Monday, June 25, 2012
Obama, crowdfunding and more
I've mentioned crowdfunding the the past but lately it has changed drastically as President Obama passed a new JOBS act which even got Republicans in on it. What the JOBS act is, is a form of crowdfunding. In other words, another way to raise money for movies.
Crowdfunding started a few years ago with websites like Kickstarter and Indiegogo. These website gave artists in any discipline a chance to raise money through what might be perceived as donations. Up to now it's mostly been artistic endeavors, anything from art to workshops or music and... movies!
Getting to the point here, what you (or I) could do was to register with the two big guys on the block, indicated above and give a total sum of money needed. Let's say it's $25,000 for a documentary on something interesting. You'd have to give details of your project, maybe some video or someone explaining the project.
Then you wait for people to put money into your project; anything from $10 to $1000 or even more. The rules were a little loose. However you cannot really touch the money until you reach your $25k. I think Indiegogo lets you take it out earlier but not sure.
Where does this money come from?
It comes from people who seem to like to put money into projects they like. Simple as that. They can be your neighbor, or a patron of the arts... there's no real rules. And if you go to Kickstarter, you can see for yourself.In return people can get t-shirts, a day on set, or anything else that might encourage them to throw down some cash.
I've seen film projects up to $350,000 and who have reached their goals. In fact the ones I saw exceeded their budget. And yes, they get to take that too. They were for documentaries with serious content.
I've always thought it would be good for a small feature costing maybe under $100,000 and have considered my screenplay The Casualties Of Love, would be perfect. That is if I did a rewrite.
But what Obama did is this; he made it bigger, the limit now is $1 million.
And of course, it's not as easy as before. For one thing you need to register with the Securities Commission (SEC) but that's not all that hard, in fact the laws governing investments $1 million and under have been loosened extensively.
So why are they changing it?
Well, politics for one thing, but also to help entrepreneurs get start-up money for a business, a restaurant, an idea or anything that might qualify. And it's open to anyone. Kickstarter and Indiegogo are primarily for the arts so those are the ones who I would deal with.
One other issue that comes up is that, until this new bill, crowdfunding donors didn't have any say in the project, nor any return on their money.
Going thru SEC there will probably be some kind of amendment to allow a return to the investor. This can be good or bad. You don't want 500 separate investors yammering at you about what they want. Yet you want their money and an incentive to get paid back will help. And even a profit. Maybe.
But this can be worked out fairly easily I think, thru a structure that gives the Producer, if the project is a movie, a clean slate to make the movie without interference. Or something like that.
So... take Ghostkeeper. I can now get a chance to raise around $650,000 or so for the movie and, combined with a small Canadian tax credit of maybe 20%, can total another $130,000.
While it sounds easy enough, it's not a slamdunk, the "investors" need to prove that they can afford to put $100 or even $1000 into a project, and that's done by them declaring their net worth, very similar to private and public offerings.
But I think, with the right project and some hard work it can happen. I'll work a little on this and check out all the bugs and holes in a future blog.