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The legal landscape of gaming company financing rounds

By Timo Skurnik
Published: 14.02.2023 | Posted in Insights

The financing, sale, and exit of a gaming company are complex and nuanced processes that involve various legal considerations. The following article outlines the key aspects to be aware of when engaging in such a transaction.

Financing of a gaming company

In the gaming industry, obtaining financing can be a challenge due to the inherent risk associated with the sector. While there have been several successes in recent years, particularly in Finland, such as Supercell or Rovio, there have also been several failures in the games sector. Due to its global nature, the gaming industry is extremely competitive, and success there requires not only an excellent product but also luck, expertise, and funding. There are many financing options available to game companies, including debt financing, venture capital, and angel investments. In addition to these, game companies can also access funding from public sources such as Business Finland.

Debt financing refers to the borrowing of money from banks or other financial institutions. This form of financing is typically secured by the assets of the gaming company and requires the repayment of principal and interest over time. However, a start-up gaming company rarely has significant assets, so obtaining debt financing from sources other than public funds can be very difficult.

Venture capital is another option for gaming companies looking to raise funds. This type of financing is provided by investment firms that specialise in providing funding to start-up companies. The investment is typically made in exchange for equity in the company. There are many venture capitalists specialising in the gaming sector worldwide, but not many in Finland.

Angel investment refers to the investment of personal funds by high-net-worth individuals into start-up companies. This form of financing is typically in exchange for equity in the company. For a start-up in the gaming sector, angel investors are often the most common source of funding, in addition to public money.

Regardless of the form of financing sought, gaming companies must comply with all relevant laws and regulations. It is also often useful to have the advice of a knowledgeable and experienced legal advisor when negotiating the deal.

The financing round of a gaming company

The financing round of a gaming company is a critical aspect of the company’s growth and development. The following is a legal perspective on the steps involved in the financing round of a gaming company.


Before engaging in a financing round, a gaming company should conduct a thorough review of its financial and operational status and consider its future growth prospects. This will help the company determine the amount of funding it requires and the type of financing it should seek (e.g., debt or equity). The company should also prepare its financial projections and projections of its future performance.

Legal Review (Vendor DD)

Before entering into a financing round, the company should conduct a legal review of its existing contracts and agreements to identify any potential legal or regulatory restrictions that may impact its ability to raise funds. In addition to contracts, it would be advisable to check, inter alia, the level of IPR protection, data protection issues and any mandatory legislation. This legal due diligence can also be thought of as a limited due diligence of the company.

Negotiation of the letter of intent

The financing round usually starts with the negotiation of the letter of intent. A letter of intent is a non-binding agreement in which the parties can agree on issues such as the amount of financing, the valuation of the company and the exclusivity of the investor. Although a letter of intent is in principle a non-binding agreement, in practise it is challenging to deviate from the letter of intent at later stages of the process. It is therefore advisable to go through the letter of intent with an experienced advisor. For example, the terms relating to the valuation of the company can often be challenging, even for an experienced person.

Due Diligence

Prospective investors will likely conduct a due diligence review of the gaming company prior to investing. This review will assess the company’s financial, operational, and legal status. The company should prepare for this process by gathering and organising relevant information and documents in advance. A well-organized data room will also improve the company’s chances of obtaining financing.

Negotiating the Investment Agreement

Once the due diligence has been completed and the investor is satisfied, the investment contract can be negotiated. The agreement sets out the terms and conditions of the investment, including the amount of the investment, the ownership structure, and the rights and obligations of the parties. If the investor makes a capital investment, the investor will often also require a new shareholders’ agreement to be drawn up, which will contain a number of conditions protecting the investor. The main terms of the investment agreement are usually already agreed upon in the letter of intent. In addition to investment agreements, other agreements may be concluded, such as a shareholder’s agreement and new director’s agreements, if the investor makes an equity investment.


Depending on the terms of the investment, the parties may agree at the time of signing that the investment contracts will only enter into force once the conditions listed in the contracts have been met. These conditions may relate to regulatory approvals, financing, or corporate approvals. Once all the conditions have been fulfilled, a separate closing ceremony is usually held, where the parties can confirm that the conditions have been met and the money has been transferred. A separate closing protocol is often drawn up for the closing.

Throughout the financing round, the gaming company should engage experienced legal counsel to assist with the drafting and negotiation of legal documents, the review of existing contracts and agreements, and the securing of approvals.

Read more about our M&A services and our knowledge of the legal aspects of the gaming industry.

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Timo Skurnik
Attorney, Partner, Helsinki +358 41 523 1143

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