A great idea is just not enough. A developer might have a breakthrough idea to teach a child to read, instill a better sense of history, or help a struggling student understand math through a game. But for the game to be made, let alone produced and marketed, there is the need for money.
That said, the variety of sources for funds has evolved. We will document ones we uncover and help guide you through your options should you be ready to take the next step and seek capital to produce an educational game.
Angel funders, online campaigns, accelerators, venture capital firms, foundations and government agencies all are potential sources of funding.
Each of these types of funding has their own pros and cons as well as other things to consider. For the experienced producer, the basic information will be familiar, but we are also compiling specific organizations in each sector to consider approaching if you are seeking funding for an educational game.
Angel funding usually comes during the earliest stages of development. This funding can come from formal angel funders or from family, friends and colleagues and often helps buy the core team enough time to develop their idea into more of a formal pitch or prototype.
It is a fairly straightforward deal: the angel investor buys a piece of your idea or business. Generally, these funders are looking to get in on the ground floor of a business, expanding its growth opportunity and earning income by seeing the company grow.
“Angel investors give you money. You sell them equity in the company, filing the investment raised with the SEC,” writes Entrepreneur Magazine. “Angel investments commonly run around $600,000. Most investments rounds also involve multiple investors, thanks to the proliferations of angel groups.”
The strong pitch to an angel funder highlights the market you hope to enter, the soundness of your idea and business plan and, often times, the social good aspect of your product. But that all depends on your funder. Many angel funds are individuals looking to make an impact or turn a profit and so homework is key.
There is no single list of all angel funders, but the Angel Capital Association is a decent list to start with and AngelList also details current funding sources and their larger network and projects.
Forbes also has a good to-do list to go over if you think angel funding is the right route for your project.
Microdonations and large-scale social fundraising have created new opportunities for companies and ideas to demonstrate “public” support and interest. To succeed on these platforms, you must understand the potential people you can reach and what about your project would interest them.
Unlike VC or angel funders, crowdsourcing is built on the idea itself and its ability to appeal to a sector of the public who will support that idea. Educational games are a natural fit for this, but thus far there have been few large-scale crowd-sourced projects (although that is not to say there haven’t been any — we’re looking at you, Robot Turtles).
The crowdsource pitch depends on the community you intend to appeal to and the message you want to stress. One thing that can help encourage donations is to operate as a non-profit, thus allowing contributors to write-off their support on their taxes. This is not a requirement, but has helped some draw larger bases of support.
Another technique is to attract matching funds or support that kicks in if the idea draws a certain number of supports or reaches a financial threshold.
Yet another idea is to offer premiums to donors a la public broadcasting. If your idea is quirky enough or the premium hip enough that can also attract donors.
But once you have created the pitch, another trick is to find a wide enough network to attract the donations needed. There are multiple routes for this, including direct appeals via your social networks, writing to groups and organizations that may support your idea and plugging into other networks.
An example of the last one would be the newly minted “Collective” from the Japanese game developer firm Square Enix. Collective vets initial pitches and then puts them out to their community. Pitches that users support then get special promotion and assistance setting up a crowdsource page at Indiegogo.
Although some worry developers have gone to the crowdsource well too often, stats from Kickstarter appear to indicate otherwise. According to Kickstarter’s 2012 statistics, more than 900 of about 2,800 video game-related projects were funded during 2012, bringing $83 million in funding from 1.4 million pledges
Many accelerators have cropped up in recent years that either focus on educational technology or gaming. As a result, many new and existing firms have started using these hubs as a way to fast-track a new project or launch an independent developer operation.
Accelerators usually have an open application period where they receive and vet pitches from companies. Those that are selected are often offered office space, collaborators to assist with the technology and a seed grant of between $20,000 – $60,000 to ramp up the company or product.
Most of these operations are for-profit and set a deadline for “graduating” from the accelerator.
Many of these accelerator’s see themselves as investing in organizing a team to develop and launch a new product. In fact, when asked about the recently organized Kaplan EdTech Accelerator, Don Burton, a senior member of the Techstars team that worked with the first group of companies could not have been clearer.
[W]hat we look for in a company that applies to get into the accelerator:
Market size/ market potential
Don Burton, TechStars
If you are considering approaching an accelerator, it is important to do your homework. Have they supported your type of project in the past, are they open about their successes and failures, are their terms fair and above-board?
Most accelerators do not focus solely on educational games, but Kaplan’s project and the new Co.Lab from Zynga and the New School Venture Fund are two that are focused on education and technology and have supported games already.
Over the coming weeks, we will be talking with VC firms, foundation program officers and former federal officials to get the best insights, tips and destinations to make your decisions about where to pursue funding the best that they can be.