Alternative financing models for Australian game developers martin s cooper Australian Game...

alternative financing models for Australian

game developers

martin s cooper

Australian Game Developers Conference December 2004

current models Publisher advances Loan capital Equity capital Government subsidy /grant Sweat equity

why alternatives? To build value the

developer must own IP

This can only be done if the developer finances in whole or part their projects

Traditional models all have attendant costs and disadvantages

goals A better royalty rate IP ownership in the business to add

balance sheet value Certainty-i.e. relief from

“cancellation for convenience” A degree of creative independence

what are the available “non traditional” sources Angel finance Tax shelter money Public raisings The completion bonding market

angel finance Increasingly available for a real

share of ownership-say 10% per $100,000 for start ups with member track record

Small publisher /distributor support Industry in-siders

tax shelter money 10B and 10BA of ITA Act S8(1) business deduction Publicity and promotion budget

public raising Track record required Licensed “sponsor” to make offer Cost-at least $75,000 “up front” Time-at least 9 months Certainty of product and market

must be demonstrated at the out set

completion bond market Elements-

• Bonder,• Financier and • Publisher

Contracts-elaborate structure with complex documentation

Costs and time

legal issues in raising capital Australian Financial Services License General Corporations Act

requirements Product Disclosure Statement General risk-non-disclosure and

personal liability

where to now? Australian Games Collective Co-operatives generally Government programs