The Survival Guide for Game Development Funding

In the past weeks, development of Momonga has nearly grinded to a halt. We have one artist working on it, but all programmers are scrambling to meet a “mission impossible” deadline for a client.

Welcome to the world of bootstrapping.

True to the “independent” tag we give ourselves, we are self-publishing our game. A big part of that is funding. And believe me, the way you fund your game can make or break it. It can even kill your company.

With this in mind I want to talk a bit about the different types of funding, and give you some of the survival tips that we found to be most useful.

Types of funding

So you want to self-publish your game? Then you need to think about funding. There are many types of funding, but in all cases the goal is to “extend the runway” – to buy yourself time to finish the game and take off. Hopefully into orbit.

1. Cut costs – If you are able to keep your living costs to a minimum, you are in good shape to invest your time in making your game. Funding is all about cashflow, so keep expenses low. Cutting costs can only take you so far, so you still need a source of cash.

2. Keep your day job – If you have a decent job with a solid income, you might want to consider hanging in there for a bit. Save up your money, and work on your project on the side. You could also cut down your working hours to have a bit more time available.

3. Provide services – A lot of indie studios are development shops providing development services to other companies. If you can get the projects, you will get paid better per hour than you would working for a boss. Which leaves more time for development.

4. Ask the crowd – If people are waiting for your game, you might as well ask them to pre-order. Kickstarter is the obvious choice, but you can do it yourself too. Sell the beta, or sell the idea. Then invest the money back into the development of the game.

5. Get a loan – This is a tricky one. Banks are cautious, so you will need a good plan. Aunt Irene can help you out, but asking family and friends for money can be asking for trouble. Just make sure you can repay the debt – never promise something you can’t deliver.

6. Find other sources – There are many ways of getting money in the bank. Think of sponsorships, government funding, art / cultural funds, or selling your assets. If you think creatively, there is certainly a way to get the cash you need to get started.

7. Get an investor – I saved this one for last. With an external investment, you give up some control over your business. However, it can also mean that you get freedom to pursue your goals. That is a trade-off worth considering.

How we do it

We provide game development services and keep our costs to a minimum. With a sprinkle of credit from the bank and a tiny bit of tax relief, we soften the blows and stay alive.

Doing this, we have been able to invest around €250k into the game.

The problem is that we chase two rabbits: Client projects and our own game. We need to focus on both of them, and that’s impossible. This balancing act can be stressful, because something’s got to give.

Then there’s cashflow. We need our balance to be around zero all the time. This presents a potential risk. At the very least, we become vulnerable: if one client pulls the plug, we could find ourselves in a situation where we can’t handle the losses.

As an example, we are currently working for a big client. Over 50% of this year’s service revenue comes from this client. The project turned out to be much harder than we anticipated, and we are currently facing a huge deadline.

In this situation we take the side of the client. Momonga is our pet project, but we put our clients on the #1 spot. An obvious choice, and good business practice. However, we have to face another painful delay for Momonga.

The correct response is to deal with it. Swallow your pride and work hard for your customers. It’s the right thing to do.

Cashflow survival tips

If you want to get the game done, you need to think hard about cashflow. These survival tips come from our experience and from other developers:

  • Cut costs – But realize it only takes you so far. In the end you will have to earn some money somehow.
  • Move abroad – Some countries are easy on your wallet. If you are free to move abroad, you could consider moving there.
  • Side products – Getting smaller products out there that you can sell is a great way to get a bit of extra money.
  • Start small – Keep your game simple. If you don’t need a AAA budget, your life will be easier, and you will learn faster.
  • Stay sharp – You will need to make some tough decisions. Fire a client or pause development? Remember that cashflow is king.
  • Build momentum – If you have a job, keeping it seems safe. The tough question is: Can you keep your day job AND finish the game? Sometimes you need to take a bit of risk.
  • Persevere – Prepare for The Dip. One day you won’t see the end of the tunnel. That is the day you need to push through or drop it.
  • Look ahead – Keep track of your cashflow projections. I use a simple excel sheet that projects cashflow a couple of months ahead.
  • Make a plan – Think about why you want to do it. Don’t burn your cash reserves just because it’s the hip thing to do. Make a plan.
  • Combine and shine – There is no perfect way to fund your development. Balance the pros and cons. Make a combination that fits your plan.

The truth is that any kind of funding is HARD. There is no simple strategy, no step-by-step plan to getting it done. Whether you are a hobbyist, service provider, or living in your parent’s basement – it is a rough ride to fund your game and get it done.

We are self-funding because we want to stay in control of our destiny. We don’t want publishers parading around with our title. We want our game to be a Paladin game. And we are willing to go the extra mile to keep it that way.

And that’s the thing: It is worth it. For us, this is the road to freedom. Freedom to choose which projects and which products we want to work on.

It feels a bit like hunting the Holy Grail, but that’s what Paladins do.

I will let you know how it works out for us. Stay tuned.

What about you? How are you funding your projects? Let us know in the comments!

  • Marion Emeis
    Posted at 20:28h, 17 September

    This is totally useful, Not even just for companies. It helps anyone in daily life as well (since I dont really wanna start my own company later on)..

    One thing I dont understand though, what exactly do you mean by other countries going easy on your wallet? Would that be lower taxes? Our country is going mad on the tax percentage once again next month, adding another 2% and all, so I guess that’d make sense.
    But, which countries? Can you explain this a bit more please? :D!
    Also, you could totally sell a demo of Momonga to keep people interested. It’s really sad that you have to delay it once again and I think people might lose interest over time..

    • Derk
      Posted at 19:50h, 18 September

      Hi Marion,

      Thanks for your reply. What I mean with “countries going easy on your wallet” is countries with low wages. While $800 per month won’t get you far in Europe or the US, it is plenty to go around with in most developing countries. If you’re interested in this thing I would recommend the book “The 4 Hour Work Week” by Timothy Ferriss. It has some great tips for if you want to move your laptop to Bali or Panama. 🙂

      Good luck!

      • Marion Emeis
        Posted at 23:31h, 18 September

        Oh cool, thanks! Wouldn’t mind travelling to far away places for a change. I might as well keep reading while Im at it :D. (I bought a guide on 3D character animation earlier! It uses 3ds Max so I can sort of learn to animate my stuff too). I know a bookstore in Amsterdam that happens to sell just one, so I’ll head there quickly tomorrow.

  • Frank
    Posted at 21:14h, 17 September

    I’ve been working with high-quality volunteers for 6 years now and any costs the game has have been funded by me (roughly 4000) with my normal day-to-day job. The downsides of volunteers is that you can’t claim their time, so that’s also the reason why it’s taken 6 years instead of 1. That’s the price I was willing to take, but lately I’m looking into paying for it to be done faster. This project needs to end and then preferably sooner than later.

    • Derk
      Posted at 19:48h, 18 September

      Hi Frank,

      Wow congratulations on getting so far with volunteers – especially for sitting a project out for six years. I agree that at a certain point it simply needs to ship – it could hurt team morale and your wallet if you let it linger too long.

      Good luck! 🙂

  • Luuk
    Posted at 00:14h, 18 September

    I think it’s great you’re working on such a big self funded project. Not only does it follow the idea of creating your own game studio and shaping your own destiny, it also shows great confidence in your own people and their abilities.
    To keep the business ruining, your product will literally need pay for itself. I can imagine (new) clients will be impressed!

    • Derk
      Posted at 19:47h, 18 September

      Hi Luuk, thanks for the kind words. It is kind of a crazy thing to do when you think of it, but it is great to follow your passion and make something you can be proud of!

  • Play Momonga at Indigo this weekend! | Paladin Studios
    Posted at 10:57h, 27 September

    […] not Monday but I wanted to give a small update. Even though we got sidetracked with some other projects recently, we are still progressing with Momonga. Stay tuned for Momonga Mondays, we will be posting […]

  • Saturnix
    Posted at 16:02h, 22 November

    Very interesting article! I think I need to print it and post it on my board!

    However, I don’t understand how could you move abroad? That would be a big cost and, most important, all of the people who works with you will not be able to follow you. If you have an office with people working in it (as opposed to commissioning jobs by the web) how can you move?

    • Derk
      Posted at 11:58h, 23 November

      Hi Saturnix,

      That would be a big cost

      Yes, the initial investment to move is fairly heavy, and it is a rigorous action to take. I would only recommend it if you require at least a year of bootstrapping. If you can afford the flight ticket and can settle in a cheap place, you will be able to save a lot – I would guess you could save up to 50% in operating costs. That starts counting in the long run. And you can lunch under a palm tree.

      all of the people who works with you will not be able to follow you.

      This is up to you, and each member of your team, to decide individually. If you seriously consider moving abroad, and you cannot convince everyone to join, perhaps they can work from their homes for a while. But it could also be time to let some people go… not an easy decision.

      If you have an office with people working in it (as opposed to commissioning jobs by the web) how can you move?

      Honestly, I would not recommend doing this if you have an office with people working there. We have a team of 10+ people and we have settled nicely in The Hague. We have a bit of cash in the bank, and can afford a fairly decent lifestyle. It simply wouldn’t do for us to pack our bags and move to Bali. Palm trees or not 😉

      As always, think before you act, and don’t take it lightly!

      Have fun 🙂

  • Robin Jackson
    Posted at 16:44h, 27 July

    Great comments. I need £14k GBP for a Game Development Document. I have a company in London who are really interested and have great people working for them. They love the game idea and the work I have done so far. To complete the GDD I need funding and I am giving out rewards. Check it out:

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