Game developers: Attention with stumbling block for game promotion

Attention game developers. Many studios are currently in the application phase for Germany-wide funding from the BMVI. However, there is one major weakness here.

Key Facts

BMVI promotes game development in Germany, but the response times are extremely long and the requirements are high.
Many developers are in the start-up phase and have submitted applications for computer game funding, but are in danger of failing due to the conditions.
Some studios have withdrawn their applications; the funding could lead to insolvencies in the industry.
A personal contribution is required, which can only be provided in the form of cash or bank loans.
Funds from investors only count as equity if they are declared as a company investment.
Project-related funds, such as crowdfunding or publishing contracts, are not sufficient for the funding guidelines.
Developers should carry out proper corporate planning to meet the funding requirements.

I also advise some developers who are in the start-up phase or have completed it in order to submit funding applications for BMVI computer games funding last year. Most of them continue to be on the ropes, as the Ministry’s response times are underground, the demands are high, and at the same time work may be done on the announced computer game titles, at least in theory.

Some have therefore also withdrawn the applications and it is to be feared that the promotion, which is actually to be welcomed, will become a disaster in terms of organization and will therefore also lead to insolvencies in the industry.

Another problem emerged in the recent past.

For example, one funding condition is that a personal contribution must be made. It should be noted, however, that this may only be evidenced in pure cash in the bank account or by bank loans. Oh investor money is possible of course or through constructions like slicing the pie (see my post on that here). However, it is essential to note that investor funds only count as equity for the purposes of the subsidy if they are generally intended as an investment in the company. Investment in individual products is not permitted or sufficient.

So-called project-related funds are to be considered third-party funds and deducted from the funding. I would imagine that this is not clear to many game developers. However, the BMVI under Andreas Scheuer recently clarified this once again. By the way, the same is true for funds paid under a publishing agreement with a publisher for a specific project or for funds collected through crowdfunding, e.g. via IndyGoGo or Kickstarter. These funds are all insufficient to meet the funding guidelines.

Here, therefore, it is imperative, if not already seen, that now, or for the next years and funding applications, a correct planning under company law should take place and the investment contracts should be formulated or designed accordingly. Under certain circumstances, there may be circumvention methods or constructions that allow money to enter the corporation that can still be used for funding.

Author: Marian Härtel

Marian Härtel ist Rechtsanwalt und Fachanwalt für IT-Recht mit einer über 25-jährigen Erfahrung als Unternehmer und Berater in den Bereichen Games, E-Sport, Blockchain, SaaS und Künstliche Intelligenz. Seine Beratungsschwerpunkte umfassen neben dem IT-Recht insbesondere das Urheberrecht, Medienrecht sowie Wettbewerbsrecht. Er betreut schwerpunktmäßig Start-ups, Agenturen und Influencer, die er in strategischen Fragen, komplexen Vertragsangelegenheiten sowie bei Investitionsprojekten begleitet. Dabei zeichnet sich seine Beratung durch einen interdisziplinären Ansatz aus, der juristische Expertise und langjährige unternehmerische Erfahrung miteinander verbindet. Ziel seiner Tätigkeit ist stets, Mandanten praxisorientierte Lösungen anzubieten und rechtlich fundierte Unterstützung bei der Umsetzung innovativer Geschäftsmodelle zu gewährleisten.