How Can I Equity Crowdfund my First Film?
As an independent filmmaker, you’re really in the best time ever when it comes to raising capital that is needed in order to produce a feature film. Now more than ever before, there are more opportunities than there ever were to raise various forms of capital that can be used for the purpose of producing your own first film. Establishing crowdfunding is one of the key areas of financing for independent filmmakers. But if you’re new to the industry, you might be wondering. How can I equity crowdfund my first film?
Crowdfunding provides access to film funding that previous generations of independent filmmakers could only dream about. But just because there are crowdfunding platforms like GoFundMe and Kickstarter, Indiegogo and Seed&Spark.
It does not mean that you’ll just magically gain all the attention you need to raise the capital you desire. If you’re going to crowdfund your first film, you’re going to have to work at it!
Understanding Equity Crowdfunding for Film
First, you need to learn how film financing works! In short, film equity financing is one of the key areas of raising capital for a film production. It involves having investors contribute monetary donations to your production.
In exchange for some percentage of ownership or interest in the film or in the profits that come from the film. Thus, equity crowdfunding means that you raise capital for a production through a crowdfunding platform.
Such as Kickstarter or IndieGoGo. In which you sell securities such as shares of your film.
How Much Capital Can I Raise?
Like any form of crowdfunding and anytime you raise capital, the sky’s the limit in terms of what you can achieve, but only if you’re willing to work hard!
Equity crowdfunding campaigns can raise up to and over $1M in investments if it’s done right, but chances are. You’re going to need some assistance!
Plan Diligently
Before you jump to your computer to start your campaign, you’re going to need to think long and hard about the process. Independent filmmakers must be prepared to face the idea of equity crowdfunding the first film with grace.
Don’t try to do it all at once and certainly don’t get involved before speaking with an attorney!
Before you can raise a dollar, you’re going to need to make sure that you’re following appropriate Securities and Exchange Commission regulations.
SEC Regulation D
Fortunately, for independent filmmakers, there are some loopholes available that can limit the time and money that is required to register your securities sales with the SEC.
Otherwise, equity crowdfunding, or equity funding through the sale of shares probably wouldn’t be possible for the typical filmmaker.
The SEC provides several exemptions from registration through Regulation D. These exemptions are important for filmmakers to understand because one or more of them may apply to you!
Thus, familiarize yourself with the following:
- SEC Regulation D, Rule 506 (b)
- The SEC Regulation D, Rule 506 (c)
- SEC Regulation Crowdfunding Law
Crowdfunding Law
The Crowdfunding Law is probably most important if you’re considering a crowdfunding equity campaign for your first film. Under this rule, startup businesses may raise up to $1.07M online through family, friends, and followers that are both accredited and not accredited.
As long as it is done through a crowdfunding website that is registered with the SEC. Thus, you can likely raise a lot of capital this way. And will be exempt from registration with the SEC in the process. A double win!
How Crowdfunding a Film Works
As we help you navigate the common question, “How can I equity crowdfund my first film?” It’s important for you to gain not just an understanding of what equity crowdfunding is.
But also what the rules are in regards to the SEC and also what the rules are for the crowdfunding platform that you intend to work with.
Equity Crowdfunding websites, like WeFunder can be used for this purpose to help you raise equity capital through crowdfunding and the best part is, they will help you navigate the legal aspects of the process.
Documentation
In fact, this crowdfunding site even provides you with all of the important documentation that is required for the purpose of equity crowdfunding your first film project.
Keep in mind that equity crowdfunding will require you to raise more capital than you might if you were to raise funds through outside sources that did not involve the use of a crowdfunding platform.
This is because the platform is going to charge a percentage of the total raised to make their money off of your project. However, there are some benefits that come to using a platform for your equity crowdfunding of a first film.
Such as:
- The platform will handle the legal documentation.
- Platform will handle the transactions from investors.
- The platform places you and your project in front of investors that are looking for opportunities to invest.
- Using a crowdfunding platform that is SEC approved allows you the crowdfunding exemption.
Starting an Equity Crowdfunding Campaign
So, now that you know you can equity crowdfund your first film, you’re probably wondering how to get started. First, you’re going to need a lawyer!
An entertainment attorney that specializes in film productions and understands film financing is a must! Additionally, you’re going to want to have a business plan.
Which outlines the following for your potential investors:
- Your company background including previous successes.
- Your first film synopsis and what it means.
- The details of your film’s audience, who are they?
- A list of business needs required for your film including costs associated with location rentals, crew, cast, and equipment needs.
- Details about the potential risks involved in the production.
- Information regarding how funds from the capital that is raised will be used.
- Full disclosure for investors.
In Summation
Equity crowdfunding is a relatively new form of raising capital for a film project. In which you are actually backing the investment with the selling of shares in the business. But it’s a great way to establish significant working capital to move forward with a feature film project.
So, “How can I equity Crowdfund my first film?” The answer is simple. Get yourself an attorney and then get started on your business plan. Once that’s complete, work with your attorney to establish the campaign on an equity crowdfunding site.
Similar to previous crowdfunding sites like Kickstarter and IndieGoGO. But which actually allow for equity to transfer to the investor. In exchange for their investment into your project. And start raising the capital your film project deserves!
