On Feb 19, 2024, Frost Giant announced a "testing the waters" period for a crowd equity campaign through StartEngine to provide another avenue for interested parties to invest in the success of Frost Giant and Stormgate. This would allow interested parties to join the likes of Kakao Games, Riot Games, and Bitkraft Ventures in purchasing some fraction of Frost Giant.
The Offer
Today, Frost Giant announced a "Testing the Waters" period ahead of the full campaign launch next month. Per Frost Giant, this "Testing the Waters" phase is meant to assess investor interest ahead of a full campaign in March - effectively a "Coming Soon" notice in advance of the full campaign.
From the StartEngine listing, it appears that Frost Giant is offering shares at ~26 USD/share (which means a $1,015 investment would net you 39 shares of the company), and StartEngine is offering potential investors an additional 5% bonus shares, rounded up, for investors who express interest during the "Testing the Waters" period. This offering is based on a 150 million USD valuation - so a $1,000 investment would net 0.00067% of the company. Per Kotaku, they will be offering up to $5 million in total shares, and as of publication $480,226.47 of that has been reserved by 240 investors.
Per Frost Giant, this offering is explicitly common shares - which means the path to any return for an investor would be through some liquidity event (i.e. through IPO, purchase, stock buyback, etc). We can expect more information on that, as well as about Frost Giant's financials and other important investment information, when the campaign goes fully public in March.
For now, what is public is that Frost Giant has raised $34.7 million USD from institutional investors, had the most successful gaming Kickstarter of 2023, the most successful RTS Kickstarter of all time, and has received over 500k wishlists on Steam.
StartEngine
StartEngine is one of the premier crowd investing platforms with a stated goal of helping "other business raise capital from their customers, friends, and adventurous investors" as an alternative to traditional investing models. Companies funded from it have gone on to provide a return on investment through buyouts (PartPic, IfOnly, etc), IPO (Knightscope Inc, Digital Brands Group Inc), and other methods. Traditionally, Frost Giant would have gone through Angel, Series A, Series B, etc investing rounds to fund their company. They have completed some of that - companies like Bitkraft Ventures (other investments in their portfolio include Discord, Midnight Society, Epic Games), Kakao Games, and Riot Games invested a total of 34.7 Million USD. It appears, however, that Frost Giant is interested in opening up investment to the community that has powered its success up until this point.
It should also come as no surprise that Frost Giant would seek other revenue streams than traditional investing. The United States Treasury has been increasing lending rates since March 17, 2022 in an attempt to curtail inflation. This means that lending rates went from almost nothing (~0.25%) to 5.5% - which is a significant increase when you consider the amount of money these companies are lending. These interest rates define the cost to borrow any amount of money - from the houses and cars people are buying to the interest rates on your own savings accounts. This also means that its more expensive for venture capital firms to borrow to invest - 2023 saw the total value of funding rounds reduce to $260 billion, a 40.3% decrease from the $435.73 billion in 2022.
In some ways, Frost Giant could consider itself to be incredibly well timed, as they formed their company during the online and gaming boom of early COVID before rate hikes tightened the purse strings on investors the world over (see: the Esports Winter). That drawdown on investing does that any further investments would likely be much more difficult to acquire, however.
What This Means
First, I feel obligated to state that neither I nor anyone at StormgateNexus are in any way affiliated with Frost Giant Studios and none of this constitutes financial advice - just my take on a newsworthy subject. That being said, this is an interesting opportunity - I think many people would have loved to be able invest into Fortnite before it blew up into the world-conquering, massively popular game that exists today. It's important to remember, though, that prior to release, Fortnite was a much-delayed base building game that had the Minecraft community excited above all else, and the game mode that took the world by storm wasn't even the primary mode upon release. It's easy to look back on the successes and ignore the failures.
Frost Giant has also publicly stated on their Kickstarter that Stormgate is fully funded through release - but in a Reddit thread responded to concerns about the campaign, Gerald Villoria, Communications Director at Frost Giant, stated that Stormgate is funded "to get us to our Early Access release." He further clarified that they have "pour nearly every cent of our approximately $35M into making the best possible RTS, but that doesn't leave much to support a launch campaign." When reached for comment, I was told that "our plan is for these funds to support our development and publishing efforts, including a marketing campaign for our Early Access release on Steam." This information is not new, but this is the first time it has fully entered the public discourse. Two months ago in their Reddit thread discussing the Kickstarter, Gerald Villoria mentioned that "Unlike some kickstarters that never result in a playable game, Stormgate is already fully funded for release to early access." Unfortunately, a comment in a reddit thread will never garner the same reach as an official statement or notice on the official Kickstarter page.
In September, Cara La Forge, Head of Business Operations at Frost Giant, telegraphed something similar in her excellent interview with StarcraftHistorian earlier this year, noting that they had been searching for additional investments on top of their Series A funding but had been unable to secure anything - "at some point we're going to go to Early Access because we need to start to monetize the game, and the game will be where it will be at that point."
Early Access is not 1.0 - and some of the biggest Early Access games have had a several year gap between their Early Access release and full release (Baldurs Gate 3 spent a full three years in Early Access). Currently, Frost Giant has shown 2 factions up to Tier 2 units and one co-op mission. Per Frost Giant, a full release would have 3+ factions with full tech trees, a fleshed out co-op, a 3v3 mode, an initial campaign, and a baseline map editor. Of course, as a live service game we would expect these offerings to improve and grow after release - but this is the baseline expectation for a released game. To address some of these concerns, Gerald posted on Reddit that Frost Giant plans on providing some roadmap in the near future.
It is important to note that Frost Giant has also been public about their desire to maintain creative control of Stormgate by not working with a publisher in Western markets. That comes with pros and cons, but one of the major cons is the lack of publisher support for development costs and marketing.
From statements in their Discord and on Reddit, it appears that Frost Giant plans to combine these funds with the $2.38 million raised on Kickstarter to power a marketing campaign around the Early Access launch, as well as support further development of the game. That Early Access launch is expected sometime in the third quarter of 2024.
Disclaimers
StormgateNexus is a fan project unaffiliated with Frost Giant Studios or Stormgate, and has no financial stake or investment in Frost Giant studios. All information in this article is public or the result of a request for comment where marked. This article does not constitute any financial advice or reccomendation and should not be taken as such. This article is opinion-based, not a recommendation nor an offer to buy or sell securities.