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And also thanks for the spreadsheet btw.
If the people you are working with are as reasonable as you, then your agreement can be less detailed. If you have any reservations, put down every detail possible on paper for reference later. Being proactive avoids the likelihood of needing a lawyer. Lawyers are the only ones who win in civil court.
I always want something on paper. I'm surprised by how often I forget the exact deal we agreed on 6 months into the project.
So far when dealing with a project that involves multiple people I have always gone with the approach that you just divide things equally. My viewpoint is that at my level I won't be gaining much by getting a bigger slice and stand to lose the interest of my partners. Also, if I learn nothing from my work and this current project will be the best I will ever do, I never deserved more than equal share because the success was a fluke.
Since my funding is always $0 I like to reserve 50% of the equity for the budget which is only payable by team members. If we have to spend $1500, I don't want to be the one contributing all of it. I want to make sure it is worth everyone's while to pitch in financially. If I do have to contribute it all then I will be glad to take the lion's share of the profits.
I think the biggest thing that needs to be agreed upon is what happens when a partner bails on the project and when can partners kick each other out for non-contribution as unfunded projects tend to run into that a lot.
I would be interested in reading more about the finer points that are often overlooked in more general articles.
One other interesting factor is Skill Equity, what if the tasks you are doing are the ones that require the most skill? i.e. accounts, website programming, and the others are making the tea and doing the post etc. Well again you may need to adjust the equity to take that into account. Sometimes you think you'll all be using equal skills but it doesn't always turn out that way.
On the other hand, I am working on a project where I am TRYING to put in the most effort because the other guy is doing stuff way beyond my level of experience and if that fell on my shoulders there is a chance the project would have to be abandoned.
I need help asap.
1. Value the team at a low-ball 100k a head?
2. Value the Company at $1M for the name and contacts?
3. Value the IP at a cumulative, expected publisher net (since we would own the IP), with a modest 300k sales projection for the first title, followed by a modest 400k sales projection for following titles on same IP? Or, better to value at Gross? Not cumulative, rather last sale? ??
Thoughts?
Thanks,
Dan
Thanks for the response.
We are a developer. By modest sales projections, do you mean high or low? Sure, anyone can say it, but by even the shrewdest of assessments for this type of game and development team, 300k is comically low. I suppose we could be even more generous and valuate for 150k units sold? Keep in mind, I have done products for PS2 with both critical acclaim and commercial success (awards / over 1M units sold) so I'm not just tossing notions in to the air here.
I have seen too many good studios ruined by publishers, given that the publishers are the only ones holding the purse strings. I much prefer a model like High Voltage, where the developer can retain their IP and drive a solid deal with the publisher. Further, would like to make a proper game to match the new landscape of gaming, but where the publisher is much slower (and more cautious) and is only willing to put down a low amount to make a quality title (under-fund the project and hope for the best) with "risky" innovation.
Investors will be paid back through royalties. The risk will be made quite clear up front (you could loose it all!). IMV, "independent" means not wholly reliant on game publishers, and where I retain 51% ownership.
Imagine all the studios and products that we know and love, that would NOT exist, had they all depended solely on movie studios and game publishers... As you know, the risk is part of what drives early stage investors, as the rewards tend to be higher, if achieved.
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Happy to talk further on this, but would love to hear thoughts on valuation.
I'm no lawyer myself, but I'd much rather have that piece of paper to prove I hold copyright over my team's work in case I need to use those copyright protections for any reason. Since you can get registered copyright in the US for $35 now if you do it online, it's very inexpensive to get some very good benefits, including having your attorney's fees paid for you if you win a lawsuit over your registered copyright. However, you have to actually own the copyright to whatever you're registering. I don't know much about the validity of their contracts, but LegalZoom offers a lot of relevant contracts about these things for $15 or very close to it.
Just did the company divide, and the next step (in some cases / my case) is the stock value price for investors... hence, thought folks here might have that followup. Seems maybe no...