‘Gambitious’ To Launch In March: Equity-Based Crowdfunding For Indie Developers

A new portal has just been announced for indie developers to find funding for their projects – unlike others though, the investors actually take a share of the profits depending on how much money they put forward.

Gambitious is a fusion of “games” and “ambitious”, although we immediately thought it was “gamble” and “ambitious”. The guys behind this new start-up, just announced today, were quick to correct us on that one.

It seems to be of no coincidence Gambitious pops up out of the bedrock just a few days after Double Fine’s Adventure made over $1,000,000 in just 24 hours through a Kickstarter campaign. They certainly seem to have their finger on the pulse; announcing their project which will launch in March while everyone is still in debate over the potential of crowdfunding for game developers as an alternative to publisher support.

Gambitious is something a little different to the likes of Kickstarter though – it presents crowdfunding in a manner very similar to the stockmarket, including the buying and selling of shares. This brings along the idea of risk as well as reward to the investor. Essentially, investors pay for a share in the game’s profits (a literal share) with the understanding that they could lose their money if the game is not successful. However, the hope is that the game will make money and will offer a big return for the investor. Investments can be made from as little as €20 for each investment unit (share), to as much as €2,500,000 – so you can see that the intent is to cater for these much bigger projects, ones that would normally require a publisher to succeed.

It is for this reason that we are instinctively led to believe that this model of investment will not be of much use to smaller developers still. Investors are going to want to be very careful with their money if there is a potential of actually losing it. That potentially means that more established developers and projects with a proven track record behind them are going to be of a bigger appeal. Plus, the bigger projects – like the Double Fine example – are going to return more money to the investor, if that’s what you care about. We’re still a little bit uncertain on the whole idea basically.

To help sway our decision, we spoke to Paul Hanraets of Gambitious to flesh out the new investment model – you can read his responses below:

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IGM: How would the funding system work mechanically? Presumably a developer would pitch through a portal on your site and then receive the funding from there, like Kickstarter?

Paul: Yes. When game studios register their project (the “Proposition”) at GAMBITIOUS, they indicate how much capital is required to fund their project and the equity they offer in return. Potential investors (visitors, members, fans) search the platform for compelling game propositions with promising outlooks. These Investors acquire units at €20 per share which cumulate until the studio has secured their funding target. Members place their stake through the GAMBITIOUS payment platform which accepts a variety of well known payment methods.

GAMBITIOUS uses a secure and dedicated bank account for all investments on the platform protecting the funds until the capital requirements have been reached. Only when the funding goal is met the transaction is executed, ensuring that investors receive their equity stake and the studios receive the financing to support their game projects. The individual investments are converted into a single investment vehicle, a new legal entity designed for the purposes of making the project investment. Each investor owns a stake in the new legal entity (the investment vehicle) in the proportion of their investment to the overall investment amount. The process occurs online and once completed, the studio and investors are granted access to a secured online collaboration community

IGM: What happens when a project reaches its funding goal?

Paul: Once the target capital of a project has been reached the project will be closed for investments, and investors will not be able to reallocate their investments. Depending on several settings, the project will then be scanned by BDO (BDO is the leading accounting and consulting firm for medium sized enterprises in the Netherlands). This Quick Scan will scan the business plan and the underlying assumptions. The results will be published in a report which will be made available to the investors.

IGM: Does a certain funding limit have to reached before the money is transferred to the developer, as with Kickstarter?

Paul: The invested capital is securely held on a bank account, and will remain under the supervision of the GAMBITIOUS (Symbid) trust foundation. When a project has reached its target capital, and the entrepreneur’s legal entity has been established, the invested capital (minus GAMBITIOUS success fee of 5% of the total investment) will be wired to the entrepreneur’s legal entity.

Due to our EMI license we can offer investors the opportunity to redeem funds that they have transferred to the platform (at any given time.)

IGM: Is Gambitious available to every country around the world or is it limited to certain regions?

Paul: No, we are working hard to make GAMBITIOUS available worldwide. GAMBITIOUS makes use of an EMI license. This allows GAMBITIOUS to offer her services to investors and entrepreneurs throughout the complete EU-zone only by sending notifications to central banks. Through the EMI license GAMBITIOUS can offer investors the opportunity to redeem funds that they have transferred to the platform.

An Electronic Money Institution (E-Money Institution) is an undertaking that has been authorized to issue E money in accordance with the Regulations referred to below. Directive 2009/110/EC of the European Parliament and of the Council on the taking up, pursuit and prudential supervision of the business of electronic money institutions [the ‘Directive’] was signed on 16 September 2009.

The EU-zone
The European Union is composed of 27 sovereign Member States: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.

IGM: We noticed that you had many digital platforms listed on your website – do you have any tie to them, are their related benefits for developers who use your crowdfunding system?

Paul: No official ties as yet and thus no direct benefits. For now we are focusing on the development of our platform and service in bringing developers and investors together.
The digital platforms are more than welcome to contact the successful developers on our platform directly.

IGM: Once an investor has put their money upfront, is there a chance that they could be at a loss, presumably if the game makes no money?

Paul: As with all investments there is a risk involved. If a project doesn’t deliver, is not sufficiently marketed, or can’t compete effectively in its industry, then chances are that your investment will result in a loss.

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Paul also gave us a portion of the FAQ to answer any further questions:

Can I still invest in a project after the required capital has been met?

No. After the threshold (funding target) has been reached the project will be closed and you can no longer invest. However, you still might be able to buy shares from other investors. After closure, investors are allowed to offer their shares to other investors or users. GAMBITIOUS will shortly offer a marketplace that will regulate and support these transactions automatically.

How do I offer my shares to others?

Once you have acquired shares in a project, and the project has been completely funded, you are able to offer these shares to other investors. First you need to offer the shares to your fellow investors before you are able to offer them publically. GAMBITIOUS will shortly offer a marketplace that will regulate and support these transactions automatically.

Are there any requirements a project submission must meet?

Yes. First of all, there is a minimal funding target, which is set at € 20.000. Secondly, GAMBITIOUS operates in a creative industry which is home to new companies as well as wild ideas, and must therefore set a standard. And while GAMBITIOUS prefers project proposals from renowned studios or seasoned development teams with an established track record, anyone with a development team, an innovative project, and a strong and realistic business plan is free to apply for submission. But to maintain that high-quality standard, GAMBITIOUS reserves the right to refuse any project.

How do I get a financial return as an investor?

Gambitious encourages you to invest in projects you find most promising, or that seem to give you the highest return on your investment. As an investor there are two ways in which you can receive financial returns. As an investor you’ll receive dividends over the amount of shares you own. You can also exit by selling your shares to others. By selling your shares you can profit from value creation within the company.

Gambitious is due to launch some time in March, you can visit the official website here but at the moment it contains no further information than what we have here for you.