What venture capitalists think about Kickstarter

Crowd funding has come out and changed the way that mid-level developers consider making their games. GamesBeat's Dean Takahashi, who specializes in funding news, thinks it's a great trend for the so-called "middle class" of games.

"It's a much needed breath of fresh air for funding games in the middle layer of gaming," said Takahashi. "The blockbuster games get all of the funding they need from major publishers. The small indie games don't take much money, and so a group of just a few people can work on them and get something to market. But this middle layer of publishers and developers who didn't have gigantic hits but have games that deserve sequels or properties in need of a reboot, those are the ones cashing in pretty big on Kickstarter."

"The big thing about Kickstarter is that it comes from the fans, and the fans can validate the idea of doing a game," he noted. "Like the revival of Wasteland that Brian Fargo is doing. He got a lot of money, nearly a million bucks out of that. He also sort of validated that a lot of fans still care about the franchise."

"I think there's still a need for venture funding for companies that are more ambitious, that want to raise more money, like five million bucks and upward," he added. "It's pretty hard to imagine that crowd-funding sources are going to produce that much money. This middle layer of people who are well known already as developers, who have some property that they can revive, are the ones that I think are going to benefit most from Kickstarter."

As for what venture capitalists (VCs) think of crowd-funding, Takahashi said, "I think they sort of realize that they have to bring their own value to the equation, that they can't get as greedy as they might be in the absence of Kickstarter. It kind of keeps everybody honest. The VCs can't take a controlling stake in a company for a very small amount of money. There's a checks and balances system here. If the deal you're getting from a VC or angels is an ownership one, you have an alternative now to go shopping for money on Kickstarter without giving up any equity."

Read the full interview on [a]list.