If I had 500k I'd pay my mortgage off and save the rest. Setting up a small publisher needn't cost a lot - I'd rather run it on a shoe-string and build it up gradually than risk a lot of cash. In fact that's exactly what I am doing (apart from the 500k in the bank bit).
Zee 3 is the third business I've set up with my brother. Neither Z1 or Z2 cost a lot to set up and both grew to a significant size (Z2 was turning over 1million+). Both of them hit problems due to either work drying up or publishers going bust and and not paying. Thankfully neither Z1 or Z2 went bust but we 'sold' them to bigger companies which was a slightly more graceful exit. With Z3 we intend to keep it smaller - growing a company is actually pretty easy to do, just hard to maintain. I always raise an eyebrow when I see a game developer increase in size very quickly - they pretty much always collapse soon after.
Put it in a tax-covering investment account until the groundwork is layed out. Get a good bank manager and hire an accountant and solicitor who specialise in this small businesses, hopefully with media experience. Draft up detailed business plans, cash flow forecasts and the like and use it to approach additional investors. Analyse potential distribution channels and do your research. Incorporate to protect against bankruptsy. Purchase initial equipment, rent, bills. Design the first game outright, maybe the first two. Realise that you can't realistically code, design and run a business of this scale all at once, settle for a business/production role or hire a dedicated business manager. Hire staff and additional equipment only when needed and only when additional funding is likely. When the first game is 50% complete hire testing staff or outsource it. Work on the design phase for the next game now. When first game is 90% complete hire a good PR firm. Remember that you will probably need to provide updates for a game 6 months after launch.
Apart from stashing the cash in the bank, that's pretty much the exact opposite of what I would do (and have done). Not saying you're wrong but I couldn't operate like that.
Zee 3 is the third business I've set up with my brother. Neither Z1 or Z2 cost a lot to set up and both grew to a significant size (Z2 was turning over 1million+). Both of them hit problems due to either work drying up or publishers going bust and and not paying. Thankfully neither Z1 or Z2 went bust but we 'sold' them to bigger companies which was a slightly more graceful exit. With Z3 we intend to keep it smaller - growing a company is actually pretty easy to do, just hard to maintain. I always raise an eyebrow when I see a game developer increase in size very quickly - they pretty much always collapse soon after.
Put it in a tax-covering investment account until the groundwork is layed out. Get a good bank manager and hire an accountant and solicitor who specialise in this small businesses, hopefully with media experience. Draft up detailed business plans, cash flow forecasts and the like and use it to approach additional investors. Analyse potential distribution channels and do your research. Incorporate to protect against bankruptsy. Purchase initial equipment, rent, bills. Design the first game outright, maybe the first two. Realise that you can't realistically code, design and run a business of this scale all at once, settle for a business/production role or hire a dedicated business manager. Hire staff and additional equipment only when needed and only when additional funding is likely. When the first game is 50% complete hire testing staff or outsource it. Work on the design phase for the next game now. When first game is 90% complete hire a good PR firm. Remember that you will probably need to provide updates for a game 6 months after launch.
Apart from stashing the cash in the bank, that's pretty much the exact opposite of what I would do (and have done). Not saying you're wrong but I couldn't operate like that.