What is crowdfunding?

Crowdfunding refers to the process of raising finance from the public typically through an online platform that will charge a commission based on the amount raised. Almost all types of crowdfunding involve the creator of a project (or the company seeking the finance) creating an online “campaign” page on the chosen platform which sets out details including a description of their project or business, how funds will be used, timing of when products (such as a game) will be completed and background on the individuals behind the project.

What are the main types of crowdfunding?

There are currently broadly three types of crowdfunding:

It is also worth mentioning Fig, which is a US based crowdfunding platform that focuses solely on video games. Fig combines rewards based crowdfunding with equity crowdfunding. Rather than investing in the studio, backers invest in a Fig entity and receive Fig shares that relate to a particular game title. The Fig entity then pays distributions based on Fig’s right to the title’s sales receipts under its licence agreement with the studio.

How can crowdfunding help your studio and what are the main considerations?

Crowdfunding poses particular issues to think about including the following:

Where can I find out more?

Feel free to contact Mark Phillips or Edward Lane for further information about crowdfunding.

Specialist Finance Providers / Velocity Capital

What is velocity capital?

This is a type of funding that allows mobile game studios that have games generating revenues to borrow against those revenues in order to utilise the revenues they have earned before they are paid out by the App Store.

How can velocity capital benefit your studio?<b></b>

Velocity capital is a cash flow tool which means you will only have to wait 7 days or less instead of 30 to 60 days to receive the revenues earned from your mobile game.

Certain providers also offer other services such as advice on a studio’s user acquisition strategy, which may be an additional benefit.

How does it work?

As the typical App Store payment terms are 30 to 60 days, velocity capital providers will verify the revenue data produced by a mobile game and pay out to the owner of that game within a shorter period (usually within 7 days). The payment usually takes the form of a loan. The game revenues, once paid out by the App Store, will be used to repay the loan and any interest or coupon element.

What are the key terms of the funding?

Typically, the velocity capital provider will often charge a fixed fee of around 5% (this rate may vary) of the revenues to be paid by the App Store.