Burning $9m, VC anxiety and commercial triumph - the Mind Candy story

Burning $9m, VC anxiety and commercial triumph - the Mind Candy story

By Rob Crossley

June 14th 2011 at 11:12AM

Develop explores how the London studio shot to fame and why investors backed it at the darkest hour

The New Millennium buzz for digital creative business helped London group Mind Candy raise $10 million during its beginnings in 2003.

But ifour years later, when Mind Candy was being named in the national press as one of Britain’s top young internet companies, the talented group was on the brink of financial collapse.

Mind Candy built its major debut project, Perplex City, with $9 million of its venture-capital-filled money jar.

But, in 2007, Mind Candy’s founder met with investors and explained the project wasn’t working.

“Eventually, I had the worst feeling you can get as an entrepreneur,” Michael Acton-Smith tells Develop.

“I felt awful – a real aching in the pit of my stomach. I realised that this was just the wrong thing.

“Creatively, Perplex City was amazing,” Acton-Smith says, “but it was way too complicated – people don’t want to consume their story across all these different mediums.

And in a new interview with Develop, published today, he bares all on what happened next in the days and months that followed.

“We were burning thousands of dollars in salaries a month. I went to the board and said ‘I know you’ve invested $10 million in Perplex City, but it’s not working’.

“We had a choice – burn through the cash until we ran out, or try this little kids game I was thinking about.

"They were shocked, but to their credit they said to go for it. We spent the remaining $1 million on that.”

That meeting brought about the birth of Moshi Monsters, a modern success story with 50 million registered users worldwide – and enough funds to capably employ over 100 permanent and part-time developers.

But the beginning of the Moshi Monsters project was just as testing as the end of Perplex City, with the group buckling under financial strain.

The story of how Mind Candy recovered to become a world-leading social games group can be found here.