Star Citizen Financials and New Investors

[Talonsbane]

So does the investor guy gets Idris or something? Bengal?

For that sort of up up front investment as long as assisting in help with the future marketing campaign, I'd say that they deserve to be granted Legatus status as well as a Bengal if requested. I also get the feeling that after the official launch of SQ42 that they will be paid back their investment plus interest over time as the game grows. Thus everybody potentially wins. (Except for those that for years have called this whole venture a giant scam. They can eat crow while they play what they doubted would be.)

 

[Phelan13]

i don't see a problem with investors... Think of them as high-level concierge for the game. Chris Roberts is still in control of CGI and they have funding to advertise the game.

 

[Schmunkel]

I'm happy about the investment, but doesn't this mean that if any future delays hit Squadron 42 CIG may run out of funds? They appear to be dipping into the red per the documents. I'm also worried about how Star Citizen is going to stay afloat after the release of Squadron 42. They basically have about 2 years to get both projects finished.

 

[maynard]

I trust CR's vision

as long as he keeps control of the voting shares in CIG he can raise money as he likes

 

[Rear_Intruder]

I do appreciate the straight answer, as I am curiious how this works. So next question, how did CIG US LLC raise support as an LLC? Normally you cannot raise support without selling shares and LLCs don't have shares. Normally investors will force LLCs to convert to an S or C corp before investment. So is CIG raising debt financing rather than equity? That would be an exceedingly risky thing to do so late in development, as they could lose the entire company.

I think the shares are from a UK based part of the larger company. CIG UK LTD Chris, Ortwin and Erin had 1 million shares between them.



The more interesting part is the overall financial situation, in summary CIG's costs are about twice what most people seemed to think that they were. However they make more than the funds on the website counter show.

With this new investment and the reserves that they have, (If they stopped raising money from backers today) they have enough cash to last until about Q2 2020. So in reality with backer money CIG are financially sound into at least 2022.

If they have to get more investment from shares before 2022 or start to shed staff (their biggest cost), then I would be worried, right now it all looks good.

 

[Phil]

If those numbers are right and I am by no means a math scholar they have spent 193 million of the 211 million raised its clear funding is going to be an issue down the road as most people backing this game are regulars at this point they will have to generate new backers and the only way to do that is advertisement and marketing but I am not sure how much more they can do as PC space sim games aren't usually a top seller to the average crowd most of the space sim fans are already signed on to this game these days and because CIG gave most people who supported early free 42 and free SC copies there is a big chunk of future revenue down the drain and it would not shock me if they tried to get out of those free copies at some point hehe.

 

[Phil]

I mean if I am reading their reports right they lost 5 million in 2017. Err correction, I don't want to say lost I mean they pulled in 43 million and spent 48 million :P

 

[AstroSam]

Correct, with Chris also saying that the year 2018 was extremely successful and they earned more than they spent. So if they still have $15 million left (which is more than I thought), that's a lot of money - but after I've read through everything and thought about it, it's clear why Chris Roberts went to "Bridal Show" (certainly pro-actively "motivated" by Sandy, thank God). CIG will certainly not be able to further optimize the ratio of revenues to expenses. And a large-scale marketing campaign would not have been possible with the remaining funds. Thus CIG would have had to take a risk and take out a loan. But as it is now, it simply means a much higher level of...whats the correct word here? ...security (?).
Well, as I said, after looking through the numbers, I'm also happy, for CIG and for us, about this opportunity Chris got through Clive and Keith. Thus we are also witnesses of the "coming of age" of a start-up, which we - we have to keep this in mind - what we made possible in the first place. I think it's worth a triple "cheers"!
May SQ42 and SC be great - Merry Christmas!

 

[Shadow Reaper]

. . .its clear funding is going to be an issue down the road. . . I am not sure how much more they can do. . .most of the space sim fans are already signed on. . .

I doubt that is true. I recruited one friend to play despite I myself am not yet playing, but the overwhelming majority of friends I have spoken with about SC are interested, but not willing to spend their time until the game goes beta. I would play now if I had the time and a gaming machine, but I'm involved in a startup that takes 70 hours/week of my time, so all I can afford really are the brief breaks here to make friends and learn about what will be on offer. When beta comes, my guess is I can bring at least ten people in, and that's enough to man a Polaris. :-)

CIG hasn't made a dent in what they can achieve finanically if they deliver the goods, and this is the kind of game people can play for a decade and be satisfied with just the one.

 

[Phil]

Over 2 million subscribers I would say most have signed on or at least are already interested. Most space sim players know about SC its the people outside of that realm you need to reach, mainstream players to bring the extra $$ which is exactly why they brought in people for advertisement and marketing CIG can only squeeze so much juice from its supporters now they have to bring it in from other sources.

 

[Richard Bong]

I do appreciate the straight answer, as I am curiious how this works. So next question, how did CIG US LLC raise support as an LLC? Normally you cannot raise support without selling shares and LLCs don't have shares. Normally investors will force LLCs to convert to an S or C corp before investment. So is CIG raising debt financing rather than equity? That would be an exceedingly risky thing to do so late in development, as they could lose the entire company.

LLC's most certainly can have shares. They can also get financing. There are many types of LLC, that is not just solopreneurs.

 

[Richard Bong]

One of my concerns is the lack of articulation on how the game is to be funded after launch.

We have several answers as to how it is not going to be funded, but not one on how it is to be funded.

 

[Shadow Reaper]

In strictly technical terms, no LLC can sell shares. Ownership in an LLC, or limited liability company, is based on a percentage of the company not by the number of shares owned. That's true for single member LLCs and multiple member LLCs. This is why the first thing when you go to investors, they want to know how you are incorporated. If you are doing an equity raise, they want to see an S or C corp, and will usually be okay if you're one of the new B or Benefit corps, but most investors won't do business with an LLC and will force you to change your status in order to receive funding.

That's why finding CIG USA is an LLC is so jolting, but as others have explained, it is really CIG Europe doing the raise.

 

[Deroth]

I know far more gamers in RL that are unwilling to spend on SC until beta and they know the pricing scheme than I know that're already in.

 

[Thalstan]

wait....are you implying we're not normal?

No one funding SC is normal

The ones in TEST are even less normal

 

[Swizzle_TV]

I read that the investor is one of Chris Roberts buddy's that has been working with him on the side lines on and off during production of SQ42 the whole time.
The way I look at it is he got his rich buddy's to throw in 46 million for marketing since this game is off the hook and I have faith it will be all the talk and a future blueprint on how games should be made.

Also it's only 10% share of the company but yea id worry if this became routine but i highly doubt it.

 

[NaffNaffBobFace]

I read that the investor is one of Chris Roberts buddy's that has been working with him on the side lines on and off during production of SQ42 the whole time.
The way I look at it is he got his rich buddy's to throw in 46 million for marketing since this game is off the hook and I have faith it will be all the talk and a future blueprint on how games should be made.

Also it's only 10% share of the company but yea id worry if this became routine but i highly doubt it.

Cool, i'd love to read that article if you have a link to it?

 

[ShakyWater]

One of my concerns is the lack of articulation on how the game is to be funded after launch.

We have several answers as to how it is not going to be funded, but not one on how it is to be funded.

I've thought about that too. I imagine CIG will downsize from the five studios they have around the world once SC is done, and then they'll get to work on their next title, if they haven't already.

That's what game studios do, right? Finish one title, then start on the next.

 

[Richard Bong]

I've thought about that too. I imagine CIG will downsize from the five studios they have around the world once SC is done, and then they'll get to work on their next title, if they haven't already.

That's what game studios do, right? Finish one title, then start on the next.

The issues is how do they pay for the servers, the maintenance, the new content to keep it alive without subscription (ruled out), or ship sales (ruled out). People expect 72 months Insurance to run out during the life of the game.

 

[Richard Bong]

In strictly technical terms, no LLC can sell shares. Ownership in an LLC, or limited liability company, is based on a percentage of the company not by the number of shares owned. That's true for single member LLCs and multiple member LLCs. This is why the first thing when you go to investors, they want to know how you are incorporated. If you are doing an equity raise, they want to see an S or C corp, and will usually be okay if you're one of the new B or Benefit corps, but most investors won't do business with an LLC and will force you to change your status in order to receive funding.

That's why finding CIG USA is an LLC is so jolting, but as others have explained, it is really CIG Europe doing the raise.

Not true at all. In the US an LLC can sell shares. There is a type of LLC that can't, but in general they can.