For those who dont know... my company is a video game development company. My business is still quite new, but I found getting finance for a startup very difficult. My best bet turned out to be equity.
The banks would lend me money, if I had security equal to the value of the loan. Now, since I dont have a house or mortgage, this meant it was a non starter for me. It doesnt mean they want you to match their investment, it means you need to have an amount of money, or the value thereof tied up in an asset, that you can cede control over to them until the loan is paid off. So say for instance you use shares as your security - this means effectively the bank controls your shares until the loan is paid off. Sames goes for any security a family member provides.
I also hear that the banks will make sure they get their money back if their business fails (hence the security I suppose). Ie, its not as simple as declaring the business bankrupt and walking away, you are still personally liable, which means bye bye security asset.
So that was a non starter for me, although I did seriously consider an FNB personal loan. I think I'm glad I didnt.
The other things I tried were Khula (never responded) and the IDC. The IDC said they would only consider financing me if I could prove that I could sell my game. In other words, a signed contract between me and a publisher. Naturally, no publisher will give me such a contract without a game, so that ended right there and then.
What I ended up doing is cashing in my pension. That, and use my shares, and final salary payout. It might not be enough money to actually produce my first game, but its enough to produce a large portion of it, enough to attract additional investment.
What has been very positive is that I met up with a guy who is an old friend of my uncle. He is a venture capitalist, and after discussing my business plan, he said he was interested in buying equity. It is very encouraging, that a venture capitalist, with lots of experience in looking at business plans, thought my plan was worth financing, even without seeing anything of the game. But I said to him, I want to develop a demo of the game first, and put it on the Internet, to see what the reaction is. That will let me know how well the game could potentially sell. Also, by then I will have a much better idea of how much money I actually need. And to be honest, I would rather not give equity away. My brother has a bit of money, and said he would finance my business if it came to that.
Its funny that I spoke with some colleagues who had experience in starting businesses, and most of them said the same thing - avoid giving away equity if you can help it.
