“Bootstrapping” refers to paying for the company yourself by way of a savings account as well as a credit debit card. It’s definitely a viable method of funding game development, however, it’s typically better to make use of the money of others instead.
This removes a significant amount of the risk on the developer’s shoulders and lets them concentrate on developing an exceptional product. What can you do to achieve this? Try these alternative methods…
Family and friends’ loans
One of your most reliable first sources of funding is your family and friends They are the ones that are most likely to trust your abilities (hopefully). When you take out the loan as a loan, there’s no chance of earning profit apart from interest, which means you will not be able to deal with any issues with securities law. We’ll go over them later.
Another benefit of investing family members and friends in your venture is that they are more patient if your project does not succeed. Crowdfunding and banks aren’t therefore if you’re in need of an immediate boost in cash it could be the best choice.
Another loan option to start your journey is a business loan. If you’ve created the form of an LLC or Corporation and you’re in a position to obtain the loan under the company’s name. But, unless your business has a proven track record and has track record, you’ll likely have to guarantee the loan personally and utilize your personal creditworthiness to obtain it. Head to Payday Now to know your loan options.
In the absence of alternative sources, however, this could be the best option at least for that initial capital.
Investment in front money
This kind of investment can however trigger securities laws, therefore consulting with an attorney is highly recommended. A way of financing that is common to numerous creative industries is known as Front Money or Seed Money. This means you can ask investors to finance the new project with money in exchange for royalty or equity in the future. The seed money is intended to help develop the venture until financing for the whole venture is found. This kind of investment can however trigger securities laws, and consulting with an attorney is highly recommended.
Indie game funds
The same as seed money investments are game-specific indie funds such as Indie Fund as well as the Sony Pub Fund. They usually operate in the same way as the funder will give the developer a set amount to the developer upfront to pay royalties when the game’s released.
Donation-based crowdfunding is likely to be the most well-known among game designers these days. We’ve all heard of it through Kickstarter, IndieGoGo, or some similar crowdfunding platform. This kind of campaign is not considered to be an investment and does not pose any issues with securities law.
It doesn’t mean there’s any legal obligation, however. You’re entering into an agreement with your supporters to provide promises of rewards. This is why you should start getting your project’s planning in order before you sign this kind of relationship.
In essence, you sell shares of the company to raise the startup capital. One method to finance an upcoming business, which isn’t particularly popular in the field of game development, however, it is quite popular in the startup world is known as equity fundraising. In essence, you sell equity within the company for the startup capital.
This kind of fundraising can require federal and state securities laws. If a company launches an IPO or offers shares to the general public it is a kind of fundraising for equity. This is a lengthy and expensive procedure that typically involves a lot of lawyers and disclosure documents regarding the financial condition of the business. This kind of fundraising has the possibility of raising a large number of funds.
There are however several exceptions to the legal requirement of an offering to the public. Offering a lesser amount of investors or more of a pool of qualified investors could be a better option than having to pay for costly registration for the SEC. If you have already made a seed investment and want to move on to the next move, this might be an ideal alternative.
Since the passing of the JOBS Act in April 2012 the crowdfunding sector is waiting for the final guidelines on the “equity crowdfunding” process. Companies could make use of crowdfunding to market the shares of their business. This is similar to making use of Kickstarter to sell a portion of your business, instead of only the game. There are certain crowdfunding sites that could be used for the purpose (not Kickstarter).
The years have passed, but there is no finalization of the rules. I’m not certain if this is a strategy game developer would choose in the future since the Kickstarter option comes with much less paperwork. For those who want to expand beyond their initial games, however, this type of crowdfunding might be the thing they’re looking for.