I was at a seminar this week that purported to be about the new EQUITY CROWDFUNDING, but sadly, the panel was populated by finance professionals whose disdain for those of us who are not “high end, high net worth” made the panel useless.
These types of professional fundraisers, coming from the status quo investment community, are not willing to acknowledge that the true value of EQUITY CROWDFUNDING is the escape from the expense, time and headache of pursuing Reg D exemptions and PPMs (“Private Placement Memorandums”). They collect monstrous fees to create those, so they have no respect for those who pursue crowdfunding as an entry to the financial world.
If you are not already familiar with the draconian and expensive process of raising equity investment (which means any ownership or expectation of financial return) to fund your movie, then you may not know that the process involving Reg D exemptions and PPMs costs tens of thousands of dollars before you can even think about raising $1 for your movie.
This is the biggest issue about EQUITY CROWDFUNDING that will affect YOU, the filmmaker: you will be able to skirt around those horrendous requirements and raise up to $1 million from investors.
Not only does the stance of those who cling to the professional investment pipeline create confusion in the marketplace, they also try to steer those who most need it away from the reality of crowdfunding.
It is profitable for them to drive you toward the old process of fundraising.
This brings up another issue that approaches us: the JOBS ACT calls for intermediaries that will behave similar to today’s non-equity perks-based crowdfunding sites. These new intermediaries will likely charge you to service your offering and present it to the public. BEWARE: this is a fast-growing area where many, many people are trying to crowd into the field, some hoping to get rich off the opportunity to merely serve as a go-between. As in any new endeavor, there will be a shake-out, but in the early days, some intermediary sites will obviously be more concerned with extracting money from you than they are in connecting you with new investors. Consider this a heads-up.
I wrote about EQUITY CROWDFUNDING and tried very hard to clarify and sort through all the details that get lost when being muddled by those who profit from the status quo, the old world that excluded most people from starting up their enterprises.
I need to do a follow-up article, and soon.
Here is something that is very critical to YOU, the filmmaker:
The SEC is currently accepting comments from the public that will affect their policy making. The JOBS ACT requires the SEC to formulate rules by the end of the year.
Those rules will have an immediate and direct impact on you. I am assessing what areas of concern should be brought to the SEC’s attention in order to protect the interests of filmmakers.
If YOU are involved in these matters, let me know what you think should be brought to the attention of the SEC, encouraging them to set rules that will benefit independent flmmakers.