Acquiring incubator funding.
Some of the most successful game incubators in Europe have been and still are publicly funded. In most cases, these have started out as a public investment in building a start-up infrastructure focused on game studios. After proving the concept by helping start-ups become sustainable and later successful in terms of creating new jobs and increasing tax revenues for the good of the public, further public investments have been made in the development of the incubator.
Local and Regional Funding
Typically for game incubators that have been around for a few years or more, these kind of investments have been by local and / or regional authorities. They have been convinced that building an infrastructure for start-ups in a booming industry that is built on creativity, innovation and at the same time new technology, is a good investment. Addtionally, they have been convinced that such an investment also has the potential to attract entrepreneurs from other cities, regions, or even countries.
National funding schemes should also be considered. Though these will most likely require a nation -wide collaboration with other incubators or clusters. Thus, it is difficult receive investment in the development of only one game incubator. If possible, this kind of collaboration can be carried out with other game incubators in the same country. But such a collaboration can also work across sectors with clusters or start-up environments that focus on e.g. healthcare, design, learning, etc.
Cases of private initiatives are a minority. In fact, the main source of funds for game incubators remains the public sector. Sometimes this can mean providing game incubators with the building / venue. Sometimes this can mean access to services, shared capital, salaries for incubator staff or dedicated part of budget, or a grant. Regardless of the legal status of the incubator, this should not be the only source of its financing, usually.
Very relevant in terms of public funding is the participation in EU projects. The challenge of creating new jobs and promoting entrepreneurship is high on the agenda of all EU’s member states. Programmes that aim at working together on solving these issues across borders are available.
Interregional programmes (Interreg Europe1Interreg Europe: https://www.interregeurope.eu/) are especially important to consider in this respect. They focus on collaboration in bordering areas across Europe. Applications for these programmes statistically stand a better chance of being approved. This is in contrast to larger projects that are being applied for centrally in Brussels.
Important to consider before applying for an Interreg project is that every participating partner is required to contribute part of the total budget (ranging from 15-50 % depending on the programme and country). It will, however, sometimes be possible to use already secured public funding from e.g. local or regional authorities to co-finance the participation in an EU project. This depends on the individual case and funding agreements.
Applicants should keep in mind that it can easily take 6 months or more before EU contributions to expenses incurred during the project are received. Thus , solid liquidity from the game incubator’s side is required.
Most of game incubators need the public money support to start supporting the game industry. There is no quantified data for that, but we can say it with a high probability.
An alternative to public funding is to approach private investors and convince them to invest in the game incubator. In practice, this will often mean that they invest first in the incubators’ ability to attract talented start-ups. Second, they invest in the mentoring process developing these start-ups into successful companies. This is similar to what public authorities do. The very important difference is that investors typically also require a certain amount of ownership in the start-ups.
Incubation vs. Acceleration
It might be harder to convince a private investor to back a “slower” incubator programme. E.g. one that allows start-ups sufficient time to grow from newly established (by e.g. recent game education graduates) to a sustainable company.
As mentioned earlier, game incubation programmes typically take a relatively long time to complete. That is exactly because of the early-stage nature of the incubated companies. A private investor might want to receive a return on investment sooner. This is why acceleration programmes that cater to studios that are closer to the release of a promising game are often more interesting from a private investor’s point of view.