Developer Pixion Games faced a significant setback when they lost a substantial portion of their $2 million seed funding round after investors withdrew from the deal, according to studio founder and CEO Kam Punia.

Speaking at the Games Growth Summit, Punia participated in an 'Investor Journey' panel, shedding light on the challenges of growing a business after raising capital while maintaining investor satisfaction.

Punia revealed that the studio then focused on a competitive mobile esports game, had secured commitments and signed term sheets from investors for its $2 million seed round. However, during three crucial days at GDC amid the pandemic, the lead investor altered their investment strategy, leading to their withdrawal from the round. This investor represented 60% of the $2 million raise.

Subsequent discussions with other investors proved fruitless, as they too changed their investment strategies and pulled out of the deal. This left the team with only a fraction of the intended funding, placing them in a precarious financial position. Punia shared his distress, mentioning maxed-out credit cards and the studio is just three weeks away from running out of money.

Despite the challenges, Punia emphasized the importance of selecting the right investment partners and avoiding deals with partners whose expectations would be difficult to manage, as this could lead to future conflicts.

Last year, Pixion Games managed to secure additional funding through an extension of its seed round, raising $5.5 million to support the development of its web3 title, Fableborne. Investors in this round included Avalanche Foundation’s Blizzard Fund, Shima Capital, Eldridge, Merit Circle, ReadyPlayerDAO, VGC, Zee Prime, Mechanism Capital, GSR, Misfits Gaming, and others. The studio had previously received backing from angel investors.

Source: adapted from an article by Craig Chapple, Head of Content for PocketGamer.biz.