Even rounding up to $5M in sales with the 3 humble bundles, a 5% commission comes out to $250,000. Factor in hosting costs and salaries, and that's not really enough money to build out a business.
They plan to grow the company (and revenues), of course. Valve runs a somewhat similar business with their Steam content delivery and promotion system. A lot of indie games are on Steam and "Steam sales" are somewhat similar to the humble bundle mechanism. There's certainly a lot more money in the indie games market than the humble bundle has brought in.
Indeed. But part of making an investment is knowing what's possible to change. People who invested in Microsoft in the days of DOS knew that there was more ahead for the company. Same goes for people who invested in Amazon when they only sold books. That applies here as well. Investing in a company merely so you can rake off the cream that's already flowing is for businesses that are old and have plateaued.
My point about Valve and Steam is that there is a lot of potential in that market segment, and certainly Valve hasn't exhausted all of it. Indeed, one could imagine the Humble Bundle working with Valve to get included in Steam sales.
Humble Bundle has a brand people recognize, like, and trust. A hell of a lot of industry connections. And an established track record. I don't know the depth of the gaming industry well enough to know exactly how wise this investment move is, but it seems like it could be fairly reasonable to me.
Right, but why do they need a huge influx of cash just to keep growing an already successful enterprise? Especially when the founders have to give up some control over the company to get it.
That's a common question in situations like this. Essentially they have a scalable business model, so rather than waiting a few years to grow to size organically they can jump to that stage in the business much earlier. Sure, they give up some control, but Sequoia are awesome folks and they massively de-risk the business this way.
