Sugar Cap, a UK platform that provides flexible loans to gaming and app studios, has raised £1.5 million in pre-seed financing. Passion Capital led the round, which also includes Velo Partners as co-investor and some business angels, such as Victoria van Lennep of Lendable.
Sugar, which stands for “Scale Up your Games and Apps Revenue”, aims to help game and app studios grow without giving away equity. Based on live data analysis, Sugar provides financing to a studio, which is then re-paid over time by the revenues of the game or app in question. Sugar takes a flat fee and, depending on the metrics of the game or app, its financing levels can be increased as required.
It’s a financing model similar to what Clearbanc provides e-commerce merchants, and it’s proven successful for the Canadian firm. The AI-driven investor recently expanded to the UK and pledged to invest £500 million in British startups over the next year alone.
So far the fintech startup’s primary product is SugarBoost, a marketing loan. There’s also SugarFlow, which gives studios early access to their digital revenues, and SugarCap, which advances the studios their VGTR credits (video games tax relief, an HMRC rebate similar to R&D credits), which otherwise can take months to process.
Ultimately the company aims to onboard and finance any studio within 24 hours, thanks to the automated platform that will integrate with all points of a studio’s data, from app performance to credit checks and payments.
“We see Sugar fulfilling a crucial role in the European games funding ecosystem,” says Evan Hoff, partner at Velo.
The pre-seed round will primarily help grow the team. The company says it plans to build its platform and business in the UK, before expanding to Scandinavia and the US in coming years.