After setting up 2 companies I spent quite a while looking for finance. I wanted to share that experience with indie game devs who need to fund their game projects.
This is for all game developers in need of finance, to fund their game project. You can get a variety of investment from the 8 sources I identified below. The first question is: what stage are you at? Probably start with Crowd funding for a small amount, and VCs will give you the biggest investments:
1.Crowd funding
2.Tax breaks
3.Angels
4.Loans
5.Match-funding
6.Revenue-share
7.Grants
8.VCs
Crowd funding
For advice in crowdfunding, refer to my previous blog post on our successful Kickstarter campaign. But if you want only 1 advice: always ask less than what you actually need. This way you increase your chances of success and you get good PR. These days it's hard to get a lot of funding out of crowdfunding, but it's still a great way to put you on the map for future investors and partners.
Tax breaks
I would advise you get help from professional accountants to speed up this process as it can be tedious.
As a rule of thumb (in the UK) you are entitled to 40% of your R&D related expenses (e.g. programmers' salaries)
and on other development expenses, a 20% tax break from the Video games Tax Credit. For more info on the
latter, contact the British Film Institute.
Business Angels
There are many ways you can get in contact with business angels:•Startup accelerator (in the UK: Ignite 100, Seedcamp)
•Pitch to angels, attend angels events (South East England: OION, Surrey 100...)•Ask fellow game developers to introduce you to their angels
Angels are more than investors, they add value to your business:
•Follow their advice, they have good common sense.
•Keep them informed, meet up regularly.
•They are more likely to invest than any new investor.
Match-funding
Once you have an investment, consider if you can find match-funding from:
•Creative England
•Angel groups (Syndicate room)
•Equity crowd funding (Crowdcube, Invesdor)
Loans
•Preserves your equity.
•You have to pay it back no matter what: make sure you
have regular revenue before contracting a loan.
•Personal loan is better: investors will be put off if the
company has debt.
•In the UK you can approach organisations like Outset Finance or the FSE group.
Grants
•Hard to get
•Get help from experts (Moore Stevens, Tenshi Partners)
•Innovation?
•Competitive advantage to the UK?
•Social benefits?
•Partnership with university?
Revenue-share
•Negociate a holiday period.
•A bad deal will not only hinder your profit, but it will also harm your chances of raising further rounds.
VCs
•It is actually easier to raise more with VCs. Don’t ask for £250k form a VC, it’s not worth their investment.
•VCs will only invest in companies they know. Otherwise they observe the studio for months.
•Start by just asking feedback on your pitch before you are investment ready; build up a relationship.
Mistakes and learnings
•Don’t have overly optimistic forecasts in the hope to impress. Investors will see through your bluff.
•Know your numbers. Be prepared to be grilled by finance experts: know the revenue predictions off the top of your head for the next 3 years.
Tips and advice
•Send your pitch for proof-reading to investors, consultants and entrepreneurs. They will give you valuable feedback for free, and can introduce you to potential investors.
•Attend networking events.
•buy a coffee, pick their brains.
•Pitch to as many people as possible to practice and improve.
•When turned down, ask why.
•Surround yourself with people you trust: non-exec directors can advise you, for free or for share options.
•Say no if the offer isn’t good enough, it’s better for the long term.
•Get funding when you don’t need it, so you are not desperate
•Give yourself time: the more you raise, the longer it takes (up to 6 months with VCs).
•In the UK: Get SEIS and EIS certificates in advance.
•Have a road map : it helps investors understand what you’re doing with their money.
•Think of the exit: where will you be in 3 years? Investors want a good ROI in 3 to 5 years.
•Show you have a long term vision.
•Show ambition.
I hope you find it useful!
