Getting a game made costs money. Where that money comes from shapes everything: your ownership, your creative control, your legal exposure, and how much of the upside you keep if the game succeeds.
Here is a practical overview of indie game and video game funding options, and what you need to have in order before any conversation with an investor or publisher.
Publisher Funding
The most common path for indie studios seeking significant capital is a publisher deal. The publisher advances development costs, handles marketing and distribution, and recoups that investment from game sales before sharing revenue with the developer.
The terms vary enormously. A publisher covering millions in development costs will want a larger share of revenue than one covering only marketing. Key things to understand before signing anything:
- What rights revert to you if the publisher doesn’t release the game? IP reversion clauses are critical and often missing from first-draft contracts.
- How is recoupment defined? Does the publisher recoup only the advance, or also their marketing spend, overhead, and other costs? The difference between these can be hundreds of thousands of dollars.
- What marketing and milestone commitments are they actually making? Vague promises are not enforceable. If it isn’t in the contract, it doesn’t exist.
The frequency of publisher deals has dropped in recent years as the market has tightened. But for studios with a strong prototype and a clear commercial concept, it remains the largest source of development capital available. Our guide on what a video game publisher does covers the deal structure in detail.
Bootstrapping
“Bootstrapping” means funding development yourself, through savings, credit, or revenue from other work. You keep full ownership and full creative control. The downside is that all the financial risk is personal.
If you have formed an LLC, the liability typically stays in the company rather than attaching to you personally. But the cash is still coming out of your pocket, and if the game fails, so does that money.
For developers with day-job income or existing savings, bootstrapping a small project is often the most practical starting point.
Friends and Family
For early-stage capital, friends and family are often the most accessible source. They are the people most likely to believe in you and the most likely to be forgiving if things don’t go according to plan.
Structure these arrangements as loans with a written promissory note rather than informal handshakes. A simple written agreement clarifies expectations and protects the relationship if the project runs long or misses targets.
Be careful about the legal framing. Offering a share of future game revenue in exchange for investment can trigger securities laws. A straight loan with interest repayment generally does not. An attorney can help you structure this correctly before you take the money.
Angel and Seed Investment
Early-stage investors, sometimes called angel investors, provide capital to studios in exchange for equity in the company or a royalty on future revenue. This is common in the broader startup world and is increasingly common in games.
This type of investment does trigger both state and federal securities laws. There are exemptions that allow smaller raises without full SEC registration, but those exemptions have specific requirements and the consequences of getting them wrong are serious. If you are pursuing angel or seed investment, talk to a lawyer before you take a dollar.
Indie Game Funds
Funds set up specifically to finance indie game development, like Indie Fund, typically operate as revenue-share financing. The funder provides capital upfront in exchange for a royalty or revenue percentage after release. You typically keep your equity and your IP. The tradeoff is a portion of revenue on the back end, and some funds also want a small equity stake.
These arrangements are often more developer-friendly than traditional publisher deals in terms of creative control, though the financial terms still require careful review.
Government Grants and Tax Incentives
Several governments and large platform companies offer non-dilutive funding for indie game development, meaning you keep your equity and don’t owe money back. These programs change frequently, so verify current availability and terms directly before applying.
A few worth knowing about:
- Epic MegaGrants: Epic Games offers grants from $5,000 to $150,000 for projects built on Unreal Engine, including games. Non-recoupable, no equity taken.
- UK Games Fund: The UK government funds early-stage game studios through development and growth grants for UK-based developers.
- Canada Media Fund: Canada’s federal fund supports interactive digital media, including video games, through production and innovation programs.
- Screen Australia: Provides grants for Australian interactive narrative projects, including games.
Tax incentives work differently: governments reduce your tax bill rather than handing you cash. The UK, Canada, France, Brazil, and a growing number of other countries have game-specific tax credit programs that can meaningfully reduce development costs.
Unlike publisher deals or equity investment, grants and tax incentives don’t trigger securities law and don’t require giving up ownership. They do require meeting eligibility criteria and submitting detailed applications. An attorney familiar with the programs available in your jurisdiction can help you structure the application correctly.
Crowdfunding
Crowdfunding platforms like Kickstarter are the most visible funding path in game development. Legally, they are not investments. They are contractual agreements: backers pay money in exchange for promised rewards.
If you do not deliver the promised rewards, you have breached a contract with potentially thousands of people. Going in with a realistic production plan matters. For a closer look at what can go wrong, see our post on the government suing a failed Kickstarter campaign.
Equity Fundraising
Selling equity in your studio to angel investors or venture capital firms is more common in the broader startup world than in games, but it does happen and can raise significant capital. Gaming-focused venture funds that have backed indie studios include London Venture Partners, Makers Fund, and Play Ventures, among others. These funds understand the industry better than generalist VCs, but the securities law requirements are the same regardless of how game-savvy your investor is.
This type of fundraising triggers both state and federal securities laws. There are exemptions that allow smaller raises without full SEC registration, but those exemptions have rules. Before going down this road, it is also worth thinking carefully about how to divide equity among your founding team.
Equity Crowdfunding
Since the passage of the JOBS Act in 2012, the SEC has developed rules allowing companies to raise money by selling equity through online crowdfunding portals. This is different from Kickstarter, where backers receive rewards. Under Regulation Crowdfunding (Reg CF), investors receive actual ownership stakes.
As of 2021, companies can raise up to $5 million per 12-month period under Reg CF, through SEC-registered portals. Verify current limits with an attorney, since these rules can change.
This path involves real securities law compliance and is not as simple as launching a Kickstarter campaign. For studios that want to grow beyond their first game and bring in a broader investor base, it is worth understanding.
Business Loans
A standard business loan is another option, particularly for early-stage capital. If you have formed an LLC or Corporation, you may be able to get the loan in the company’s name. Without a track record, though, you will likely need to personally guarantee the loan. This keeps the debt in your name even if the company fails.
Before You Seek Funding: What Investors and Publishers Actually Check
The funding landscape is more selective than it was a few years ago. Investors and publishers now expect playable prototypes, clear commercial concepts, and studios that have already done the legal housekeeping. That last part is where most early-stage studios fall short.
Here is what an investor’s due diligence team will look for, and what you should have sorted before you are in a room asking for money:
IP chain of title. Can you prove your studio owns everything in the game? Every employee, founder, and contractor who contributed code, art, or music needs a signed invention assignment agreement. If those agreements do not exist, you have an IP ownership problem that any serious investor will find immediately. Our checklist for starting a game company covers this in detail.
Third-party asset inventory. Keep a clear record of every piece of middleware, engine technology, and open-source software in the game, along with the license terms for each. Some open-source licenses carry obligations that affect how you can distribute your product, from attribution requirements to redistribution conditions.
Trademark and copyright registration. Unregistered IP is a potential liability in a funding conversation. Register your studio name and game title before you go looking for capital.
Clean corporate records. Formation documents, board minutes, and a current, accurate cap table reflecting all shares, options, and convertible notes signal that you are a professional operation. Investors who cannot see a clear ownership picture get nervous.
Worker classification. The contractor versus employee distinction matters in due diligence. Misclassification can mean back taxes, fines, and complications in an acquisition.
And when evaluating any potential partner, ask these questions before agreeing to anything: How is “net revenue” defined in the deal? What creative control will they have? What happens if you miss a development milestone, and what cure rights do you have? If a partner cannot answer these questions clearly, that is a signal worth taking seriously.
Get the Legal Foundation Right First
However you fund your game, getting the legal foundation in place before you seek money is not just good practice — it is what makes you fundable. Start with our checklist for starting a game company to make sure the basics are covered.
If you have questions about a specific funding path or are ready to review a publishing or investment agreement, contact us to set up a consultation.