finance and funding issue 21

– . – Finance and Funding – issue 21

Finance and Funding – issue 21

We talk to those in the know about whether crowd-sourced funding is truly a viable source of film investment.

Danae Ringelmann
Co-Founder, IndieGoGo

Can you tell us what IndieGoGo does?
IndieGoGo is an online funding platform where anyone with an idea can create a campaign and raise money by offering perks [while] keeping 100 per cent ownership. We launched the site in 2008, and we’re now in over 150 countries, with over 17,000 campaigns.

Your main competitor is Kickstarter; how do they differ?
They’re bigger than us in terms of dollars, not in terms of campaigns. The difference between the platforms is we’re international and they’re US based only. We simply require you have a bank account anywhere in the world; we don’t curate and we don’t require an application, so we are an open platform in that regard. We have this thing called the GoGo Factor, which is an algorithm based on the level of activity of a campaign. This can include everything from the number of updates to activities driven by your community: funding, Tweeting, comments, sharing, posts to Facebook etc. The highest GoGo Factors get featured in our newsletter, on our homepage and in press promotions. That’s another difference; we promote on effort, not based on someone’s opinion. We also integrate with PayPal and credit cards to make it very easy to pay. We have partners in place with fiscal sponsorships; campaigns can raise funds and offer tax deductions if they want to, without paying a fee to the fiscal sponsor and to Indie GoGo.

So, can you offer investments?
No, that would be illegal. In the US you would have to register your film with the Securities and Exchange Commission, which is the investing oversight body. That alone can cost tens of thousands of dollars. If you are trying to make a $20,000 film and it’s going to cost $50,000 just to register it, it doesn’t make sense. You can go to private investors but you have to keep it offline. With crowd funding you are pitching to the world.

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Tero Kaukomaa
Producer, Iron Sky

Iron Sky is a 10 million-dollar, English language science fiction comedy about Nazis from the moon. The idea came from the team behind the zero-budget Star Wreck, [which was] released online five years ago and has over 8 million downloads. Iron Sky is going to be released in cinemas [in] 2012. For many years we had had a big community taking part in the production in so many different ways, [so] it was very natural to develop the crowd-sourcing funding aspect [by] being active online, in the markets and various conventions, speaking in various panels and answering questions from the media. Equity investment starts from 1000 euros, [and investors] receive an equity stake to recoup from the film’s revenue pro rata with all recoupable money, and after that a profit share pro rata to the production budget. And all for 10 years from the first release of the film. On top, there are different kinds of fan perks, like getting your name on the credits, meeting the director and cast, getting associate producer credit, etc. The investment possibility has been there since May 2010, and we have collected over 320,000 euros so far. As we just completed principal photography, and people see that it’s getting real, the amount of investments are rising. I believe we have a good change to collect the full 900,000 euros as targeted.

We have a four-person team concentrating on our viral activities, so there is a lot of work. But it has also paid off. Our traditional financing as a Finnish/German/Australian coproduction brought us 85 per cent of our budget, and we were fighting to find the rest until we succeeded with the fan investment scheme. I’m more than motivated to see that our investors will make their money back with a profit, because that will make it easier for the future. As I have seen so many people being ready to participate financially, I see so much potential for the future [of crowd funding].”

Yancey Strickler
Co-founder, Kickstarter

“Kickstarter is the largest funding platform for creative projects in the world. It’s an excellent resource for filmmakers and artists to fund their work and grow their audience. Film is our largest category by a pretty wide margin. We’ve had more than 1,500 successfully funded film projects to date, and they’ve raised well over 10 million dollars since our launch in April 2009. At this year’s Sundance Film Festival, there were five films that premiered which had raised funds on Kickstarter, including the incredible Pariah, which was picked up by Focus Features.

Zana Briski, who won an Oscar for Born Into Brothels, used Kickstarter to fund a photography project, Allison Anders funded her latest film using Kickstarter and we’ve had about a half-dozen Kickstarter funded films see theatrical release at this point. It’s a very strong community.