Independent game developers are teams and companies that don’t have a permanent relationship with a large game publisher, nor the funding they provide. In that case, there is roughly five ways to fund game project: bootstrapping, project funding from a publisher, grants, private investment funding and crowdfunding. This article opens a bit more about what crowdfunding is and what type of crowdfunding options there are for game companies based in Finland.
Authors: Ria Gynther & Suvi Kiviniemi
What is crowdfunding and how it helps game developers?
Crowdfunding is closely linked to crowdsourcing. In both large number of participants take part in a project with a relatively small contribution. In crowdfunding this contribution is monetary. (Wikipedia 2021.) There are numerous different platforms that offer the possibility to set up a crowdfunding campaign; you might have heard names like Kickstarter, Indiegogo and Patreon before.
Crowdfunding is a popular funding option for game developers. The most successful category on the Kickstarter platform are games. In mid-June 2021 43.5% of the campaigns in this category have gotten their ask (funding) and total of 1.52 billion dollars have already been raised in 2021 to complete game projects. Sounds awesome, right? As usual, there are also downsides. Kickstarter is an extremely popular platform and the 56,5% that did not get funding they need equals to 34 519 unfunded game projects. (Kickstarter 2021a.)Image 1. Not all crowdfunding campaigns are successful. In this screenshot taken on June 17th, 2021, you can see three video game campaigns on Indiegogo that are ending withing days. They’ve raised 0-12% of their original goal. (Indiegogo 2020.)
According to crowdfunding expert Tommaso De Benetti (2021), videogames are the most difficult sub-category of games in crowdfunding. Most of the successful projects offer something tangible, something to collect. Board and card games are usually more appealing than videogames. Also, making for example a card game is much faster than making a video game, and bakers are rarely willing to wait for years before they get access to a game they have invested in. 80% of successfully pledged Kickstarter campaigns in the game category were tabletop games. (De Benetti 2021.)
Crowdfunding in Finland
Crowdfunding is tied to regional legislation and not all the international platforms are available for companies registers in Finland. Legislation differences between countries are one of the main reasons why platforms like Kickstarter have not yet launched their services to Finland.
Finland has a strict Money Collection Act that affects donation-based crowdfunding (nothing is received in return for the participation) and Consumer Protection Act that affects rewards-based crowdfunding (contributors receive something in return for their participation). (Ministry of Finance 2016). There is also separate Crowdfunding Act that monitors loan- and investment-based crowdfunding (Ministry of Finance 2017).
But wait, why can I find Finnish companies from Kickstarter then? Well, this is a bit messy. Finnish companies can utilize Kickstarter but not directly; they use partners from eligible countries such as Sweden, US, and UK. Kickstarter can transfer funds to a Finnish IBAN bank account, but the campaign itself needs to be run from a country that is eligible on Kickstarter. All the countries and more details can be found from Who can use Kickstarter? -info page. (Kickstarter 2021b.)
Some of the international platforms, like Indiegogo, can be used from Finland, and there are a few local services available as well. Mesenaatti.me is a Finnish, reward based crowdfunding service (Mesenaatti.me 2021). Unfortunately, it is mostly known by Finns, and does not seem to have that many success stories from the video games industry.
Picture 2. Companies can seek even millions trough crowdfunding campaigns. (Invesdor 2021)
Apart from product rewards or supporting fees, there are also other, less known forms of crowdfunding. Fundu offers a platform for loan-based crowdfunding, where investors and companies can meet and make deals (Fundu 2018). It is also possible to organize an investment round in the form of crowdfunding; in this case, the backers buy some shares, a concrete slice of the company, instead of the game through the crowdfunding platform. This happens through specialized platforms; in Finland, one such platform is Invesdor (Image 2). In total Invesdor offers three types of funding rounds: share issues, bond and convertible bond rounds. They operate in the Nordics and the DACH region under two different domains: Invesdor.com and Finnest.com. (Invesdor 2021.)
Choosing the right funding options for your game project is a task you should invest some time and thought in. If you choose crowdfunding to be part of your plan, also take time in defining what form of crowdfunding is the best fit for you, what is your crowdfunding goal and finally what platform will help you to achieve this. There are many options out there but not all are equally good for your specific project. Compare the platforms, analyse successful campaigns, and consult your network before starting.
De Benetti, T. 2021. About Crowdfunding. Presentation given at LGIN education event on 15th of April 2021.
Fundu. 2018. Usein kysyttyä. [Cited 17 June 2021]. Available at: https://www.fundu.fi/meista/usein-kysyttya/
Invesdor. 2021. Our products for companies. [Cited 14 June 2021]. Available at: https://www.invesdor.com/en-gb/for-companies/
Kickstarter. 2021a. Stats. [Cited 17 June 2021]. Available at: https://www.kickstarter.com/help/stats?ref=global-footer
Kickstarter. 2021b. Who can use Kickstarter? [Cited 17 June 2021]. Available at: https://help.kickstarter.com/hc/en-us/articles/115005128594-Who-can-use-Kickstarter-
Mesenaatti.me. 2021. What is Mesenaatti.me? [Cited 17 June 2021]. Available at: https://mesenaatti.me/en/info/mika-on-mesenaatti-me/
Ministry of Finance. 2016. Why is the Crowdfunding Act needed? [Cited 18 June 2021]. Available at: https://vm.fi/en/-/why-is-the-crowdfunding-act-needed-
Ministry of Finance. 2017. Crowdfunding Act. [Cited 18 June 2021]. Available at: https://www.finlex.fi/en/laki/kaannokset/2016/en20160734.pdf
Wikipedia. 2021. Crowdfunding. [Cited 14 June 2021]. Available at: https://en.wikipedia.org/wiki/Crowdfunding
Indiegogo. 2021. Video Games. [Cited 14 June 2021]. Available at: https://www.indiegogo.com/explore/video-games?project_type=campaign&project_timing=ending_soon&sort=trending
Invesdor. 2021. Invesdor. [Cited 14 June 2021]. Available at: https://www.invesdor.com/en-gb/
Ria Gynther works as an RDI Specialist in Baltic Explorers -project at LAB University of Applied Sciences. She’s also the Vice-Chairperson of IGDA Finland.
Suvi Kiviniemi is a project specialist at Metropolia University of Applied Sciences, in game industry related projects. She runs the Living Game Intelligence Network, a support and mentoring network for game companies.
Illustration: https://www.pexels.com/fi-fi/kuva/kasi-raha-pitely-rahoitus-4968663/ (CC0)
Reference to this article
Gynther, R. & Kiviniemi, S. 2021. Basics of Crowdfunding for Finnish game companies. LAB Pro. [Cited and date of citation]. Available at: https://www.labopen.fi/lab-pro/basics-of-crowdfunding-for-finnish-game-companies/