn’t just about raising money – it was what credibility that investor was going to bring and how they can help us in terms of their knowledge and existing audiences,” reveals Cottam. “It was about making sure that investor was going to help us considerably – beyond the cash injection.” As for successfully maintaining new investor partnerships? “Communication is key,” he suggests. “Keep communication flowing – even if things are going wrong. Communicate that to your investors because they can help. Don’t try to hide anything.”
If Antstream’s investor success has made you curious about how investment, guidance and support could help your small business realise its big ideas, you’re in luck. Creative England has recently relaunched Creative Enterprise: Evolve, a support scheme with the goal of making high-potential screen sector businesses ready to tackle the world of investment. From perfecting your proposal, to providing the chance to pick the brains of industry leaders, it’s designed to help young companies on their way to achieving growth. As far as Cottam is concerned, it’s a leg-up that could be an invaluable tool for SMEs. “Securing investment is a stressful process – you’re dependent on raising money and the clock is ticking,” he says. “I think anything that can help entrepreneurs avoid making mistakes, make sure they’re focusing their energy in the right places, pitching their products properly and understand what investors are looking for is hugely beneficial.”
