Introduction

[ LiB ]

Introduction

Given the choice between addressing financial strategy and snorting shards of glass, many game developers would have to pause. Unfortunately, development shops require active, constant financial oversight to thrive. This chapter addresses the three main financial issues developers face: raising money, handling a financial crisis, and selling the company.

A developer may want to raise money for start-up costs, including building pitch materials, but it may also pursue outside financing for an independent development or an R&D project. The process of raising money can be broken down into four questions:

  • How much money do you need?

  • Where do you get it?

  • How do you persuade people to give it to you?

  • What do you exchange for it?

The development business model is a difficult one, requiring developers to assume a lot of execution risk. Furthermore, payroll keeps burning even if a team isn't engaged on a project, which makes the end of every engagement pretty scary. Even when you've got a contract in place, getting paid can require some effort, not to mention your project can be terminated .

For these reasons, developers need to maintain a cash reserve big enough to buffer against harsh conditions. Even a well-managed company can hit the skids, so this chapter will cover both preventive measures and financial triage. There is also a discussion of winding your company down in a humane and civilized manner, should it become necessary.

If you manage your company well, and produce some great products, you may find yourself on the right side of a buyout offer. Should you accept it? If you do, what terms do you need to negotiate? This chapter will cover these topics and what else to expect during the sales process, including a sample letter of intent from a purchaser interested in buying a company.

[ LiB ]


Game Development Business and Legal Guide
Game Development Business and Legal Guide (Premier Press Game Development)
ISBN: 1592000428
EAN: 2147483647
Year: 2003
Pages: 63

flylib.com © 2008-2017.
If you may any questions please contact us: flylib@qtcs.net