How Companies Are Funded

Crowd Funding

 

Companies can set up a kick-starter page and people can donate money to it to help get the project done. They only receive all of this money once the kick-starter page has reached the goal, however if it doesn’t, people won’t be charged for it. Patreon is another way to receive money for people like youtubers and twitch streamers.

Examples:

  • Double Fine – Psychonauts 2 – Goal of $3.3million reached $3,829,024
  • Gun Media – Friday the 13th – Had a goal of £700,000 and Raised $929,513.70

Creative England

Creative England partnered with Microsoft to fund Green Shoots. This is meant to help the growth of the industrial and game development within England. They invest between 25,000 to 50,000 to promising companies. They can also receive extra benefits such as:

  • Enrolment on the ID@Xbox programme for Xbox One Development Kits
  • Access to Windows 10 devices for testing purposes (subject to availability and at the sole discretion of Microsoft)
  • Bespoke technical guidance and support directly from Microsoft
  • Access to select Microsoft tools and services for free,  through the Bizspark Microsoft programme
  • Introductions to investors and publishers
  • To be eligible to apply to Green Shoots companies must fulfil the following criteria:
  • Be a games company based in any of the English regions outside of Greater London
  • Have previous, demonstrable game development experience
  • Qualify as an SME and be registered at Companies House
  • Be able to provide £1 for £1 match funding to any investment awarded by Creative England
  • Have an idea for an innovative new entertainment game that can be available for commercial release no later than January 31st 2017

The CE Game Development Fund is also to help business development for the growth of the games trade in England by giving a greater investment of 50,000 and 150,000 to games studios.

Companies must fit into this criteria:

  • Be based in any of the English regions outside of Greater London
  • Have previous, demonstrable game development experience
  • Qualify as an SME and be registered at Companies House
  • Have been trading for a minimum of 3 years and be able to show a minimum of £100,000 revenue in their most recent company accounts
  • Be able to provide a minimum of £1 of private match funding for every £1 Creative England invests

Publishers

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When a team want to create a game, they ask publishers to fund their projects, if they agree, they will provide them with a budget for the game. When the game is near completion the publishers will sort out business aspects of the game including advertisement.


Grants

A grant is an amount of money that the government gives to the company for the project. Companies don’t have to pay a grant back although it’s hard to get one with competition.

Advantages:

  • Do not have to pay a grant back or pay interest on it
  • Do not lose any control over your business

Disadvantages:

  • Locating  a grant that suits your specific project
  • There is lot of competition for grants
  • The applicant often is expected to match the funds you’re awarded
  • Grants are usually awarded for proposed projects, not ones that have already started
  • Application process is potentially time-consuming

Tax Relief

In Britain there is a tax relief that companies can apply for if they fit into a certain quota. Companies in all 3 industries (Games, Animation, and VFX) can claim it if so much of the project is British. By this I mean, staff, landscapes, overall concept and idea. If it hits so many points then they are granted a tax relief as long as it’s somehow British. If the companies are losing money they can apply for help.


Business Angels

Business angels are people who privately invest in a company for their own gain and profit. They invest an average of 850 million every year.

In general there are six different types of investor:

Virgin

Has not yet invested

Latent

Has not invested in the past three years

Wealth maximising

Experienced businessmen and women investing for financial gain

Entrepreneur

Backs businesses as an alternative to stock market investments and often for the love of entrepreneurship

Income seeking

Invest for income or to gain a job

Corporate

Companies that make regular investments, often for majority stakes.


Private Funding

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Private funding can be from anyone including friends and family. It’s basically where you can ask people to give you some money to help fund your project and it can come from anywhere, and any amount of money.


Loans

In finance, a loan is the lending of cash from one individual, organization or entity to another individual, organization or entity. A loan is a debt provided by an entity (organization or individual) to a different entity at an rate of interest. Companies can personally take out the loans risking themselves for a project.


Sales

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Games, Animation, and VFX companies often create revenue from the games, merch, receipts they sell to people. How much they sell is up to advertising.


Contracts (Fixed Cost)

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One of the more safer ways to keep money to create a contract with a publisher (or something similar). In the contract it will be agreed that withing a certain time-frame the developers will have a finished product that will create profit for both parties.


Early Access

earlyaccess

Games can often be released early on platforms i.e. steam. This enables players to buy the game early before it has been tested for everything to bring in early revenue. The developers often use the players as QA testers for the game with every bug that comes up flagged they can fix while still earning money.


Advertising and Sponsership

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In-Game Advertising

This is where players can see advertisement in games or may interact with them, this can be simple things like have a brand logo on a phone or to other things like having an actual billboard.

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These are usually mini-games on a company website to help promote it.


UK Games Fund

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The UK Games fund is to help indie developers make games and encourage the growth of the industry.

Eligibility Criteria:

  • You’ll normally be a registered, active games development company
  • You can also apply as a new startup, even before you have legally formed your company with Companies House (although grants will only be awarded subsequently to your company once established)
  • Companies that apply must have no more than 50 employees
  • You do not need to be PAYE registered before applying, although you will need to pay company employees using PAYE if you intend to claim their costs from the grant. If you’re not PAYE registered presently you’ll need to allow sufficient time for registration prior to grant award
  • You can apply as a company with a single (PAYE) employee, although you will need to show that you intend to work with suitable contractors, as we don’t support projects with solo development plans
  • You will not need industry nominations to make an application (although providing reference contacts could help strengthen your application if you’re just starting out)
  • You will need at least 6 weeks of working capital to enable you to draw down the grant, which must be claimed monthly after incurring and defraying your costs
  • The scale of development will be such that our grant will represent no more than 50% of the total costs of the project
  • We will consider applicants where part of the team includes UK-based contractor arrangements.

FIG

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FIG has a board of people who review a game and decide whether or not it should be funded, this is to prevent people spending their money on projects that can just be left behind.

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