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Ouya Android game console get VC funded
Pinky
Melbourne, Victoria
13941 posts
Source: http://linuxgizmos.com/ouya-android-game-console-gets-vc-funding.html

It's been big news around these parts - I think a few of you even funded their Kickstarter project which raised $8.6mil - and now Ouya has been funded by a VC to the tune of $15mil

Interesting development. Hard to know if it's good or bad really - probably a bit of both. The initial interest and ground-swell from the public really hinged around the open development platform. Being based on Android I can't really see how that can change I guess. Then again, people are crafty so who really knows?

Anyway, they say they're still on track to deliver the first units, so I'm still looking forward to it.

Here's the orig Kickstarter vid:

12:17am 13/05/13 Permalink
system
Internet
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12:17am 13/05/13 Permalink
IVY_MiKe
Canberra, Australian Capital Territory
1502 posts
Ok, I'll bite.

What does that mean for Ouya?
It *sounds* as though this money could be spent well on producing a batch to be sold at retail, or to help further develop the Ouya (be it software, community etc).

I'm not familiar with the group who've thrown the money at them (VC for those too lazy to click is 'Venture Capital')

I'm still waiting for my Ouya to arrive, and I'm keen for a simple, little unit that will give me maximum flexibility.
I think it'll take me around 10 mins out of the box to throw XBMC or Plex on it, but I'm also keen for retro emulators and other retro platformer goodness!
03:50am 13/05/13 Permalink
simul
Brisbane, Queensland
1554 posts
KPCB are one of the biggest valley VC firms - you could think of them similar to the Coles/Myer of VCs. Very successful + lots of big names. What isn't said though is what share KPCB get - I'm assuming its a large chunk.

05:40am 13/05/13 Permalink
Spook
Brisbane, Queensland
35676 posts
is ouya chick a zombie?
06:27am 13/05/13 Permalink
TicMan
Melbourne, Victoria
8608 posts

I'm still waiting for my Ouya to arrive, and I'm keen for a simple, little unit that will give me maximum flexibility.


Same - was supposed to be shipped in March or something from the original Kickstarter campaign?
09:16am 13/05/13 Permalink
carson
Gippsland, Victoria
1887 posts
What does VC mean? Is it venture capital? If so, what are venture capital funds?
09:18am 13/05/13 Permalink
greazy
Brisbane, Queensland
5837 posts
Yep venture capital. It's like an investment firm that specialises in funding startups. High risk high returns.
09:52am 13/05/13 Permalink
parabol
Brisbane, Queensland
7563 posts
It's like an investment firm that specialises in funding startups. High risk high returns.

Yeah they basically invest knowing that 9/10 companies they fund will fail. For a company that succeeds, it's all fun and games until the VC wants to cash out, for their returns.

Then you get enormous pressure to sell the company, even if you're wanting to stay on and expand it. Happened with my employer's previous company. They had to start fresh with a new company but couldn't do much of the old stuff due to the fact that they sold their IP along with the company.
11:52am 13/05/13 Permalink
carson
Gippsland, Victoria
1888 posts
Yeah they basically invest knowing that 9/10 companies they fund will fail. For a company that succeeds, it's all fun and games until the VC wants to cash out, for their returns.Then you get enormous pressure to sell the company, even if you're wanting to stay on and expand it. Happened with my employer's previous company. They had to start fresh with a new company but couldn't do much of the old stuff due to the fact that they sold their IP along with the company.

So why would Ouya want to risk this? Surely if they are successful and have to pay out they'll lose a s*** tonne of money? They already seem to have done really well with the kickstarter funds.

What sort of returns do the venture capital funds ask for in return?
05:08pm 13/05/13 Permalink
typo
Other International
6537 posts
What sort of returns do the venture capital funds ask for in return?


Some (large) percentage of shares. It really depends on how much they are asked for, and how far through the process they are to mainstream release.

The VC market is basically built on the idea of building up a product as quickly as possible, and then putting it on the stock market at a price that is inflated as possible. Then the VC company gets out before the prices go to s***.

They generally have the means to force a sale, even if the founders don't want to.
05:51pm 13/05/13 Permalink
simul
Brisbane, Queensland
1555 posts
So why would Ouya want to risk this? Surely if they are successful and have to pay out they'll lose a s*** tonne of money? They already seem to have done really well with the kickstarter funds.


Connections and deals. Nvidia were part of the funding, and KPCB are huge, and have a lot of connections:

"The company has been an early investor in more than 300 IT (information technology) and biotech firms, over the past thirty five years, including: Amazon.com, America Online, Brio Technology, Compaq, GenScript, Electronic Arts, Flextronics, Genentech, Google, Intuit, Lotus Development, LSI Logic, Macromedia, Netscape, Quantum, Segway, Sun Microsystems, and Tandem."

"In 1999, Kleiner Perkins and Sequoia Capital paid $25 million for 20% of Google"

http://en.wikipedia.org/wiki/Kleiner_Perkins_Caufield_%26_Byers#Investments
07:42pm 13/05/13 Permalink
trog
AGN Admin
Brisbane, Queensland
36979 posts
So why would Ouya want to risk this? Surely if they are successful and have to pay out they'll lose a s*** tonne of money?
The key thing is accelerating growth - one of the big reasons for VCing is so that you can ramp up quickly across all facets of the business (something that is really important in innovative space, because it lets you outpace any potential competition).

In terms of the money side of things, the core idea is "a smaller piece of a bigger pie". This document has come up several times in the startup circles I'm in: Is a Small Piece of a Big Pie Worth Much? But note all the disclaimers at the bottom; it assumes everything goes to plan which it basically never does.

Ouya was always a likely target for VC (just like Occulus Rift and Hawken) because they "proved" their model on Kickstarter or through good public buy-in otherwise.
09:34am 14/05/13 Permalink
system
Internet
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09:34am 14/05/13 Permalink
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