Funding
It’s about start-up survival.
Introduction
Game development is a business with various ways to approach funding sources. Overall, game developers can survive for quite a while by bootstrapping and approaching the so-called 3Fs (friends, family, fools) for support.
An incubator’s role in supporting game developers is to facilitate funding rounds by networking with investors and publishers. A tool that’s also often used is crowdfunding.
Other sources of funding to consider are public support instruments. Some countries have public funds available specifically for game start-ups. E.g. StepDemo in Finland is offering up to 5,000 EUR for concept development and up to 15,000 EUR for demo development.
Funding Opportunities
- Project finance (investors lend against a particular game and take a share in the revenue)
- Apply for crowdfunding through e.g. Kickstarter (i.e. a large number of people invest in a project through an online platform. There are various types of crowdfunding, but the gaming industry may be interested in a royalty-based system where investors give money in return for a fixed share of revenue)
- Bootstrapping
- Loans
- Equity fundraising
- Front money investment
- Look for game incubation programmes (some of them offer free facilities and knowhow)
Early Survival & Development
Finding a way to survive for start-up teams in the early phases of the company’s lifetime is crucial. But, in order to move beyond early stage survival, it is also important to address attracting external capital to fund the company’s growth or the development of a specific title.
The Incubator’s Job
As an incubator it is essential to get an overview of relevant funding opportunities (often public) in the region and country that you are located in.
In addition, creating a network of private investors can be of huge help to your incubatees. Ideally, such a network would cover every (company development) phase from early stage seed capital to VC funding.
However, before approaching any kind of external funding, the teams in the incubator should be educated. They should be prepared for approaching potential investors. A start-up team’s company structure should be clear and covered with specific agreements. All relevant documentation should be available (one-pagers, pitching slides, etc.).
Crucially, a few practical pitching sessions should be held before approaching the main funding targets. An incubator should discuss with its teams what it means e.g. to have an investor on board, whether the investor is looking for equity, revenue share, etc.