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Once again, Curt Schilling pitches investors on 38 Studios, his Rhode Island videogame start-up

Posted by Scott Kirsner  July 8, 2011 11:03 AM

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Just a few months after receiving a $41.7 million loan from the state of Rhode Island, the videogame start-up 38 Studios is soliciting private investors for funding. UBS Investment Bank began circulating a "brief teaser" of the investment opportunity in June, describing it as a "pre-IPO fund raise." That's quite a stretch for a company that has yet to release its first game.

So far, the Rhode Island loan — which lured the company to the Ocean State from Massachuetts, and which could total $52.5 million if 38 Studios hits certain business milestones — has been 38 Studios' largest outside funding. Through a publishing arrangement with Electronic Arts, that big California game company is likely funding most of the development costs for the first 38 Studios game, "Kingdoms of Amalur: Reckoning," due out in 2012. But the company's most dedicated backer thus far has been founder and chairman Curt Schilling himself: a 2010 Harvard Business School case study on the start-up noted that he'd poured nearly $20 million of his own money into 38 Studios between 2006 and 2008. The case study also detailed Schilling's inability to agree to terms with an array of prospective investors. (Schilling, in case you've forgotten, was the pitching ace who helped the Red Sox win the 2004 and 2007 World Series — and he's also a die-hard gamer.)

38studios-copern.jpgThe investment overview that UBS has been e-mailing around says that 38 Studios' first game, the single-player role-playing game "Reckoning," will be out in the first quarter of next year, and its second game, "Copernicus," a massively-multiplayer online game (MMO) similar to "World of Warcraft," will be released in the fourth quarter. (Company-supplied concept art from "Copernicus" appears at right.)

It notes that "Reckoning" was previewed last month at the E3 gaming conference, winning several awards from industry publications and blogs. "Success at E3, considered the preeminent gaming conference," the UBS bankers write, "has been a major indicator of eventual commercial success for game releases historically, and the Company intends to build on this positive momentum with further media events leading up to the game’s launch."

The second game, "Copernicus," will be set in the same universe as "Reckoning," but during a different era. The pitch compares this universe to what George Lucas created with the "Star Wars" series and J.R.R. Tolkien's Middle-earth.

"With Reckoning and Copernicus launching in 2012, 38 Studios expects to achieve over $100mm in revenue in 2012," the bankers write, adding that the company expects to be "extremely profitable" by 2013. The document stresses the experience of the 38 Studios team, which includes comic book artist Todd McFarlane, author R.A. Salvatore, and game designer Ken Rolston. It also includes nine screenshots from the two games, and notes that their success could also create opportunities for toys, collectibles, movies, and comic books.

"38 Studios has established itself as the rising star to watch over the next several years in the RPG and MMO space," the UBS bankers write.

Two big questions I have: how much is 38 Studios seeking to raise, and does it need the money to finish its Copernicus game? Unfortunately, CEO Jen MacLean didn't return calls or e-mails, and a company PR rep told me the company had no comment on the fundraising document.

Would you invest?

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About Scott Kirsner

Scott Kirsner was part of the team that launched Boston.com in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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