Bubble Gum Interactive has just closed a capital raising round of over $1 million to fund the development of its children's game, Little Space Heroes, which will be launched later this year.
The capital raising also saw it claim the honours as the inaugural recipient of funds from the $10 million Sydney Angels sidecar fund, which was closed last month and established as a vehicle to match investments made by Sydney Angel members.
Director of marketing and community engagement Paul Gray explained that the investment was sourced primarily from angels and venture capital firms, and supplemented by a couple of government grants.
Sydney Angels members and the sidecar fund invested a total of $400,000, with a similar amount raised from Artestian Capital, Elevation Capital, Angaros (Singapore) and an unnamed firm.
The remainder was sourced from two government grants, he said.
The $1 million capital raising is the first time that the business has sought funds since the founders stumped up the seed money to start Bubble Gum Interactive last year, Gray said. The company was founded by Phil Mason and Leigh Harrison as principal founders along with Gray and others as key members.
However, it took almost a year to close this "round one" capital raising, he said.
"We started pitching in September last year at Sydney Angels, but it was a total disaster; we couldn't get the demo video to play," he said. "But we talked to some angels a few days later, and secured some investment from a [venture capital fund], which got the ball rolling."
"We started other conversations and pitched all over the place, Australia, over the phone, international locations."
The funds will be used to finalise Little Space Heroes, where players create a "space hero, and embark on an intergalactic adventure".
A beta version will be launched in the next two to three weeks, and the final version will be launched later this year.
Gray said the business model is "freemium", where kids can create an account for free but require a monthly subscription to access the best content. (He said this would be in line with industry standards of around $7 per month, and a discount if on a longer basis.)
Within two years, the company aims to be the number one developer of kids' virtual world in its target range of five to 12 years old, Gray said.
"To get to that point, we'd have to have tens of millions of players in the game," he said.
Within the next six months, it is aiming for a couple million free players, and he said that the industry conversion rate is about 10 to 15 per cent that upgrade to paid accounts.
The business is cashed up and boasts some pretty impressive business talent. It has a strong emphasis on safety features and ambitious vision.
No product has been launched yet. It appears to be online only, and there is no app or tablet version. It's Flash based.
There's a huge global market for those that capture the imagination of kids that have a direct line to their parents' wallets. Disney bought Club Penguin for US$350 million.
There are a number of competitors in the space, and Disney is already on-board. Kids are notoriously fickle. Will the tech work seamlessly and not annoy kids with short attention spans?
No doubt the company has the money, skills, business acumen and the vision to achieve something big. However, it is worrying that after a year, there is still no product on the table. Also, this is an online, Flash-based game, when the industry is rapidly shifting towards apps for mobile/tablets and HTML5 technology.