(in the US and Canada) (let's say for a Console Game like Ps2 or Gba) What's the options of financing out there and what are the poor and con's of each other's ? Bank Funding ? Publisher Funding ? Venture Capital Company ? Going Private ? is there more way's ? or combine some together like Vc + Bank loan's ? Thanks

1. Venture capital is nearly impossible to find. VCs tend to invest only in sure-things. Games are not sure-things. If you do get a VC, there's a good chance they will own most of your company and will sell it or shut it down if a) it doesn't work out or b) selling the company will result in an optimal return on investment. You don't even need a ready product for your company to be sold. For example, if your company's brand has accrued significantly more value than the VC's initial perception of your product's ROI.

2. If you can spin your project as pro bono, banks will finance your project since they're required by law to fund pro bono ventures (or specifically local community-oriented projects.) Refer to the Community Reinvestment Act (CRA). I learned that from a small business investment banker that lectured at a business workshop I attended.

3. To get publisher funding, you first need a publisher, and before you can get a publisher you need a good product.

4. You may look into angel investors. A friend of mine (also a neighbor) started a game development firm in Canada with a $1 million investment from one of the guys' "rich oil tycoon uncle."

5. You can finance your company and project privately by working under someone else or starting a services or retail shop and building that. That, I'd say, is the best way since you also gain valuable business experience which you can apply later on. Of course, this means putting your games company and project on hiatus. Chris Crawford mentioned in an interview by the Duke Nukem guy that one of his regrets after starting Gas Powered Games was not having business administration experience so he recommends hiring a business manager if you intend to work on the game too. There's a lot of paperwork involved if you do it right and it's a lot of paperwork that can save your ass (or company) one day.

Small Business Investment Companies (SBICs)

[Edited by - Adraeus on September 7, 2004 12:26:05 AM]

You shld get in touch with your local business shop or Enterprise for advice. There are many combinations of private/equity/grant sources of funding that could be available to you. In the UK, most sources would require you to 'match' the money you want from them with either your own money (from wherever) or some kinda loan. You should check out if any of your banks do a 'Small business finance loan guarantee scheme'. This means ususally 70% of the loan you require is guaranteed to be paid by the government to the bank if your business fails and you can apply for up to the £100,000 limit. Publishers tend to take on projects that are completed unless you have in your lap the 'killer' app. Of course, once a relationship is built up with a publisher then, who knows, they may pay you to develop future titles. Venture capital can throw up all manner of headaches - they tend to look at the people more than the ideas and they usually want a good chunk of your company relative to the investment required plus, they usually give out the 'big' money only, not the normal amounts a company needs on start-up. Private equity is good for smaller amounts of money but again, it depends what deal can be struck between yourselves and how much of the company is up for grabs. Either way, its not easy and tests your mettle to the limit - personally, I have a sneeky suspiscion they make it hard to see if your determined and serious enough to make your business successful. Hope this helped.. Good Luck!.

What does 'pro bono' mean please?
Trying so hard not to type 'boner' - having a wierd day!

http://www.cogsci.princeton.edu/cgi-bin/webwn2.0?stage=1&word=pro+bono

In case you didn't understand from that link, a pro-bono game is freeware, you cannot generate a profit. If you get money from a bank by saying it's pro-bono, and then sell your game, the bank will do something that you won't like.

Quote: Original post by Adraeus
2. If you can spin your project as pro bono, banks will finance your project since they're required by law to fund pro bono ventures (or specifically local community-oriented projects.) Refer to the Community Reinvestment Act (CRA). I learned that from a small business investment banker that lectured at a business workshop I attended.

Please post more information on this! I've spent the last 30 minutes online trying to find out what would qualify and any advice from others and have come up nearly empty handed. Do I just need to schedule an appointment for a loan application and then say "I'm actually doing a community-oriented project pro bono and would like some free money as per the Community Reinvestment Act." Does it help to wink a lot?

Lastly, from the little I have absorbed from the internet on the subject, the bank doesn't seem to be required to fund anything...it just risks government withholding approval on mergers and charterings if it doesn't get a good CRA rating.

http://www.ffiec.gov/cra/default.htm

Quote: The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations.

Safe and sound banking doesn't include giving money to people to make games (which by its very nature is high risk). I would certainly be interested in hearing how such money can be extracted to make games.