Project Finance can be beneficial as it provides a cornerstone of the finance plan for your game, which apart from being valuable in itself, may help you to unlock other finance, as third party investors may be incentivised to invest if they can see that you already have a project financier willing to invest on the basis that the game has commercial potential.
Project financiers would typically allow your studio to retain the IP in your game (although note the third bullet point below under What information and security will you need to provide to the project financier? Below).
The project financier usually charges a fee from the budget of the game and/or a premium on its finance which is payable from the game’s revenues. Typically there are also legal fees involved with obtaining Project Finance, and the project financier will usually expect its legal fees to be paid for from the budget of the game. In certain instances, the project financier may also request a revenue share from the game. You should take advice on any deal proposed by a project financier, as there is usually room for negotiation of the financial terms.
Project Finance is long-established and a very important source of finance in the feature film and television industries, but less so for the video games industry. However, there are financiers out there that are open to considering games projects.
In order to secure Project Finance, you will likely need to demonstrate the strong commercial potential of the project (e.g. through sales forecasts, your track record, examples of previous similar successful projects and any other relevant factors).
If a project financier agrees to provide finance, its requirements will vary, but typically it would need:
As the requirements of project financiers can be complicated, it is important to seek legal advice.
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