Washington Filmworks continues the conversation on crowd funding with the second in a series of 2 guest posts from Steve Edmiston. Here Steve discusses the JOBS Act (Jumpstart Our Business Startups Act). If you’re not familiar with the JOBS Act, the ongoing considerations of the U.S. Securities and Exchange Commission, and the potential impact on crowd financing, some links are provided at the end to help jumpstart your research.
So what’s really, really new and exciting? The JOBS Act. Wall Street realized that it hadn’t been invited to the revolution, and now it wants to join the crowd funding party. Investors will soon be able take the leap into crowd funding projects. President Obama signed the JOBS Act in April of 2012, and the SEC will soon issue the final regulations that are intended to allow companies to raise a limited amount of money by selling a stake in their business to a large number of investors – essentially, equity-based crowd funding. Personally, this concept appeals to me enormously. I’m much more excited about having my $50 buy a tiny piece of intellectual property pie, a long shot on the roulette table, than I am receiving my T-shirt and poster.
The scuttle is that Kickstarter (at least for now) is not jumping in with a platform for investors, leaving a potential competitor – Indiegogo or others – to fill the void. Some predict a proverbial gold rush of companies seeking to provide the preferred platform by which we will crowd fund our indie films (and bands, and gamers) as investors. Optimists even believe this type of grass roots commerce will help pull the U.S. out of its economic rut. While much has and will be written about every aspect of this evolution, I’m simply fascinated to see what we small contributors really, really, really want if given a choice in the marketplace for supporting independent films – swag, or piece of the action?
Observations (when it’s just too early to have “lessons learned”). Out of all the good, bad and ugly, two crowd funding themes keep rising to the top of my thoughts.
You must have a unique, compelling strategy to cut through the noise that is more than “a story that must be told.” Crowd funding is saturated, and the numbers tell us it’s going to only get worse. The gold rush is over. There is no “get rich quick.” Hard work and talent is required to rise to the top. But that is not enough. You need a marriage – a viable connection to a hook beyond merely a good idea + talent, to stimulate your potential funders. My two favorites:
- 1. You must preach to a choir. Locally, as reported by WF in an earlier blog post, JourneyQuest succeeded because it was not a cold call offering to an unprepared consumer – the producers had already built a fan base that hungered for more product. Jumping on the JourneyQuest bandwagon was virtually essential to the JourneyQuest fan base. It is impossible to suggest the success is replicable without first bringing a similar fan base into the campaign.
- 2. Think about crowd funding after you’ve found some metric of success (or, have your “proof of concept” already). The film Fat Kid Rules the World was already produced, had a passionate, recognizable director in Matthew Lillard, had already succeeded on the film festival circuit, and had a unique vision when it determined to launch a campaign centered upon finding or building a better distribution strategy. Again – the success is borderline irrelevant to anyone that is not observing the obvious – FKRTW had a hook and a fan base, and it had an award winning film that was already made. Jumping on that bandwagon was easy.
Remember (or discover) what William Goldman said. Goldman’s an icon. The man’s IMDB is legend, and includes two of my top ten all time films: Butch Cassidy and the Sundance Kid and The Princess Bride. Goldman’s book about Hollywood, written in the 1970s, “Adventures in the Screen Trade”, is still required reading (including my classes at SFI and the UW). He coined the term “Nobody knows anything,” which he applied to all of Hollywood – his belief was that there was no way the powers that be could predict or guarantee success. It just wasn’t possible. And I found this concept absolutely comforting, even inspiring, because I was being told I didn’t have to buy what any establishment was selling me. I think the phrase applies to crowd funding today – we just don’t know. In that vein, I find it fascinating, troubling, and perhaps ironic that Indiegogo – a significant brand name in crowd funding – did not crowd fund its own quite recent growth-financing round in June. Instead, it raised $15 million the old fashioned way, from two venture capital firms. I’m not sure why this bothers me – perhaps the concept of failing to succeed at navigating its own business model to raise money was just too horrifying for Indiegogo to contemplate. But it smacks slightly of the “those that can’t do, teach” cliché, or the Barnes & Noble business self-help books by authors that haven’t engaged and succeeded with their own secrets to success.
So nobody knows anything. Still strangely comforting, particularly when you’re handing me the axe for the first time.
This guest blog post, and its predecessor, Some Crowd Funded Growing Pains, were written by one of our local “crowd funding experts”, Steve Edmiston, who is with Invicta Law Group, where he focuses 26 years of experience for his business, IP, and entertainment industry clients. He is a screenwriter and producer, with feature films including Crimes of the Past, A Relative Thing, Farewell to Harry and has also written and directed multiple award-winning shorts, including local favorite The Day My Parents Became Cool. Steve teaches at the Seattle Film Institute and the University of Washington and can be reached at sedmiston[at]invictalaw.com.
- Jumpstart Our Business Startups Act (JOBS Act)
- Quickly adapting to crowdfunding laws
- Crowdfunding sites prepare for equity-based investments
- Jumpstart Our Business Startups Act (JOBS Act) Frequently Asked Questions About Crowdfunding Intermediaries
- The Future Now: Crowdfunding Won’t Wait For The Jobs Act