To Edinburgh or bust: What is it about the Edinburgh Festival that makes beggars of aspiring stars and debtors of successful companies? Caroline Donald canvasses opinion from the great and the would-be-good

'THE REVIEWER from the Independent said he quite liked the play I put on last year, D Minus, but it never made the paper,' says Kevin Madley ruefully. Nevertheless, later this month Madley will be back at the Edinburgh Fringe Festival for the third time; he has written two one- woman plays, to be performed by a new company, Table & 2 Chairs, formed with the Festival in mind. 'I go to Edinburgh partly to be part of that large arts scene and also, hopefully, to become famous - it's a small chance but you never can tell]'

Madley is far from being a solitary dreamer. Funding and sponsorship may be thin on the ground this year but the idea that the streets of Edinburgh are a path to theatrical fame (if not fortune) is almost universal. Even in the dark days of recession, there are 540 companies listed in the Fringe programme, all hoping for the golden light of good reviews and packed houses to shine upon them. For this anticipated glory, Madley, and others like him, are willing to sacrifice considerable amounts of their own money.

Madley is taking time off from his job in Her Majesty's Oil Taxation Office in order to spend a week on the Fringe. With the efficiency and forward-planning one would expect from a tax inspector, he arranged his accommodation in the University's Pollock Halls of Residence last October and booked his venue (No 45 in the Festival programme) last December. He reckons on spending about pounds 1,500 at the Festival: 'I'm completely self-financed - it's me taking a gamble on losing as little as possible.'

Even if the show is a hit, Her Majesty will not be losing one of her inspectors. Madley sees the Festival as a way of getting his name known, so when he sends a script to agents they stop and take notice, 'rather than just consigning it to the bin'. It may be his experience of dealing with other people's earnings that makes him realistic: 'I don't think there is any possibility that I could make sufficient money from working in the theatre. I won't give up my day job.'

That is exactly what Simon Hardeman did do five months ago, in order to pursue a career as a stand-up comic. He is financing his trip to Edinburgh with money he managed to save from his previous incarnation as a journalist. Hardeman has joined forces with Spike Breadwell to produce a show with the dubious title of On the Toilet with Shergar, which includes jokes about 'Jesus on dope' and 'urine, vomit and public transport'.

Choosing a venue is more complicated for Hardeman and Breadwell than for most, as Breadwell is wheelchair-bound. In the end, they plumped for Southside Community Centre (Venue 82), 'the one we would have wanted anyway,' says Hardeman loyally. Finding accommodation for Breadwell was a problem too, as he needs assistance getting out of bed. He is spending three weeks in a special hostel run by a charity, which will cost him pounds 1,000. Luckily, a charity grant will cover much of the cost.

Hardeman and Breadwell are not expecting to earn their fortunes at Edinburgh but are using it as a 'shop window' for their act. Even for the larger companies with a three-week run in the prestigious Assembly Rooms, such as Red Shift, going to the Festival is a financial risk. Last year, after a three-year sponsorship deal with Beck's beer and a Festival sponsorship arrangement with Invergordon whisky came to an end, Red Shift gave Edinburgh a miss, along with Communicado and Trestle theatre companies.

However, all three companies are back again this year. Despite the lack of a backer, Red Shift believes its decision to go it alone is a risk worth taking. 'You can't just look at it financially because the knock-on effect is good,' says company administrator Deborah Rees. 'The fact that we are doing Orlando (an adaptation of Virginia Woolf's novel) in Edinburgh this year might make it easier for us to get bookings for our spring tour; there are lots of ways in which playing Edinburgh can pay off. We missed the publicity last year.'

Fringe venue economics are ruled by quantitive rather than qualitive considerations. 'This year is the most expensive yet,' says Vivienne Glance of Count of Three theatre company. 'It costs twice as much as a fringe venue in London. For pounds 800, we get a two-hour slot for one week (at venue 41), whereas in London we could get all day for two weeks for that money.'

Glance's show, Into That Clear Place, features public figures (Colin Moynihan and Woody from Madness to name but two) being interviewed by on-stage telephone, against background video images. She invested a lot of energy and money in her search for sponsors, but to no avail. She even approached advertising agencies, suggesting they run their advertisements on her monitors as an integral part of the show. 'The main problem is that people think you are begging, however much you offer them in return in terms of publicity and product placement.' To help cover costs, the company will be selling the second-hand televisions used as video monitors after the show.

Stephanie Sybliss's Theatre Noir is getting its first airing in Edinburgh, plunging into the deep end with a story about black lesbians, Basin. Not only is she administrating the company and acting in the play, she has put the money up herself, with the help of a friend. She is going to Edinburgh in the hope of meeting people who will fund future projects for her all- black company 'because, after this, I will probably have a huge overdraft]'.

Dody Nash, an 18-year-old second-year student at York university, is administrator for Sinistra theatre company (at Venue 6). 'We got no support at all from the university, though we got an educational grant from York Children's Trust. A friend's father gave us pounds 100 and we raised pounds 493 from performances at the university and York Arts Centre. Other friends gave us pounds 15 each.' Nash and her company are sleeping in friends' flats dotted around Edinburgh.

'We've got a two-bedroomed flat and about 17 people are sleeping in it,' says Robert Deering of Thame Youth Theatre. 'Each person is paying for it, like a holiday, about pounds 80. Being quite a young cast they are getting it from their parents or are working for it.' As the company has found sponsorship, Deering can afford to relax and confess to what the true reason for visiting Edinburgh is: 'I hope we can do justice to the play, but basically we hope just to have a good time.'

The Edinburgh Festival begins on 16 August; comprehensive daily coverage of the Festival and Fringe begins on 17 August.