Where to find funding for Kickstarter videogame?

[Donnie18]

Hi everybody, first post here! If someone wanted to find funding for a videogame in the range of $25-50 million, where would they look? Thanks!

[Harold Mansfield]

Hi everybody, first post here! If someone wanted to find funding for a videogame in the range of $25-50 million, where would they look? Thanks!

Probably not Kickstarter. For that kind of cash you would need to find a private investor who believes in the concept and expects a significant return. There are conventions and conferences where people with ideas show proof of concept and shop for investors. $25-50 million is a lot to ask for a first timer with no track record. I would set your sights lower. No one is going to invest $25-$50 million for just an idea.


First things first, get clear on exactly how much you need, why you need it, what it will be used for, and write a business plan.
Then use all of your own money developing a working proof of concept.

Are you a game designer, developer, or programmer?

[Paul]

25-50 million for a video game? I don’t know much about video games but that sounds like an incredible amount of money for that.
Not to be negative, but you won’t get that kind of money. You could probably raise some money on a crowdfunding site ($ 100,000 or so) but what you are looking for requires an investment bank.

You would have to demonstrate in a very comprehensive business plan and proposal how the video game would generate 100 million or more quickly.
Business plans for that kind of money could cost you 10-50 thousand.

If your game is already developed and it is completely revolutionary and has some traction there is a slight chance. But, there is no way they will invest in just a concept.

I little bit of reality. I’ve been raising capital practically all my life and never raised anywhere near that amount of money on even the best deals.
The first reality is you need to know people in that world. To get a meeting with real investors, especially investment banks, is very difficult. Second reality is about you and your team. They want to see your track record on managing a business and invested money. The 4th reality is it must be a slam dunk deal. 5th reality is you better know what you are doing or they will tear your eyes out, even if it is a great deal. If it that good they will seduce you and squeeze you out before you know what happened.

If you do have a good product you should approach funding incrementally. Is the game developed, or just an idea?

[Donnie18]

Thanks for the replies! Just want to add that the game in question is called Shenmue III. You may have heard of it and it's very highly anticipated with Yu Suzuki and his legendary development team behind it. I'm trying to get them a AAA budget so they can truly exceed the expectations set for it. If you can help, it would be much appreciated. Thanks!

[Harold Mansfield]

Thanks for the replies! Just want to add that the game in question is called Shenmue III. You may have heard of it and it's very highly anticipated with Yu Suzuki and his legendary development team behind it. I'm trying to get them a AAA budget so they can truly exceed the expectations set for it. If you can help, it would be much appreciated. Thanks!

But you have a few things working against you. There's been a few video games that were promised, got funding and never amounted to anything. That kind of soured the market on investing in promised games.

I'm no expert but even with the best rock star team, state of the art infrastructure, and a killer marketing budget I don't see anyone agreeing to give you $25-$50 million. That's also a wide variable to say "I either need this much, or double that". Doesn't sound well thought out or that you're sure of exactly why you need it or what it would be used for. Like you just want a large cushion to do what you want.

Also, $25-$50 million is what a really good game hopes to make. You're going to start that far into debt? Very risky. Very, very risky. That's the kind of budget that established players in the industry with their own money may spend on a game. Maybe taking your game to one of the players in the industry is a better idea than trying to fund it yourself. They have those kinds of budgets and if one bites it's all upside for you.

For perspective, Pinterest, and Twitter didn't get $50 Million in 1st or 2nd round funding.

If you're intent on shouldering it all yourself and trying to find that kind of coin, I'd crunch some actual numbers and get it down to a number that you may have a snowball's chance of saying out loud and keeping someone's attention.

[Donnie18]

But you have a few things working against you. There's been a few video games that were promised, got funding and never amounted to anything. That kind of soured the market on investing in promised games.

I'm no expert but even with the best rock star team, state of the art infrastructure, and a killer marketing budget I don't see anyone agreeing to give you $25-$50 million. That's also a wide variable to say "I either need this much, or double that". Doesn't sound well thought out or that you're sure of exactly why you need it or what it would be used for. Like you just want a large cushion to do what you want.

Also, $25-$50 million is what a really good game hopes to make. You're going to start that far into debt? Very risky. Very, very risky. That's the kind of budget that established players in the industry with their own money may spend on a game. Maybe taking your game to one of the players in the industry is a better idea than trying to fund it yourself. They have those kinds of budgets.

For perspective, Pinterest, and Twitter didn't get $50 Million in 1st or 2nd round funding.

I'd crunch some actual numbers and get it down to a number that you may have a snowball's chance of saying out loud and keeping someone's attention.

Ah, sorry about the random figure I threw out! To be more specific, it's exactly $50 million that is needed. Again, the team is quite established with a proven track record in the industry. I know the chances of getting $50 million probably aren't very high, but if there's any chance at all then it must be taken.

[Harold Mansfield]

Ah, sorry about the random figure I threw out! To be more specific, it's exactly $50 million that is needed. Again, the team is quite established with a proven track record in the industry. I know the chances of getting $50 million probably aren't very high, but if there's any chance at all then it must be taken.

Then I say hit the shows man and show it off. Maybe climb one step at a time. Do a kick starter to get money for promotions like going to places like SXSW and showing off the product with hopes that it leads to a deal. A few grand to $100K is far more realistic to raise than going for it all at once. You could pitch everyone at $50M and get no takers. Then what?

[Paul]

Then I say hit the shows man and show it off. Maybe climb one step at a time. Do a kick starter to get money for promotions like going to places like SXSW and showing off the product with hopes that it leads to a deal. A few grand to $100K is far more realistic to raise than going for it all at once. You could pitch everyone at $50M and get no takers. Then what?

What is $ 50 million needed for? Is that what it costs to launch a video game? I don't know much about it but that seems like an incredible amount.


Again, is it actually developed or just conceptual? What do you expect the game to make as a return? Can you make a convincing argument that it's a sure fire 100 million+ deal? Maybe a company that has made 100s of millions in that business might be interested, but I can't imagine a typical investment bank going for it.

As Harold said build the prototype and then look for a deal. Maybe licensing.

You mention a top notch team. What do you mean by that, technically or business wise? Do they have a proven record of successful games? Doesn't matter how brilliant they are as developers, if they don't have a history of success no body will look at it. Who are the officers? Who is the CFO? Do they have a successful history of 50 million dollar deals? At that level of investment management will be intensely scrutinized. In fact, if it is a viable deal they will likely put their own management in and maybe their own techs.. They would likely provide the funding in stages as certain phases are completed. Everything will be very tightly monitored.

I have to agree with Harold, do this incrementally. A prototype is critical.

[Donnie18]

What is $ 50 million needed for? Is that what it costs to launch a video game? I don't know much about it but that seems like an incredible amount.


Again, is it actually developed or just conceptual? What do you expect the game to make as a return? Can you make a convincing argument that it's a sure fire 100 million+ deal? Maybe a company that has made 100s of millions in that business might be interested, but I can't imagine a typical investment bank going for it.

As Harold said build the prototype and then look for a deal. Maybe licensing.

You mention a top notch team. What do you mean by that, technically or business wise? Do they have a proven record of successful games? Doesn't matter how brilliant they are as developers, if they don't have a history of success no body will look at it. Who are the officers? Who is the CFO? Do they have a successful history of 50 million dollar deals? At that level of investment management will be intensely scrutinized. In fact, if it is a viable deal they will likely put their own management in and maybe their own techs.. They would likely provide the funding in stages as certain phases are completed. Everything will be very tightly monitored.

I have to agree with Harold, do this incrementally. A prototype is critical.

Shenmue I and II had budgets over $70 million since they were funded by Sega. This sequel took over a decade to materialise after the second game precisely because of the fact that Yu Suzuki was looking for people to give him the AAA budget that this needs in order to please the fans who have been waiting this long. By the way, this is a Kickstarter project. It raised over $6.7M! Now while that is a very good amount of money, it is nothing compared to the budget required.

[Fulcrum]

I've never heard of the games and available videos for #3 don't really give me any idea what the game, or game play, is about. Big mistake when trying for 7 figure funding.

I think that I'd take this project a different route, depending on who owns the rights to I & II, as retro games are making a bit of a comeback. I see 2 options.

First option - re-release I & II on Steam (or other service) and direct the income from those 2 games directly to the budget for III.

Second option - approach Blizzard/Activision and try to get them on board. I believe these guys have the largest player base and almost instant access for marketing announcements and sales as well as a skilled and experienced team. If you doubt me, look up "Call of Duty" and "World of Warcraft".

[Harold Mansfield]

Shenmue I and II had budgets over $70 million since they were funded by Sega. This sequel took over a decade to materialise after the second game precisely because of the fact that Yu Suzuki was looking for people to give him the AAA budget that this needs in order to please the fans who have been waiting this long. By the way, this is a Kickstarter project. It raised over $6.7M! Now while that is a very good amount of money, it is nothing compared to the budget required.

I'm a little confused. You're involved in a project whose 1st and 2nd iterations have raised that kind of money before and has already proven to be successful. Why are you now at a loss for how to raise money again? Why can't you repeat what you've already done? What's changed? Who's the CFO? have they ever done this before?

[Donnie18]

I'm a little confused. You're involved in a project whose 1st and 2nd iterations have raised that kind of money before and has already proven to be successful. Why are you now at a loss for how to raise money again? Why can't you repeat what you've already done? What's changed? Who's the CFO? have they ever done this before?

This should sum it all up https://en.m.wikipedia.org/wiki/Shenmue sorry for the confusion.

To the previous poster, I must say that the idea of seeking help from Blizzard/Activision sounds interesting. Maybe it's worth trying.

[Paul]

Very interesting, but I'm also a bit confused. It is very impressive to raise 6 million on a non-equity crowdfunder site. A fantastic achievement. That clearly shows interest and a fan base. But then I read that the first 2 versions lost money. So the obvious question is why would anyone invest large money in a project that has a history of failure?

I admit I don't know the games or the developer, or the gaming business at all. How is it monetized, a purchase or a subscription? Can you demonstrate how this version will be successful in spite of previous failures. What is the price and how many would be needed to purchase to recover 50 million? I don't know the pricing but if it's priced at $ 100 you would need at least 500,000 just to break even. Is that reasonable to expect?

To me the obvious is to partner with a large company already in that business. With just a team of "developers" , no matter how good, I can't see an institution investing. They want to know about the final marketing and sales strategy. Partnering with a large company that has the marketing muscle might make it more attractive. Large institutional investors do not take risks, everything must be in place.

Now, what you might do is convert to an equity or revenue share or some type of convertible program. There are crowdfunding sites for that. There are also large investor shows in LV and Florida and smaller ones around the country and internationally. You now have enough funding to do all that. You would need an S.E.C. attorney and follow some regulations. You will also need a qualified CFO and even a CEO with experience. People who have managed that kind of money. Also, somebody needs to be the "closer", someone who can talk investor language and present the opportunity from a business perspective.

As a strategy you may want to broaden the investment opportunity beyond just one "hit or miss" project and present yourself as a gaming company with plans for continuing game development. I saw the development team, very impressive. With Suzuki's game development history it could sound like a viable business. With your 6 million "war chest" you could do a lot to create a serious legitimate and viable deal that may be attractive.

Use some of that money to create a killer business plan (hire somebody)and a killer presentation, hire some people who are from the investment community and who have raised large capital before. They know who to call and how to proceed. You will need to pay them very,very well, but it could be worth it.

Basically use your war chest to generate more investment.

[Paul]

As a little follow up, below are some dates for investment "Money Show" trade shows. New and emerging companies make their presentations to the attendees. 1000s of investors flow through. With hotels and travel and booth costs will be around 10K+ each show but could be very well worth it. I could tell you who to call if interested.

Also, back to my previous comments. I want to re-emphasize management. I don't mean just developers, I mean business management. They look at that even before the "business". Your management MUST be top notch with successful histories.


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[Donnie18]

Sorry for the late response! Thank you so much for your advice. I will be sure to take it all on board.

[Fulcrum]

Pulling this back up as I was perusing Steam a few minutes ago and Shenmue 1 & 2 happened to be listed on my recommended list for later in 2018. Big Brother or someone taking the advice from this forum?

[beetee]

Sorry for the late response! Thank you so much for your advice. I will be sure to take it all on board.

What is the status of your funding?

[SkyWriting]

Hi everybody, first post here! If someone wanted to find funding for a videogame in the range of $25-50 million, where would they look? Thanks!

So it is scheduled for release in 4 days. Any updates for us?