If you want to create your own video game, then one of the first questions you need to ask yourself is how you are going to fund it. Making a game takes time and costs money – even if just to pay your rent/mortgage, food and utility costs. If you want a team to work with then you will likely need to pay them unless you have all decided to bootstrap the game together. The main ways of financing working on your own game that I’m aware of are:
Working on it part time
It’s extremely hard to work all day and then come home and then work more on your own game but lots of people do this and for some it has worked out very well. The downside is that your social life is likely to suffer and/ or you’ll be making slower progress than if you were working on it full time, which can be frustrating. One of the most notable success stories of this is Thomas Was Alone which developer Mike Bithell created in his spare time while working full time at Bossa Studios.
Funding it through savings
This allows you to work on your game full time but could mean that you are using up your savings quite quickly depending on how much you have saved and what your monthly spend (burn rate) is. Companies like Polygon Treehouse are a great example of this method as they set up their studio after their employer, Guerrilla Cambridge, shut its doors.
Whatever your discipline there will be people looking to contract someone with your skillset which, if you can find them (which can be tricky and time consuming in itself), can provide you with money for your own project but the difficulty here is ensuring that you can find the time to work on your own project as well.
This is funding that comes from within your company and is the ideal situation to reach, where you have released a game which has sold well enough to pay for the development of your next project. In order to achieve this though, you’ll likely have to fund that first project through one of the other means listed here.
Funding that you secure from outside of your company – there are lots of different types of external funding so the rest of this article will be focusing on this area in more detail.
Improving Your Chances For Receiving External Funding
Addressing the following three key points will help to ensure that your applications have the best chance of success. You’re probably going to struggle unless you have effectively addressed a minimum of two of them:
Beautiful concept art and mock ups showing what you’re intending the game to look like will help the people you’re trying to win over to see your vision and understand the game. You need to get them as excited about the game as you are.
An experienced team
If you want people to give you money to make a game then they’re probably going to be looking for you and/or your team to have shipped games before otherwise they will understandably feel that their money might be at risk. This is why it can be helpful to have worked at at least one games company before striking it out on your own.
A killer prototype
Nothing gives people a better idea of what the game is going to be like than actually being able to get hands on and play it. It can be hard to make a prototype though, especially if you need money first in order to do so but there are plenty of free game engines and resources out there now. If you can get to the point of having bootstrapped a strong prototype it will mean that you stand a much, much better chance of securing funding to develop the rest of the game.
What are you willing to lose?
If you have decided to seek external funding, then you will need to ask yourself what you are prepared to give up for it. All types of funding will cost you something but some have a much higher cost than others. Your funding bargaining chips include:
When the game is out, who gets what percentage of the money it makes? If you are not careful and give away too much even if the game sells well you still might not make enough from it to internally fund your next project.
Equity in the company
The better your company does the more valuable shares in it will become. To ensure you don’t lose control of your own company then you will want to avoid giving away more than 50% of the shares.
Some methods of raising money will tie you into certain commitments that can take up quite a lot of time, with crowdfunding for example, you may end up having to spend more time than you planned keeping your backers up to date and honouring pledges like sending out t-shirts etc.
If you get a bank loan (which generally isn’t very advisable for game development unless you only need it very short term or you can secure a very low rate) then it will cost you in interest so you could end up having to pay back a lot more than you borrowed.
It’s often advised that you don’t give away your IP as this can be worth a lot in the long term if you end up wanting to develop sequels or use the brand in other ways in future. On some occasions it may be worthwhile to sell the IP if the price is right and if the alternative is likely to be that the game doesn’t see the light of day.
Freedom on some choices
Some types of funding may have contracts that mean you will agree to or lose your say on some decisions such as which platforms you release on, the release date, final say of creative control or when to sell the company. Everyone will have their own opinions on what they do and don’t want to do so it’s worth taking the time to think about what matters to you.
External funding options
There are numerous options available for external funding (Fundamentally Games has this list). Some of the main ones I’m aware of are:
This is one of the best types of funding as there is no recoupment but they do therefore come with some restrictions on how the money is used as each body will have its own remit for the funding and their aims.
- UK Games Fund
- Wellcome Trust – looks to encourage collaboration between games with a scientific/ health/ medical angle and researchers
- Creative Europe – when making your second narrative game you will be eligible for this
- Arts Council – fund a variety of projects including games
- UKTI – speak to your local advisor to see how they can help
Investments (Project/ Company)
- Creative England – run a Greenshoots program with Microsoft
- SEIS (Seed Enterprise Investment Scheme) – A government initiative to encourage investors to invest in smaller, riskier startups by offering higher rate tax payers 50% of their investment back through tax relief. You can receive a maximum of £150,000 through SEIS investments on which your investors can claim relief. Companies like Games Co London, Mercia, Goldfinch Entertainment, and Daedalus can all help you to set this up for a fee or a cut of the investment but if you already have enough interested investors (which can be hard to find) and a good accountant it is possible to do this yourself.
- EIS (Enterprise Investment Scheme) – similar to SEIS but only 30% instead of 50% however the limit on this is far greater than for SEIS (with EIS you can receive up to £5 million each year, and a maximum of £12 million in your company’s lifetime).
- Video Games Tax Relief (VGTR) – you can claim back percentage of your expenditure part way through or at the end of your development. This is well worth looking into!
- R&D Tax Credits – you might be able to claim these on some of any research and development costs you might accrue.
This is a great way to allow players or investors to fund your game but it is a lot of work to run a campaign and there is no guarantee of success. This has been a great route for games like The Banner Saga and Night in the Woods.
Crowdfunding platforms include:
- Kickstarter – one of the most popular player crowdfunding platforms, where you will receive the amount you ask for (minus fees) if you hit your target
- IndieGoGo – player crowdfunding where you will receive anything that is pledged (minus fees) even if you don’t hit your target
- Seeders – equity based crowdfunding
- Crowdcube – equity based crowdfunding
- Fig – crowdfunded co-publishing
- Patreon – subscription based crowdfunding
Players can buy and play your game while it’s still in development and give feedback. This can work great for some types of games but not all.
A popular and traditional way of funding games. The publishers usually gets a rev share in return for their services that may include funding it, putting it on many different platforms and promoting it. There’s a list of games publishers on Fundamentally Games.
Maybe not a great option for games as you can’t bank on how many sales your game will get as it’s such an unpredictable market.
This can be a good starting place if you need money, for match funding for example when you know you can pay it back before spending it, but be careful you don’t let money damage your relationships.
There are a few things to look out for with funding, including:
- De Minimis State Aid limits – certain types of funding count as De Minimis State Aid and you can only receive a certain amount of this in any three year rolling period.
- Match funding – some funding will require that you sourced an equal or certain percentage from another source (which can make getting your first lot of funding tricky).
- Geographic location – sometimes you must live and/ or have registered your business in a certain location to be eligible for the funding. In rare cases, if the funding is guaranteed and substantial enough it could even make moving to a different region worthwhile.
Playing the game
Applying for funding can be very time consuming as you not only have to figure out what to apply for, if you’re actually eligible and how to apply but you need to spend enough time on the application so that it has a good chance to being successful without spending an excessive amount of time on it, that might be better spent elsewhere (like on making the game itself).
Speaking to someone who has been successful with that funding in the past can be very helpful as they can give you some handy tips on do’s and don’ts when applying. If you can also meet anyone from the funding body itself then that is likely to be a massive help as that will give you a much better feel for what they’re looking for and how to be successful with your application.