Minimum expected ROI?

ThomasCalc

Hello,

I've a game project and have been in contact with an industry expert. He finds the project very impressive (including our past, the skilled team, the current game prototype, and the business plan). But he said I've no chance to get funded because the 100% profit (ROI) in my business plan is too low for investors. He said investors want at least 3-5 times ROI.

Is this true? I heard there are more levels of funding (angel, seed, venture capital etc.). Is 300%-500% profit (ROI) necessary everywhere?

The funding need is 1.8 million USD in the business plan.

SteelmlLord

I can help. What's your email address?

Tuah Bao

Each industry is different. Required ROI may be higher for IT industry because products/softwares get obsolete more quickly as compared to hotel or restaurant industry (example).

Therefore, it is reasonable for investors to expect higher ROI for game project. However, 300%-500% seems too high.

As general rule of thumb, project or investment looks fine as long as the ROI is higher than risk free rate (which is Fixed Deposit rate). If your project's ROI is lower than FD %, then it will be rejected automatically, investors will rather put their money into the bank.

Again, depends on the lifespan of the project, if the project has a short lifespan, investors will want to recover their investment (capital) plus other returns quickly.