This is a guide for game funding presented during ]the MICA conference in Buenos Aires on October 6, 2017. It includes info on the different types of funding, funding sources for games and game studios, as well as presentations that will help present game studios and their games for studio funding and project funding opportunities.

1. A High-Level Guide to
Game Funding
Sean Kauppinen
CEO
International Digital Entertainment Agency (IDEA)

2. About Me
• Founder and CEO of IDEA - (International Digital
Entertainment Agency)
• 20+ years experience in the games industry
• Sony Online, Ubisoft, 3dfx, bleem!, Frogster, PlayFast,
SlapShot Games, others
• Have worked on more than 600 titles
• Has been CEO of Game Publisher(s), CSO, CMO, PR,
Design, Production
• World Traveler and Citizen
• What I do:
• Mentor CEOs
• Strategic Advisor
• Board Member
• Publishing
• Business Development
• Marketing Strategy
• Angel Investor
sean@ideagency.com

3. What We Will Cover
• What are the sources of funding and how do they differ?
• How are games funded?
• What do investors look for when considering investing in a game, studio, or platform?
• What materials do you need to prepare to be funded?
• What do investors expect?
• How do I fund my game?
• Defining your game’s market potential for investors (comps)
• Common mistakes
Take Away
Knowledge of the funding process and what you need to have the best chance of
success.

4. How are Games Funded?
• Personal Money/War chest
• Friends & Family
• Angel Investors
• Government Funds
• Incubators and Seed Funds
• Completion Funds
• Venture Capital
• Private Equity (Not Relevant to most Game Studios) >$20M Revenue
• Ad Agencies

5. Personal Money
• Developer uses one of a few different models:
• Ramen, Ramen, Ramen – starve to make the game
• (*most games die under this model)
• Live at home/school – work on the game during all free time and then
realize you probably no way to market the game (Flappy Bird)
• (*most games die under this model)
• Save while doing other job and take a moonshot – (Minecraft)

6. Personal Money
• The Risk is that of losing all your money and your time if you haven’t
thought through the opportunity
• Are you approaching a red ocean with lots of competitive games
(Multiplayer Online FPS), or is it niche (Steampunk RPG), or is it an
underserved segment (Poker-players that like Hunting Games)?
• Test ideas on friends, and then solicit feedback from industry peers,
mentors, advisors, etc., but actually listen
• Most importantly, is it fun? Is it fun to other people? Is it simple to
understand and get playing?

7. Friends & Family
• Mom and Dad
• Rich Aunt or Uncle
• Cousin that sold their software company for a lot of money
• Your friends parents that you have known since you were a kid
• *NOTE: This is a great way to become an orphan. Often, people don’t think through the risk of
alienating your family versus including them in something you believe will be great

8. Friends & Family
• Usually this takes on one of three forms:
• Limited Liability Company with owners and shares based on funds/sweat equity
contributions
• Project Funding where people buy a piece of the project revenue (not IP ownership)
from the game after platform fees. You don’t get to recoup dev funds or other
expenses off the top
• Loans that need to be repaid once the game generates revenue (sometimes with
interest, sometimes without)
• This also involves tracking sales and can become a lot of work if you have dozens of
investors that need royalty reports and quarterly payments

9. War Chest
• Your studio does work for hire, maybe is generating some royalty payments
• Possibly has a good profit margin on work for Ad Agencies
• An efficient team, strong processes and reused systems for similar games
build a war chest
• Reputation for increasing quality in the genre you are targeting adds value
(RPG mechanics for RPG game)
• The risk is studios burning their cash on their own IP in between work for
hire projects (You need to track this like you would a paid external project)
• Studios with an established banking relationship sometimes take out loans
as well

10. War Chest
• I have seen studios successfully use their war chest to fund games and
become original IP shops
• Usually this involves creating a really strong pitch deck for the game and
getting it in front of a publisher that is appropriate
• Capcom probably isn’t going to be interested in your Horror game, and EA
isn’t going to be into your Match-3 or MOBA
• Remember – burning through your war chest is also eating up your runway
and your studio can die if you go too far without all of the funds to
develop, and market your game

11. Angel Investors
• The first tier of investors – accredited means more than $250K/year in
U.S.
• Mostly high net worth individuals or successful entrepreneurs
• Looking to put $10K-$250K into a business (usually at $1M Valuation
or less)
• They want:
• A management team they believe and trust
• A strong plan on how you are going to make money
• Demonstrated previous success
• Possibly to see how you have handled funds for your business previously
• A great return for the risk – 10X-20X minimum

12. Angel Investors
• There is a danger – the dentist probably doesn’t know the games
business
• There are also a lot of cocky people that believe they know more than
you because they were or are successful in some other field
• Many don’t actually have the money to lose, so they can sometimes
require constant check-ins and babysitting which distracts you from
your work – making games and building a healthy game studio
• If you take angel money, make sure it is someone you like speaking
with and that they understand your business, or are willing to learn

13. Government Funds
• Many countries have government funding (but usually not for games
specifically) – Chile is an exception
• Governments tend to fund:
• Art and Cultural works (cultural preservation, language preservation)
• R&D investments (dynamic back-end for games, physics engines)
• Economic Development (creating more technology aka export jobs)
• This is usually through tax credits, grants, or loans
• Governments also sometimes incentivize foreign investment with
matching funds, capped at some level

14. Important!!!
Seed Funds, Venture Capitalists, and other professional investors
don’t typically fund games.
They fund companies building platforms or technology that just happen
to be doing it in the games space

15. Incubators and Seed Funds
• Incubators sometimes have investors and take a percentage of
companies, or projects in exchange for funding, advice, and a place to
work
• They sometimes provide mentoring and business services instead of
funds
• There is an application process to get in and your team (not company)
and game are reviewed. Then all of the teams that pass are stack
ranked (usually). They take teams based on the number of slots

16. Incubators and Seed Funds
• Seed funds look for early stage investments (companies) that are
solving a problem, innovating, disrupting, and usually platforms
• The approach is that if you build something once, lots of people can
use it and you get paid over and over again.

17. Completion Funds
• Funds set up specifically to complete a project
• Non-dilutive project financing that gets the money back first when
you generate revenue
• Then they get a percentage of revenue after they recoup

18. Venture Capital
• Funds that are set up for a 10 year lifecycle
• 4 rounds, A, B, C, D (Mezzanine)
• Different sized investments each round
• Looking for companies and founders that stand out
• Looking for businesses that have momentum
• Usually look to invest in platforms and technology companies (Unity,
Ad Platforms, Player Data and Analytics

19. Venture Capital is
Acceleration Capital
Funds to get to the goal faster and grab greater
market share because of the investment

20. Private Equity
• Think of Private Equity as buying predictable revenue streams and
cash flow
• If you are big enough to matter to Private Equity, you probably are
talking to Tencent
• Not relevant to funding games, but they do buy game companies
(Sony Online, Foundation 9 Entertainment)

21. Ad Agencies
• Ad agencies are often looking for games developers to create brand
experiences and advergames to get consumers interacting with
brands
• This is a great way to try out game mechanics on someone else’s
budget
• Your game might be a fit for advertising platforms and licenses are
often included in the requirements vs having to pay to use Tony El
Tigre

22. Types of Funding
• Project Financing/Equity Funding
• Crowdfunding/Crowd Equity
• Publishers

23. Project Financing/Equity Funding
• Project Financing – puts the investment into the game
• Does not dilute ownership of your company
• Is usually setup as a separate investment vehicle or company
• Can be a specific loan, but most of the time is an ownership
percentage of the revenue stream generated by the game

24. Project Financing/Equity Funding
• Equity Funding – puts the investment into the company
• The most common form of funding for games companies and
preferred since it takes into account all future IP and revenues
• Used by many companies (particularly in China) to fund the company,
direct the funds to the specific project they are publishing, and
includes a pre-negotiated exit based on success
• Dilutes ownership of your company
• Introduces new partners to answer to, and if there isn’t a clause
blocking sales to third-parties, it opens up your company to
competitors

25. Crowdfunding/Crowd Equity
• Crowdfunding (Kickstarter, Indiegogo, etc.) sells copies of your game
in advance and proves the market’s appetite for your game
• Is increasingly ineffective due to previous companies “destroying the
hotel room”
• Projects under $30K have a chance to be funded
• Funding is usually for established studios with a named designer or
experience on AAA or a previous project that was crowdfunded

26. Crowdfunding/Crowd Equity
• Crowd Equity is selling shares in a project (like project financing), but
platforms are emerging where equity shares represent revenue
percentages
• FIG is the main platform for games and projects tend to range from
$30K-$2.5Million
• Again, successful projects tend to rely upon a known designer or team
• There is additional paperwork required to register the project as a
Security with the SEC in the U.S. where FIG is based

27. Publishers
• They come in all shapes and sizes
• Different philosophies (developer friendly, cut-throat business, win-win)
• Can fund a full project from an idea
• They want stable, established studios, with a strong track record in a
specific genre)
• Most publishers want to see a prototype or vertical slice of the
gameplay
• You will get a lot of feedback and need to be willing to make changes
• The game needs to be fun

28. Publishers
• Most publisher deals include recoupment of the publishers’
investment (or costs) first
• As a developer, you want to work with a publisher that recognizes
your sunk costs in getting a project up to the point where it is signed
(you recoup too)
• Can be any percentage split – 90/10 to 100% to the publisher
• Most reasonable publishers will let you have a royalty share to reward
success
• Live team costs need to be accounted for in the beginning if your
game is live

29. The Funding Process
• Figure out how much money you need to get to your goal
• Define how you will spend the money and when you need it along
your roadmap (pre-production, dev, launch, marketing, live ops)
• Create a pitch deck
• Create a target list of possible investors – research previous
investments (CrunchBase, Angel list, entrepreneurs that have sold
their business in a similar space)
• Find a mutual connection to the person you want to reach
• It is helpful have the mutual connection do a warm intro and be interested in
what you are pitching

30. The Funding Process
• Investor meetings
• 30 Mins-1 Hour for initial meetings
• If there is interest, they will ask a lot of questions(in most cases)
• If it’s institutional money, the process goes to a partner level meeting, and
there will be 2-3 rounds of pitches to larger groups
• All investors will do due diligence on you and your team, request documents
on finances, bios, company founding documents, etc.
• If the investor agrees that they want to invest, you need to have an
attorney draw up a term sheet and investment documents
• Paperwork is signed, funds are deposited either all at once, or on a
tranche schedule (monthly, quarterly, milestone based)

31. Defining Market Potential
Start with Top Line Market Numbers

32. 2.7 Billion Mobile Players
835 Million Mobile Payers

33. Current Console Generation Install Base
Platform North America Europe Japan Rest of World Global
PlayStation 4 (PS4) 20.89 23.7 4.78 10.14 59.51
Xbox One (XOne) 18.5 8.06 0.08 3.34 29.98
Nintendo Switch (NS) 1.68 1.21 0.93 0.44 4.26
http://www.vgchartz.com/analysis/platform_totals/

34. Legacy Install Base
Platform North America Europe Japan Rest of World Global
PlayStation 3
(PS3)
29.42 34.54 10.47 12.45 86.88
Xbox 360
(X360)
49.11 25.87 1.66 9.16 85.8
http://www.vgchartz.com/analysis/platform_totals/

35. Relevant Legacy Install Base
Platform North America Europe Japan Rest of World Global
PlayStation 3 (PS3) 11.768 13.816 4.188 10.5825 40.3545
Xbox 360 (X360) 19.644 10.348 0.664 7.786 38.442
Relevancy Estimate: NA, EU, JP ~40% |ROW ~85%

36. Current Addressable Console Install Base
Platform North America Europe Japan Rest of World Global
PlayStation 4
(PS4)
20.89 23.7 4.78 10.14 59.51
Xbox One
(XOne)
18.5 8.06 0.08 3.34 29.98
Nintendo
Switch (NS)
1.68 1.21 0.93 0.44 4.26
PlayStation 3
(PS3)
11.768 13.816 4.188 10.5825 40.3545
Xbox 360
(X360)
19.644 10.348 0.664 7.786 38.442
TOTALS 72.482 57.134 10.642 32.2885 172.5465

37. 172,546,500 Consoles
In Use

38. Digital Console
• 110 million users+ for PSN
• 70 Million+ MAU for PSN
• 55 Million+ MAU for Xbox Live
• 125 Million+ Digital Customers on Consoles each Month
• Audience is growing as ownership and distribution paradigms change
• Audience is less interested in owning physical copies
• Portability and distributed access leads to desire for cloud based content rights

39. PC and Steam
• 67 Million MAU on Steam
• 1.2 Billion PC Game Players (source: NewZoo)
• Average game on Steam now sells around 7,500 units
• Becoming like mobile – people want free-to-play and premium is
difficult
• User base is trained for Steam sales (Summer, Fall, Winter, Spring) –
meaning 50%, 75% and 90% off many titles
• Players lots of games on sale and most are played less than 1 hour
• Price erosion and bundling are the norm with user aftermarket sales
and trading becoming a major part of the economy

40. Emerging Markets – that limit your potential
• Emerging markets are not ready for most current games
• Cheaper (mostly Android) smartphones
• Slower data networks
• Need localization and culturalization and likely local marketing and support
teams
• Difficult for those that want to purchase, to buy
• Lack of credit cards
• Caustic billing (up to 80% revenue share to carriers)
• Massive Piracy
• Lower PC specs (640x480 resolutions are normal)
• Console titles are grey market or too expensive in most cases

41. Mobile
• Challenges:
• Space - App sizes are increasing (device storage is not keeping up) iOS 7 –
512GB
• Server calls for API-based services are maxing out titles
• Per API call pricing reduces the money developers are making
• New games have even greater challenges to reach the charts
• Established games are entrenched on devices
• Less time to monetize as lifetime engagement decreases
• No sane publisher shows ads for other company’s games to paying users

42. Your Potential
• Top game in category #
• Bottom game in category #
• Units from Google Play Store
• Units form press releases
• Units from Steam DB
• You should build a low, mid and high scenario.
• Budget for low and hope for high!

43. Investor Pitch Deck
Template

44. Company Name
Logo

45. The Problem - Example
• There are few companies creating games for the pan-LATAM market,
which currently generates $XX Million in revenue per year. It is costly
to localize games and takes a lot of time, so many developers ignore
culturalization and miss out on $XX Million in potential revenue.

46. The Solution - Example
• We will solve the problem of culturalization by creating a platform so
creators can upload their game content and local resources in each
LATAM country will take on translation, marketing and localization, all
of which is in the cloud and can be updated in real-time.
• This will make it easy for developers to get their games into all of
LATAM with little effort.

47. The Ask
• We are raising $XX,XXX to do blank
• For the funding we are offering X percent of (company equity, project
revenue)

48. Why us?
• Company background and track record
• The team has XX experience doing x, y and Z
• Insert pictures of founders and bio highlights

49. Market Size/Market Potential
• Data about how this is an amazing and growing market.
• How much of the market we believe we can get over a 3 year period.

50. Features of Your Solution
• These X many things make our system work
• Why these features are important
• How others don’t have the same thing
• Differentiators that make you better/likely to succeed

51. Business Model
• We charge X
• Competitors charge Y
• We are better (not because we are cheaper!)

52. Projected Revenue
• Insert graph of revenue growth

53. Use of Funds
• XX for development
• XX for marketing

54. (Company Logo and Name)
(Contact Name)
(Contact Phone)
(Contact Email)

55. Publisher Pitch Deck
Template

56. •(Logo and Company Name/or Logo if Logo Has Company Name
in it)
(Nice Picture in the Background of Art or Collage from the Studio’s
Games)
(Month) 2017 Company Presentation

57. (Picture of Team)

58. (Company Logo)
• Founded in 20XX
• Location
• XX Game Developers
• Highlights from Company (XX Awards, XX Million Players

59. Gameography
Pictures of
Titles
Released
Pictures of
Titles
Released
Pictures of
Titles
Released
Pictures of
Titles
Released
Metrics or info why the game
was a success
Metrics or info why the game
was a success
Metrics or info why the game
was a success
Metrics or info why the game
was a success
Partner Logo Partner Logo Partner Logo Partner Logo

60. Why (Company)? (Possible points below)
• Special tools and tech
• # of Programmers, Developers, etc.
• Years of Experience or number of titles worked on
• Major title experience of the team from other studios
• Major successes that make the team a partner others want to
work with

61. (Logo for Project 1) (artwork for pitch as background if possible)
(Short Blurb, i.e. If Max Payne was an RPG set in the Disney
Universe)
QX, 2018 (target launch quarter)

62. (Game)
• (2-3 sentence elevator pitch on the game including genre)
• Target Release Date
• Platform(s)
• Business Model or Price Target
• Primary Audience
• Secondary Audience

63. Features
• List features (i.e. levels, characters, enemies)

64. Gameplay
• Explain Gameplay and Differentiators (Visually if possible)

65. (2-3 Additional Slides to Sell theGame)
• Why is this game worth making?
• What market opportunity does the game address?

66. Retention
• List Retention Mechanics (Prefer a graphic showing core loops)

67. Monetization (for Mobile Games)
• List Monetization Mechanics (Prefer a graphic showing core
loops)

68. Production Schedule
• Chart showing how resources ramp up on the game and
milestones

69. Budget
• Budget breakdown by milestone

70. (Company Logo and Name)
(Contact Name)
(Contact Phone)
(Contact Email)

71. Questions?
sean@ideagency.com