Financing a Game Development Venture 62 GameCo procures a completion bond from a specialized bonding company to insure the bank's loan against the risk of GameCo's not finishing the game. In other words, the completion bond is like an insurance policy that gets triggered if GameCo does not deliver the game. Without the bond, if GameCo did not deliver, the publisher would not pay GameCo, and the bank would lose its money. With the bond, GameCo gets the money from the bonder and repays the bank. What's in it for the bonder? The bonder will charge a fee, from 2 to 10 percent of the game's budget. To manage its risk, it will aggressively investigate the project and the company, and will oversee the entire production. It may or may not require the developer to put up collateral for the bond. Figure 3.3. Completion bonding. Advantages for developer: · Payments are more likely to be on time because the bank, not the publisher, pays. · The bonder can act to balance power between the publisher and the developer. · A project that would not have been funded directly by the publisher may get a chance with a completion bond. Disadvantages for developer: · Expensive--even though the publisher will usually pay the bonding and loan fees, which range from 3 to 10 percent of the budget, these fees will probably be recouped from developer's roy- alties. · Generally requires a prototype before a bonding company will issue a bond. · The bonder may require the developer to put up collateral. · The publisher may not put as much marketing muscle behind a release in which it has no other sunk costs. Pitch Materials When raising money, you need something concrete to show your goals, your talents, and your ability to execute a project. Pitch materials are the first project that potential investors see, and they judge your ability to execute a development project based on what they see in your pitch. Does it look completed? Are there typos in written material? Does it look as good as it possibly could (it should be in color and bound, with some kind of protective cover)? Is it well organized and clear? Is it thorough, or does it gloss over difficult sections or topics? Is it playable? Does it convey why some- one will spend $25 to $60 on this game?