Execution Labs raises $1.4M to incubate indie mobile game studios in Canada

Canada has been creating huge numbers of jobs in the video game industry. But many of those have been at huge game publishers such as Ubisoft. Execution Labs hopes to change that by creating an incubator for emerging Canadian mobile game studios.

Execution Labs has raised $1.4 million to create its game studio incubator in Montreal. The company will take applications from startups, train the most promising ones for three months or longer, offer them advice from industry experts, and help them launch their mobile apps. The move shows that games are still attractive to both investors and entrepreneurs, and mobile gaming is becoming the focus of most game startups.

The labs will follow in the footsteps of other incubators in the game business such as YetiZen, Game Dojos, YouWeb, and others. But cofounder Keith Katz (pictured left) told GamesBeat that the company will have a unique business model.

The financial details work like this. For every employee that a startup has, Execution Labs will offer a stipend of $2,000 per month. It will train the startups, give them office space, offer development tools, and expose them to game industry mentors. For every three months the studio stays at the labs, Execution Labs gets a 5 percent stake, starting with a minimum amount of 10 percent. The startups can stay longer if they wish. If a startup stays for nine months, Execution Labs takes a 15 percent stake. If the startup launches an app while at Execution Labs, it will give 30 percent of the revenue proceeds to the incubator.

After a team spins out, the labs will drop its revenue share to 1 percent per $10,000 invested, with a one-year expiration. Execution Labs will help with marketing and customer acquisition support, as well as live operations.

“The diversity of new gaming platforms and business models has created a ton of opportunity for developers, but navigating this crazy space can be a really daunting prospect for small indies,” said Jason Della Rocca (pictured right), the cofounder and former director of the International Game Developers Association. “The Execution Labs model is designed to make things much more manageable for indies from both a creative and business perspective. Ultimately, we want to foster a new wave of game entrepreneurs who own and control their IP.”

Katz is the former vice president of monetization at OpenFeint (acquired last year by Gree) and is based in San Francisco. The third cofounder (pictured at bottom) is Alexandre Pelletier-Normand, the former head of deployment at Gameloft.

“We raised the $1.4 million because we wanted to have plenty of runway,” Katz said.

The funding came from lead investor BDC Venture Capital, with participation by coinvestors Real Ventures and White Star Capital. Additional investors include Taiwan investors Jimmy Foo and Richard Wu. Dozens of mentors have agreed to volunteer their time to coach the teams. The mentors include Ed Fries (the cofounder of  Xbox), indie developer Phil Fish (of Fez fame), and monetization expert Ben Cousins of Ngmoco.

“Canada is a game industry hotbed, with tremendous development talent from coast to coast,” said Dominique Bélanger, the director of strategic initiatives and investments at BDC Venture Capital. “Part of our strategy is to support cutting-edge, early-stage initiatives just like this one. Execution Labs is a very promising platform for harnessing the creativity of independent game developers and speeding their growth into commercially viable studios that can blossom into major worldwide players.”

Execution Labs also has a marketing partnership with GameStop, the world’s largest video game retailer. Chris Petrovic, the general manager of GameStop Digital Ventures, said, “As our customers engage in more forms of gaming, GameStop can use its global market presence to support games developed through Execution Labs.”

Execution Labs will also provide legal guidance and help lining up funding from early-stage investors for those studios that spin out, leaving the teams to focus on what they do best: making great games. In exchange for all the help and financing it provides, Execution Labs gets an equity and revenue share commensurate with its level of investment in each team. In the future, Execution Labs hopes to take applications from outside of Canada.