Schilling’s Big Pitch

Curt Schilling wants $48 million. And it has nothing to do with a possible contract extension from the Red Sox. Instead, it’s for a videogame startup he founded last year called 38 Studios. If successful, it would be the largest-ever first round funding for a gaming company.

38 Studios is developing online multiplayer games, with initial products that will incorporate storylines from author R.A. Salvatore and visuals from comic book icon Todd MacFarlane. Not much more is known about the Maynard, Mass.-based company, except that its team includes vets from Midway Games, Hasbro and Disney.

By all accounts, Schilling seems to be very involved in the company’s vision and operations. He’s met with a number of VCs over the past few months, and will be invaluable once there is a product to promote. He’s even launched a blog called 38 Pitches, which is designed to discuss both the company and baseball (it’s only discussed baseball so far). The downside to Schilling’s intense involvement, of course, is that he is a first-time entrepreneur who doesn’t yet know much about how venture capital works. More than one VC I’ve spoken with has come away with the impression that an investment would require quite a bit of “babysitting.” At the same time, almost all of them like the idea of hanging out with Curt Schilling, and respect the team. And since any respectable term sheet would include a request for box seats…

The big issue here is the round size. Game publishers typically raise single-digit or very low double-digit millions for their first round, and then raise more later. Turbine, for example, raised $15 million in a Series AA recap in 2003, and now has another $37 million in the bank. RealTime Worlds was launched with less than $2 million in 2004, and later scored $31 million from NEA.

So why is 38 Studios asking for $48 million at the outset? No idea, and company CEO Brett Close did not return my calls. All I can assume is that the company would prefer the increased flexibility of a large bank account, and thinks VCs will be willing to invest at what is basically a Series B or Series C valuation. What remains to be seen is if the lure of a baseball superstar can overcome what would be typical VC angst at such an abnormal transaction.