While there is money out there it certainly isn't available "without any trouble whatsoever".

My original point re VC assumed an attampt at developing a full price game. If you scale down to an amatuer doing a product you can make for $50k you do avoid VCs but you also encounter a new set of problems.

The sort of loans you refer to (such as SBA loans) aren't quite the "free money" they appear to be. Most are mearly government insured bank loans. To get the government protection these banks/small investors have to show that they have taken due care to invest the money in a business that stands a good chance of repaying. This means you still need to meet many of their normal criterior such as:
1. Relevant industry experience - most amatuers/newbies don't have this).
2. Matching funds - You often need to invest between 20-40% of the amount you want.
3. Collateral - Your home to guarantee the loan.
4. Nature of the business - a very high risk business (added to lack of proven experience) may rule you out.
5. Business plan that shows you can survive and repay the loan (very hard in the budget/shareware field).

Of course some, or even all, of these problems may be solved but often they create new ones.

As an example you can solve item one by getting/hiring a partner (who you will have to entrust your financial future) who has the relevant experience. The new problems this throws up are that:
i. You can't just select a partner off the street. You need to have worked with them in order to know/trust them (and for them to know/trust you) - which you have not otherwise you would already have industry experience.
ii. Don't know someone who wants to team up with you? Then you need to hire someone - that immediately increases the amount of money you need to run your company. For a small company this is a big expense and raises the question of why they would work for you when they qualify for a loan themselves.

In fact I am currently working with a client that is dancing this very dance. The team all have years of industry experience, the % of cash they need to invest themselves and a great business plan. They have a media funding organisation offering them matching funding and a bank willing to make a government underwritten loan - So close they can smell the money but still they can get it.

The media funding is only matching funding (they need another source first) but, the bank wont pay them the money first either. Like the two positive ends of a couple of magnets it doesn't matter how hard they push the team simply can't get the two sources of funding to meet.

I really appreciate your input Dan. I think I've covered most of the bases you mention, and I have workarounds for the others. Needed to ask purely for piece of mind, all the same.

When you say "you're doing toys" you should know that toys are big business, and lots of money are made in toys. Just like entertainment, or food, or weapons, or anything else people pay money for. Yes, you ARE doing toys -- that's what games are. Toys are big business, too.

When it comes to games, though, they're a lot like a movie, or a novel, in that the artistic production values really matter. You can't measure the need for a specific game until that game has already been produced -- this is very different from, say, specialty hair schampoo. If there's a need for a schampoo that causes your hair to not discolor when you have impure water, then that's pretty easy to measure, and pretty easy to show that you can make the product.

However, there's always a need for "a game that's fun" -- but how do you prove that the game YOU make will be fun, until you've made it?

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Original post by liquiddark I really appreciate your input Dan. I think I've covered most of the bases you mention, and I have workarounds for the others. Needed to ask purely for piece of mind, all the same.

Good. The biggest mistake developers make is to dive in without spending time working out how they are going to sell the end product or even just fund themselves to completion. Of course once you have managed to get your hands on the money then the really tough part begins - the development :)

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Original post by liquiddark I don't know how long ago you were talking to folks, but the Berlin Economic Development site have the following note on their site: Quote: From http://www.blc.berlin.de/wfb/en/Medienwirtschaft.html Berlin is becoming the boom town for up-and-coming video game companies" Maybe it's time to take another look?

Well, I think you have to do a difference between those who want to attract companies to their site to get their offices there and those who actually have a close contact with german game developers.

Currently there are different groups that have been formed to politically support the game development in germany: The first group is the Northstar group which is build out of companies in northern germany (Bremen, Hamburg, etc), then there's the more or less recently created G.A.M.E. (march 2004; german site : http://www.game-bundesverband) which regroups the major part of german game developers. It has it's main site in Berlin but the CEO has his company in Essen (far west germany).

Quite some companies are located around berlin but I'm only aware of 3 or 4 major companies in berlin but I know ~30 companies around Düsseldorf, Frankfurt, Stuttgart, ...

So... don't always believe what some site managers write on their homepage.

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Original post by liquiddark This much I have seen for myself, although where I live there are lots of youth programs that will offer loans to startup businesses run by sub-30-year-olds. It'd probably be worth looking into if you still have the dream.

Unfortunately most under 30 year olds I have seen in the game development scene (be it german, french or belgian) doesn't have the knowledge to write a good business plan which responds to the question asked by a VC donner or BA. Most of them can't predict an interesting ROI (as Dan stated).

Best regards,
Metron

It boils down to this: game developers often assume that others will like their games, and get frustrated when someone else disagrees. You design a game because you think it is fun; why wouldn't anyone want to buy it!?

The truth is: what you like, others might not, and even then, how do you get them to know they like it?

To sum it up: prepare, and assume as little as possible.

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Original post by liquiddark Again, is this out to lunch, or are there just very few mature efforts in the indie scene?

Yes. And not just the indie scene. There are a lot of devcos that have gone bust simply because they're badly planned and run.

I mean, just because you're a talented bunch of coders with a passion for what you're doing, doesn't mean you know how to run a business. It's an entirely different skill.

I'd just like to say that I've tried to inflict a more businesslike sensibility to Meldstar, but because of the attitudes of members and our distribution (never mind our HR troubles), I have failed utterly and miserably.

To run a business, you need office space and rules. People working from home doesn't really help because it makes organizing meetings (when they're needed) troublesome, and such meetings usually disintegrate into impromptu LAN parties, and nothing gets done. As well, working at home invites laziness and erodes morale, as members aren't able to see what others are doing. Knowing that others can't judge their progress too well, they slack off; at the same time, they are frustrated that the others are doing the same.

A common workspace is needed, as are ground rules to promote sensible and professional behavior. Having a light dress code doesn't hurt (button shirt and khakis, or even clean sweater & jeans; as long as you look neat and tidy it's good), and same with having a set time to work together (rather than at one's own whim).

There's quite a bit on this in Game Architecture and Design. I'd advise a read.

What an accusation...

Well, there's a fine line in independent gaming. At some point, if you attract outside investing, you aren't independent anymore.

In many ways self-financing a project is far superior... but, that is totally off the subject, why don't game developers run a business.

Answer is far easier: Because they are game developers, not business men. If they were business men, they would have an MBA and not have the skills neccessary to program.

That is why some of the smarter companies hire people like me and Dan (obscure) to help them.

You can see my site at www.vgsmart.com to get an idea of the target market segment I am targetting, which is EXACTLY the segment this post is about. Im targetting the single man teams that have knowledge about programming and making a product, and know nothing about sales.

There you have it.

-Joseph Lieberman
Marketing Manager
www.vgsmart.com

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Original post by Obscure While there is money out there it certainly isn't available "without any trouble whatsoever". ...If you scale down to an amatuer doing a product you can make for $50k you do avoid VCs but you also encounter a new set of problems. The sort of loans you refer to (such as SBA loans) aren't quite the "free money" they appear to be. ... Like the two positive ends of a couple of magnets it doesn't matter how hard they push the team simply can't get the two sources of funding to meet.

I agree entirely, having seen this problem repeated several times with different teams. Fortunately, I've only been burnt by this once myself :).

There is, unfortunately, a big bias amongst investors away from the games industry, largely because they got excited 5 years ago, invested in crap badly-run companies with genius programmers that didn't deliver. So, the lazy / stupid coders who couldn't be bothered / weren't intelligent enough to adopt even basic good practices (like creating schedules and sticking to them) have in no small way also ruined things for the rest of the studios :(.

The light at the end of the tunnel is that in the last 18 months I've seen strong signs (in the UK) of investors starting to cautiously consider games again. They now come to the table with sensible (albeit sometimes painful) demands, such as detailed full project plans.

Sadly, as Dan illustrates, most still have some hang-ups that are throwing a spanner in the works. But there's hope that within a few more years things might even up a bit.

There are also a couple of groups that are bringing experienced project-managers into the games industry specifically to help games studios deliver - and also to help them secure funding. (I know of at least 3 games that got funding largely because they had a really impressive project mgr in place who gave the investor or publisher a lot of security!)