Lionhead secures new venture capital

British development group Lionhead Studios has announced that it has signed a deal for several million pounds of investment from a consortium of venture capital groups, which will be used to fund future product development.

Ingenious Ventures, IDG VE and Add Partners are the companies providing the new funding to the Guildford-based studio. Financial details of the deal have not been announced.

"Capital investment is necessary for any development studio wanting to create triple A titles and previously it has been the industry norm for this investment to come from publishers," explained Lionhead CEO Peter Molyneux.

"However, we were attracted to a different source of funding as we felt this would give us more flexibility for future product discussions with publishers," he concluded.

The new deal comes as Lionhead's latest title, Xbox exclusive RPG Fable, has just proven itself a massive success at retail - with over 1.2 million copies of the game sold since it arrived in the USA under a month ago.

Fable, which was co-developed by Big Blue Box under the Lionhead Satellites programme, is the second game from the group, following on from two-million seller Black and White. Four more titles are in development at the moment - including Black and White 2, BC and The Movies - with two of them set to be released next year.

Lionhead's decision to acquire venture capital funding will give the company a much stronger position in contract negotiations with publishers, and will also silence - for now, at least - persistent rumours that the firm has been looking into the possibility of a flotation on the London Stock Exchange.