Find the Best Video Game Investors in 5 Steps

The beginning of the year was slow when it came to funding gaming projects. However, video game investors have turned this situation around by investing in early-stage startups, hopeful they would deliver hits.

According to Crunchbase data, in the first quarter of 2024, video game investors put USD 265 million globally into early-stage rounds for gaming startups, a 65% gain from Q4 2023 and a roughly fourfold increase from Q3, during which investment hit a multiyear low.

The process of securing funds is not very straightforward. So, how can one ensure they get investors? To know how, keep reading this article.

How do video game investors operate?

Understanding how these financiers operate is crucial for game developers seeking funding.

• Funding stage: While some investors favor established studios with a proven track record and late-stage projects with a higher chance of success, others are willing to gamble on early-stage ventures. It allows them to influence the game's direction and potentially reap even greater rewards.
  
  
• Preference towards specific genres: Investors are not all equal. Some specialize in supporting genres, like mobile games or esports titles, while others have a broader focus. Aligning your project with investor interests can increase your chances of securing funding.
  
  
• The AAA advantage: Big-budget, high-profile AAA games are naturally attractive to many investors due to their potential for blockbuster profits. However, if your project does not fit this requirement, there is still a place for innovative indie games to find funding.
  
  
• Experience is vital: Just like you would not trust someone with zero experience to work for you, investors seek developers with a proven track record. A history of successful projects and the ability to meet deadlines will demonstrate competence and reduce the risk factor for the investor.
  
  
• Beyond the cash: Investment goes beyond just cash. Investors often seek a stake in the company, granting them a share of the profits (and potential losses). It can give them some control over the project, allowing them to make creative decisions.

5 steps to find investors for your video game

Step 1: When to search for investors

It is important to note that finding investors and negotiating a deal takes time. In the case of indie games, it will likely take two to three months to close a deal. However, it can take longer if the investment amount required is more.

So, if you are sure you need external funding at some stage in the development process, start preparing well in advance. To stay one step ahead, you can assemble required materials and create a list of potential investors you will approach for funding.

Step 2: Shortlisting video game investors

There are different types of video game investors you can reach out to for funding. You need to know how each investor operates to ensure you collaborate with the right partner who matches your needs. Here are the different types of investors you can consider for your game:

Angel Investors:

Are wealthy individuals who invest smaller sums in early-stage startups. They often have a personal connection to the company or founders, offering more hands-off mentorship unlike other investors. The value proposition for startups includes deep industry knowledge and valuable guidance alongside their funding. Examples of prominent angel investors include Greg Richardson (Juno Capital) and Chamath Palihapitiya (Playdom investor).

Venture Capital Firms:

These are organizations that pool money from multiple investors to finance established companies. They take a more active role in the companies they invest in, seeking high returns for their shareholders.

Venture capital firms typically invest larger sums of money compared to angel investors. For instance, Galaxy Interactive, Griffin Gaming Partners, Makers Fund, London Venture Partners (investors in Peak, Supercell, Klang Games).

Equity Crowdfunding:

This is a platform that allows people to invest directly in a company in exchange for ownership (equity). The benefits for developers include the ability to raise funds from a broader audience compared to traditional methods. However, it is less common than reward-based crowdfunding due to higher risks and stringent regulations.

Publishers:

Publishers usually handle the release and marketing of video games, but in some cases, they may support a project with an advance payment that they will recover from the profits. Unlike other investors, publishers do not seek a stake in the company or aim to become founders. They are primarily interested in getting their advance payment repaid and receiving a small percentage of the profit.

 

Before committing their funds to a project, publishers consider whether the video game project will be completed, if the development team is reliable, the development stage (with projects closer to release having a higher chance of getting funding), and the track record of the developer.

Step 3: Preparing your project pitch and documents

After shortlisting potential investors for your game, it is now time to prepare your pitch documents highlighting the merits of your project. Make sure your pitch is as effective and impactful as possible. Here is what you need to present to game investors for them to consider your game:

1. Project presentation: This is the first document game investors want to see to know more about your game. You must pack as much information as possible in your presentation to ensure clarity. Make sure the presentation is also visually appealing.
   
   
2. Team and company documentation: Investors need to know the people behind the project before making a deal. They want to know the track record of the founders and employees. You can present this information through a document highlighting the experience of the employees or founders and their roles in the game development. This information will establish credibility ensuring that you have the capabilities to execute the gaming project.
   
   
3. Description regarding financial model: What are your financial forecasts once the game is released? How have you spent the funds you have received so far? Investors would want to know all this before investing in your project. Create a spreadsheet that highlights your expenditure in different project components. Make sure to give your financial projections once the game is released to help investors gauge the profitability of the project.
   
   
4. A roadmap including milestones: Your project pitch should also include project roadmap and milestones. This document will help you prove video game investors that you can plan your time and allocate resources to achieve the desired results within a specific timeframe. You should report the milestones you have achieved so far to make your plan look realistic and attainable.

Step 4: Negotiations with video game Investors

Following the presentation, you may not receive a response immediately. Sometimes, investors consult further to ensure they are making the right decision. However, when an investor shows interest, start preparing for the negotiations. Set an in-person or virtual meeting to discuss how the funding from the investor will take the game to the next level. The investor can ask you questions to determine if your project is the right fit for them. 

Here are some of the questions an investor may have for you:

• How do you plan to use the funding?
• What type of game are you working on?
• Are you sure the game will be successful?
• Do you understand your market?
• Have you worked with other investors before?
• Can the project continue after the entire investment has been spent?
  

It is imperative to be transparent during the negotiations and offer as much clarity as possible.

Step 5: Negotiating and finalizing investment terms

Once video game investors commit to your project, you can negotiate the terms. You will need to agree on the project deliverables and the milestones you need to attain to receive additional funding. You should also specify the roles of everyone involved in the project and the circumstances that can result in the termination of the contract.

All these issues are very critical, and it is recommended to have a lawyer present. The lawyer will help you interpret the terms forwarded by the investors and safeguard your interests in the whole arrangement.

Before signing the contract, you can also ask how the video game investors plan to use their share in your company and if they are interested in earning a regular income or selling their stake at a higher price to other game investors. Remember, you do not need to sign the contract immediately. Take as much time as you need to understand the terms.

Takeaway

Securing video game funding is challenging, even for seasoned developers. Studios with a proven track record have a clear advantage, but that doesn't mean indie developers with a strong concept are out of the game. So, even if your initial funding attempts fall flat, analyze what went wrong, refine your pitch, and try again.

This is where Game Marketing Genie comes in. While we cannot control the outcome of your investor negotiations, we can equip you with the tools to impress them. For instance a well-designed pitch deck that effectively showcases your game's potential, along with by a data-driven market strategy tailored for success. Empower your vision with a winning deck. Get in touch with us for more details.