During the course of our Alternative Funding Week
on Gamasutra, we've covered everything from Kickstarter to public grants to equity crowdfunding. But we've yet to touch on what self-professed "digital matchmaker" Digital Capital
has to offer.
Switzerland-based Digital Capital's funding model offers project-based funding, with a concentration on digitally-distributed video games. We got in contact with company co-founder Todd Tribell to see if this funding route might work for your game project.
Can you describe to our readers what kind of services your company provides?
We offer project-based funding with private equity investments for digitally-distributed games and non-game applications - with our focus very much on games.
Who are some of your game developer partners? Do you target smaller or larger devs?
At the moment we are able to talk publicly about two: Digital Power Entertainment, Ltd, a Dublin based development studio headed by Jason Schreiber (IGF 2010 Winner of Best Mobile game
) and Dream Weddings, Ltd. an Irish developer and publisher led by Chris Klug, a 25 year veteran who is best known for his work at Westwood/EA. We've been going for 18 months and are very close to releasing our first title, from Digital Power Entertainment so we're really excited about that.
We don't have a specific type of idea partner or dev that we work with, whether it's one guy or girl, or a team of 100 based anywhere in the world - we're completely open. Developers don't need previous experience, although if they have a track record it does give us more confidence.
And business acumen can be very important. From our perspective, a developer's awareness and adaptivity to the evolving market is a major asset. Given how quickly the industry changes, the size -- and to some extent, the experience -- of a dev is not our biggest concern. We are far more interested in a partner's ability to understand what it is they are actually offering and to demonstrate that they can deliver on time and on budget.
Can you describe your funding model and the process involved?
We have a simple funding model. If we like a project and it stands up under due diligence, we source the investment (often from a single, high net worth investor) and create a joint-venture with the developer. We place the full amount of the development fund in escrow and release against milestones, so our projects are fully funded from the outset. It's our priority to return the investor's funds as quickly as possible. Once the investor has recouped, the developer will then share in profits according to their ownership. We don't ask idea partners or developers to pay the development costs from their royalties.
How is it different from other investor-based funding models out there?
There are so many models that exist now, from crowd funding to large VC's and pretty much everything in between. I think Jason Della Rocca did a nice job this week
in summarizing the choices now available -- the situation's a whole lot better for developers than it's ever been.
But developers need to think really hard about which option suits them best -- there are pros and cons with every partner and, I've said before (in an article for Gamasutra
) that choosing an investor is like choosing a wife or husband. You're in this thing together and once the initial glow has worn off you have to know how to make each other happy and that involves great communication and honesty, especially with any bad news. A financial break-up or falling out is every bit as messy and painful as a divorce. We take an active role in our projects, benefiting both our investors and our idea partners and devs, in bringing our projects to fruition. Again, that works for us and our partners, but some developers may prefer a more 'hands-off' approach.
Would a game developer be able to keep rights to a game you invest in?
As our idea partners/developers are fully-fledged partners together with the investor and with Digital Capital, they participate respectively in the ownership of any IP held by the joint venture. They also have input into the marketing and PR. For us it's important that the developer retains a stake in their creation and I think it's increasingly important for developers to get an insight into the costs and processes of marketing. Traditionally they been very removed from that -- it doesn't make sense to us that a publisher doesn't involve the creator in the marketing and PR. That is, unless the developer really can't, or doesn't want to demo (yep, we know there are some shy ones out there) and be involved in the branding and messaging. But there's generally no-one who knows or understands a game better than its developer.
What should game developer partners look out for when working with investors (any general tips for working with investors would be great, too)?
We want our partners to be prepared to demonstrate how an idea makes financial sense to an investor and be able to show P&L's, SWOT analyses
and generally have a clear idea of what it will take to build the game successfully. In order to have the attention of any investor, they need to have a concrete plan which is exciting to an investor and will show them specifically how and when the investor will see a return. The better the ROI, and the more solid the plan, the better the chance an investor will pick up the project. Developers must remember that an investor is there to make money -- pure and simple. Investors are prepared to take a risk, and some will risk more than others but they're never short of options so it's down to the developer to demonstrate how they can generate a profit. It's the less romantic but essential part of of the business.