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Portfolio startup case: Donut Lab

We are carrying on with our series of case studies, where we delve into the development journeys of our startups.

Today we'll tell you about a game studio Donut Lab, the developer of the mobile game Donut Punks with 1.5M installs during its soft launch.

We had the pleasure of speaking with the powerhouse trio that drives the studio.

  • CEO Andrei Gordei, the creator of the Green Riding Hood game and the founder of Gordei 2D Studio. He has an impressive background as an artist.
  • COO Tim Raiter, a serial entrepreneur and designer, who led the design team at Brex. He has also made invaluable contributions to several reputable parental apps such as Hello Belly, which boasts a gross revenue of $2M.
  • CPO Yar Anufriev, who has significant experience in the industry, including work on RPG games like Ages of Magic, which generated an impressive $65M in revenue.
We asked Gordei, Tim & Yar how they accomplished their success, the challenges they encountered along the way, and what their plans are for Donut Lab. Here is what they told us.

Donut Lab is a game dev studio

Donut Lab is a self-published mobile gaming company with the creative and production capabilities to build a new generation of multiplayer and competitive mid-core games in a unique and memorable 2D style.

Donut Lab has combined the power of proprietary technology, creative intellectual property, and publishing to create a truly unique offering in the gaming space.

They have three technology-based solutions that enable them to build complex games with significantly higher speed and at a fraction of the cost.

  • Donutmagic2D, a set of plugins for 2D graphics in Unity3D.
  • DonutmagicServer, an original and proprietary server engine that enables the deployment and management of real-time multiplayer games worldwide.
  • DonutmagicCore, a robust and cutting-edge SDK extension for Unity3D, designed to facilitate the creation of engaging and high-performance gaming clients.
Donut Lab's first major title is an action-packed MOBA shooter game Donut Punks. It has already gained over 1.5 million downloads and received 13,000 positive reviews with an average rating of 4.7.

Moreover, Donut Punks has a remarkable 10% of players engaging for 80 minutes per session and 150 minutes per day on average. Most of the players enjoy 2-3 sessions daily.

Donut Lab has already raised $5.2 million to date, including funding from renowned venture funds Level-Up, Joint Journey, FlyerOne, and Wargaming.

How we got our start

Gordei on the background and his first game:

It all began a decade ago when I was working as an illustrator in advertising. At that point, I had already taken home multiple accolades, including top honors at prestigious events like Cannes Lion and ADC Global Awards.

I was feeling quite bored with simply creating illustrations. So, I decided to establish my own outsourcing studio to become more deeply involved with aspects such as team building and project management.

Our primary clients were game development studios, responsible for constructing the games themselves. While they focused on coding and game design, our focus was on visual elements.

At a certain point, we became intrigued by the prospect of crafting a game of our own. This led us to release Green Riding Hood in 2015, an alternate take on the classic story of Red Riding Hood that incorporates yoga, green tea, and vegetarian recipes into the mix. I was the main artist of the game as well as the project manager.

I went the extra mile by securing the talents of some notable celebrities to do voiceovers for the game. Alister Findley, who had previously lent his voice to the acclaimed Nighty Night kids' app series, provided the English narration. Meanwhile, the Russian voiceover was handled by the well-known broadcaster Nikolai Drozdov.

Despite being our debut effort, Green Riding Hood was still able to pick up awards such as "Free App of the Week" in 2017 and even earn the distinction of iPad App of the Year 2015 in Russia.

One of the primary factors that drew me to Green Riding Hood was its distinctive art style and animation, which I found to be unique enough. Moving forward, I aspire to continue creating unconventional games while also incorporating innovative mechanics to keep things fresh and exciting.

Back when we were working on Green Riding Hood, I had yet to discover the world of venture capital investments and was funding all of our projects out of pocket. As our team grew in size, this became increasingly challenging. However, things turned around when I met Tim, whom I was teaching yoga in Bali. He introduced me to the world of venture capital and opened up new avenues for us.

Tim on Zombie Donuts and first investments:

By 2018, we had already set our sights on our next project, the MOBA game Zombie Donuts. At that time, Supercell's Brawl Stars was in its soft launch phase, and it was apparent to us that brawlers were going to be the next big thing. As fate would have it, this proved to be quite correct.

We had big plans in mind for Zombie Donuts, including a collaboration with legendary American actor Danny Trejo. Gordei, the project's mastermind, sought to push the envelope in terms of visual style, while the game itself was designed to incorporate a blend of brawler mechanics, zombie apocalypse tropes, and the use of donuts as currency.

Within a mere three months, we managed to construct the prototype of Zombie Donuts just in a flat in St Petersburg. We proceeded to playtest it and found that it was both engaging and fun. So we concluded that it was well worth the effort we had invested in the project so far.

Armed with our prototype, we pitched it to several potential investors and ultimately managed to secure support from three business angels, each of whom contributed a sum of $50,000.

We put this capital to work immediately, investing in the development of the game as well as strategies to drive traffic and gather our first batch of metrics. What was truly remarkable was that people were returning to the game the very next day, despite there being little to no new content available for them to explore.

With solid metrics now in our favor, we had little trouble garnering interest from additional investors. The most substantial sum came from Wargaming, one of the World’s biggest game publishers, which contributed a generous $300,000 to our cause. Ultimately, we managed to secure a total of $500,000 in funding.

Difficulties we faced

Gordei: We changed the concept of the game three times. We spent a considerable amount of time on each iteration, but I would often step in and say, 'It's not quite what I had envisioned.' It wasn't until a year and a half into development that we decided to make a tweak to the concept for the first time. We realized that the original idea would not resonate with a wide audience.

The name was changed a few times too. It went through a few iterations, starting with Zombie Donuts, then changing to Kids vs Zombies, and finally settling on Donut Punks.

Tim: We would often end up running low on funds, leaving us with only a few days to find an investment. However, we always managed to sort things out since we didn't want to lose truly talented people who had turned down other lucrative offers to work on our game.

I vividly recall a moment when we felt utterly hopeless and exhausted from our attempts to raise funds. It was 3 a.m. and we were at our wits' end when our team contacted me and urged me to hop on a call with Level Up, hinting at something intriguing. I was skeptical, but I obliged. To my surprise, we landed a last-minute investment that kept our project afloat. It was a turning point that reignited our spirits and propelled us forward.

Yar: We constantly find ourselves on the move. It's not unusual for us to have to relocate due to unexpected obstacles, such as trouble securing residence permits in Turkey.

We also have to keep up with infrastructure changes, as we recently shifted from using Google Cloud to Amazon AWS. This change was necessary as our grant from Google had expired, and we needed to explore other options.

What's next

Gordei: Our primary focus is scaling the business. We have a clear understanding of our financial progress to date and the projected timelines for payback. Our immediate goal is to attract more traffic to our platform and increase brand awareness, so we can achieve monthly revenue of around $500,000.

Success in such games as Donut Punks heavily relies on the recognition and acceptance of our product. We understand that achieving widespread recognition is no easy feat, but we remain steadfast in our pursuit and believe in the potential of our game to make a significant impact.

To make it all happen, we're raising a pre-series-A round. We have already secured $800,000 and are now seeking an additional $500,000.

Ultimate advice to founders

Gordei: The visionary position should be above planning. While we do have a plan in place, my team trusts my intuition and expertise in understanding the gaming industry. In the event that a game-changing idea presents itself, we are quick to pivot and incorporate it into our plan. My philosophy is that planning should not hinder the exploration of fresh and innovative ideas.

Yar: Don't be traded in for repetition, it's just a waste of time. Lots of founders believe that all it takes is to tweak an already successful project to create a new and innovative product. In reality, this couldn't be farther from the truth. For us, Brawl Stars served as our source of inspiration, but we didn't stop at mimicking it. Instead, we added numerous fresh and innovative mechanics that we believe set our product apart.