Weighing the Promises and Perils of Financing Your Game through VCs or Crowdfunding
Game developers can gain a lot of money through well-designed monetization, but they can also acquire cash through two other means:
- Venture capital (VC) funding from an established firm or angel investors
- Crowdfunding from a large group of supporters
Of course, both of these routes come with promises and perils.
On the plus side, a venture capitalist may offer you six, seven, even eight figures in capital, and a chance to earn far more by setting you up to go public or selling to a larger company. Just the act of getting funding confers credibility to your company, in the tech/gaming industry, because it’s clear proof that some major players think you’re worth backing.
However, all this also means that they get a stake in your company, and usually, a say in its management and even design decisions. Add to this the pressure of an investor who expects returns and has a right to expect that you deliver them, usually sooner rather than later. And of course, one way or another, they’ll usually take a large cut of your revenue, too.
Meanwhile, crowdfunding has proved to be a great way for indie developers to raise enough money to make their games, while staying true to their original vision. However, most successful game crowdfunders only manage to raise total pledges in the four- or five-figure ...