LionHead studios, the firm best know for the series Black and White and more recently the Xbox hit Fable, have raised an estimated £7 million ($12.6 million) to help fund the development of several next generation console titles.

The money was raised by a syndicate of private equity firms comprising of IDG Ventures Europe, Ingenious Media and Add Partners, in exchange for a large minority stake in LionHead.

The owner, Mr Molyneux, said that the extra capital would allow LionHead to develop its forthcoming games to more advanced stages and will also allow the company to strike more favourable deals to publish the games, he said.

Mr Molyneux aims to retain ownership of the intellectual property (IP) that lies within the games, allowing the company to earn more revenue by adapting them for use on different platforms such as desktop computers and mobile phones.

“If you lose your IP then you become a production facility, not a creative studio,” Mr Molyneux said. He said the additional funds were also necessary to produce compelling games for the next generation of console machines.

These will include PlayStation 3 and Xbox 2, which are expected to be released in the next 18 months.