Jas Purewal, Osborne Clark "Project finance and public funding for games in the UK" thursday@3 26/4/12

1. Project finance and public funding for
games in the UK
Jas Purewal
26 April 2012

2. osborneclarke.com
Overview
• What is project finance and how can it help fund
games?
• Public sources of funding
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3. osborneclarke.com
About Osborne Clarke
• Osborne Clarke is a leading UK/European law firm
to the games industry
• We advise the full range of games businesses, from
start-ups and small developers to publishers
• We advise on matters including: contracts, IP,
funding, corporate/tax, employment and disputes
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4. osborneclarke.com
About me
• I'm a games lawyer at Osborne Clarke – I advise
clients like Nintendo, EA, AppyNation, Dynamo and
Supermono on contracts, IP, funding and disputes
• I wrote a blog dedicated to explaining legal issues to
devs: www.gamerlaw.co.uk
• I like Twitter: @gamerlaw
• I am not Phoenix Wright :/
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5. osborneclarke.com
What is games project finance?
• Finance provided to fund the completion and release
of a specific game under an agreed structure.
• Investment is limited to the project in question – it is
not an investment in the developer or the IP
generally.
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6. osborneclarke.com
How does project finance work? Part 1
Note: this is a basic summary - project finance is much more complex in real life!
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7. osborneclarke.com
How does project finance work? Part 2
• Typically (but not always), Publisher signs a
publishing agreement with Developer.
• Developer puts the IP into a special purpose vehicle
("SPV"), owned by Funder or Publisher.
• SPV contracts Developer to develop the game.
• Funder funds the game development costs.
• Funder may require a completion bond.
• If things go wrong, everyone has a degree of
protection…(but it gets complicated in practice)
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8. osborneclarke.com
How does project finance work? Part 3
In theory:
• The Publisher is happy because it doesn't have to
fund the game.
• The Developer is happy because it has funding.
• The Funder is happy because it makes a (medium-
sized) profit if all goes to plan.
• The Completion Bonder is happy because it's paid a
fee for making sure the game is completed.
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9. osborneclarke.com
A few example of games made using
project finance
• Neverwinter Nights 2 (Obsidian)
• Railsimulator (Railsimulator.com)
• Urban Freestyle Soccer (Acclaim)
• Made Man (Silverback/Mastertronic)
Or just take a look at Kickstarter…
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10. osborneclarke.com
Opportunities and challenges for games
project finance
Opportunities Challenges
• More controlled and less • Still in relatively early days
invasive than equity (or debt) • Risks need to be managed
investment
• Historically focused on publishers
• Publisher has less risk
• Complex legal/financial rules
• Developer retains IP control
• Can be expensive start-up costs
• Better deal for developer (?)
• Developer still dependant on a
• Can be combined with other third party for funding
investment sources
• Investment rules don't help (yet)
• Promotes innovation?
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11. osborneclarke.com
Who's involved in project finance?
Some examples:
• Funders/Project managers:
Fund4Games, Standfast
• Bond providers:
Film Finance Limited, IFG
• Banks:
Barclays Bank, HBoS
(Source: NESTA - http://www.nesta.org.uk/library/documents/The_Money_Game_v7.pdf)
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12. osborneclarke.com
Public source of funding
There are still several sources of public funding, if you know
where to look (and don't mind getting knocked back…)
1. EU funds
2. UK government funds
3. Other sources
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13. osborneclarke.com
Public source of funding: EU funds
• The EU makes funds available in UK via the European
Regional Development Fund:
• Abertay Digital Prototype Funding (http://prototypefund.abertay.ac.uk/)
• North West England (http://www.thenorthwestfund.co.uk/funds/digital-creative)
• Screen Yorkshire (http://www.screenyorkshire.co.uk/funding/)
• You can apply directly to those funds for funding, or could
apply directly to the Department for Communities and
Local Government (but needs public sector help…?)
• Expires in 2013?
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14. osborneclarke.com
Public source of funding: UK government
funds
• National Endowment for Science, Technology and the
Arts
• Used to provide games funding more widely
• Now a charity-> funding must meet charitable objects
• Enterprise Capital Funds: small grants to SMEs by
government-backed funds (e.g. IQ Capital):
http://www.bis.gov.uk/policies/enterprise-and-business-support/access-to-finance/enterprise-capital-funds
• Creative Skillset: funding for training
• National Lottery? Arts Council?
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15. osborneclarke.com
Public source of funding: other sources
• Competitions:
• IGF: http://www.igf.com/
• Dare to be Digital: http://www.daretobedigital.com/
• Middleware, e.g. Unity: http://www.kongregate.com/unity_game_contest
• Hacks, e.g. Gamehack: http://www.gamehack.co.uk/
• Charities? (e.g. Wellcome Trust)
• Try other indies – e.g. Indie Fund
• Crowdfunding again
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16. osborneclarke.com
Thanks!
Jas Purewal
Lawyer
Osborne Clarke
T +44 (0) 207 105 7268
jas.purewal@osborneclarke.com
Twitter: gamerlaw
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