If you’ve ever stared at a term sheet and thought, “This looks fine… right?” you’re not alone. Money is (finally) creeping back into games, but the fine print can still kneecap a studio for years.
We wanted a clear, founder-friendly guide to the stuff that actually matters, so we brought in someone who reads this language for a living on our Devoted Speakeasy Ep. 37
Who’s Brandon?
Brandon Huffman, Managing Attorney at Odin Law & Media, one of the leading firms advising game studios on publishing and investor deals. He has negotiated across the table from names like Microsoft, Sony, Nintendo, Tencent, and Netflix, so he knows how quickly one sentence in a term sheet can change a studio’s future.
In short: he sees where deals go right, where they go sideways, and which sentences quietly eat your equity.
Publisher vs. Investor: Which Door to Open?
If you’ve got a single title that needs funding, marketing, or platform support, a publisher is usually the right choice.
Meanwhile, investors are best when you’re building a scalable business:
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A franchise (multiple titles in the same IP) -
A live-ops game with ongoing content and monetization
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Tools/technology other studios will buy (engines, pipelines, AI)
Why the difference? Investors chase scale and repeatable revenue, not one-off hits. That’s why AI and dev tools currently attract more venture capital (VC) interest than single titles. Tools can sell to many customers. A single game is binary.
Valuation & Dilution: Don’t Let Big Numbers Fool You
A sky-high seed valuation looks exciting… until your next round.
If you need more money later and the valuation drops, you’ve hit a down round.
Earlier investors then use anti-dilution protections to increase their share. You get diluted twice, by the new round and the old protections.
Founders often fall below 50% ownership faster than expected.
SAFEs vs. Convertible Notes
These are common at pre-seed/seed.
SAFE (Simple Agreement for Future Equity): money now, converts later into equity at the next priced round.
Convertible Note: technically debt, can convert to equity later and usually accrues interest.
Why does it matter? Discounts and valuation caps decide how much equity early money gets when it converts. Too generous = more dilution than you planned.
Anti-Dilution: Know the Two Terms
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Full ratchet: early investors reset as if they bought at the lower new price. Extremely punishing for founders.
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Broad-based weighted average: a partial adjustment. Still dilution, but survivable.
Control Terms: Where Founders Need to Push Back
Investors don’t want to design your characters, but they do want oversight.
Expect:
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Board seats (common at seed/A)
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Veto rights on big decisions (selling the company, raising new rounds, issuing new shares)
Game-specific twist: some investors want veto rights over publishing deals or licenses. That can block a partner you want to work with.
Strategic Investors: Double-Edged Sword
Publisher-affiliated or platform investors may ask for:
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Rights of first negotiation/refusal/match
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First look at sequels or future titles
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Regional exclusivity
These rights can scare future acquirers.
Founder Equity: Vesting and Buybacks
Even if you’re starting with friends, use vesting.
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Standard: 4 years, 1-year cliff.
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Milestone-based vesting ties equity to real progress.
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Investors may ask for re-vesting so the clock restarts when they invest. Push for timelines that match your dev cycle.
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Include repurchase rights so dead equity doesn’t block the company if someone leaves.
Drag-Along & Tag-Along
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Drag-along: if a sale is approved, minority holders can’t block it.
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Tag-along: if some shareholders sell, others can sell proportionally too.
Both are standard, and both grease the wheels of exits.
Bad Fit? Getting Rid of an Investor
There’s rarely a “kick them out” clause. Your options:
Buy them out.
Or bring in a new investor to replace them.
Choose carefully at the start. You’ll likely be living together for years.
Investor Checklist (Founder-Friendly Version)
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✅ Valuation you can grow from
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✅ SAFE/note discounts max ~20%, fair cap
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✅ Broad-based weighted average anti-dilution
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✅ 1× non-participating liquidation preference
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✅ Founder-majority board for standard decisions
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✅ Narrow, time-limited ROFR/first match rights
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✅ Vesting that matches your dev cycle
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✅ Repurchase rights for leavers
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✅ Capped legal fees
Brandon’s best reminders!
Bring in a lawyer early. Many defer fees until a round closes, so don’t wait until after you’ve signed. A few hours of expert review can save you years of regret.
Watch the full conversation in Devoted Speakeasy Ep. 37 to hear Brandon break down investor traps, valuation myths, and real-world examples from the games industry.
