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Who Deserves What? > Who Deserves What? - Pg. 15

First Steps 15 a new wholly-owned subsidiary corporation calledNewGame, Inc. and sells shares of that company to investors.Thisstrategy has pros and cons for both sides, but it has the effect of making sure that investors are impacted only by the success or failure of New- Gameand not the success or failure of other Devco operations. · Professional investors will frequently demand as much as 40 to 60 percent in an early fund raising round, though this number should be significantly lower for a developer with a track record and, best of all, a development contract. · Finally, carefully consider if there are any parties who may emerge "out of the wood-work" to lay a claim to the company or its IP. Think back on everyone with whom you talked over a story idea or game design, everyone who worked on code that became part of your engine, or anyone to whom any founder said anything that could have been construed as a promise of involvement in the venture. `Tis a far far better thing to pay 1 or 2 percent up front than to have a release held up by litigation. Note TIP A new business is everyone's baby, and it is not uncommon for everyone to think he gave birth to it. Like Solomon, the founders' job isnot to split the baby, but to devise a plan whereby the baby remainsintact and all the parents are adequately motivated to act in its bestinterest. It seems obvious, but can get lost in the deal-making shuffle:Never negotiate a deal that is too lean to keep your counterpartyhappy for at least the next three years.