Tag: crowdfunding

Categories
Truly Free Film

Things All Filmmakers Should Know About the “JOBS Act”

Karen Robson and Steve Goodman of Pryor Cashman LLP have kindly provided us with a copy of an analysis they’ve written about the recent changes in securities laws because of the JOBS Act. It contains vital information about crowdfunding and how it relates to film — and is an important read for all filmmakers.

JOBS ACT TO HELP FILMMAKERS RAISE CAPITAL
By: Stephen M. Goodman, Karen M. Robson and David E. Parsly
May 2012

NOTE: This is a general analysis of the statute and should not be considered legal advice.

On April 5, 2012, President Obama signed into law the Jumpstart Our Business Startups Act (the “JOBS Act”). The JOBS Act encompasses a series of proposals that emerged in Congress over the past year, and that were ultimately brought together in a single piece of legislation receiving substantial bipartisan support. The stated purpose of the JOBS Act is to stimulate job growth and capital formation by removing and/or reducing certain costs and regulatory burdens applicable to smaller companies.

Specifically of interest to independent filmmakers, the JOBS Act introduces reforms to a certain widely, used private offering rule to remove the prohibition on “general solicitation” and creates a new exemption for “crowdfunding”, which, when rules mandated by the JOBS Act are finally adopted by the Securities and Exchange Commission (the “SEC”) in approximately nine months, will offer the potential to raise money through small investments from a larger number of investors.1 Since rulemaking related to the elimination of the general solicitation rules in private offerings must be completed within 90 days, this exemption will have a more immediate impact than crowdfunding on capital formation for filmmakers.

ELIMINATION OF “GENERAL SOLICITATION” RESTRICTIONS ON RULE 506 OFFERINGS

Private securities offerings under Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), are frequently used by filmmakers to raise capital through the issuance of equity or debt securities. Regulation D offerings are exempt from registration under the Securities Act, which eliminates the substantial burdens and expenses associated with public registration and reporting. The most popular exemption used for domestic private placements is Rule 506 under Regulation D, because the amount that can be raised under Rule 506 is virtually unlimited and, so long as the offering is made only to “accredited investors” (i.e. generally investors that meet certain minimum annual income or net worth requirements), the number of investors is likewise (at least theoretically) unlimited.

However, issuers relying on Rule 506 have been prohibited from engaging in any form of “general solicitation or advertising” to attract investors. The SEC has never precisely specified what constitutes a “general solicitation,” but the SEC has cautioned in no, action letters that to avoid a general solicitation an issuer must approach only investors with whom the issuer has a “pre,existing substantive relationship.”2 Over the last several years, many commentators have noted the deleterious effects on issuer’s capital raising created both by this “general solicitation” limitation and by the vagueness and apparent internal contradiction in its interpretation.

Title II of the JOBS Act amends the Securities Act to specifically permit general solicitation or general advertising in connection with a Rule 506 private placement, so long as everyone who eventually makes an investment is an “accredited investor”. The intended result is to permit issuers, such as companies formed to finance and produce films, to reach a broader pool of potential investors, regardless of whether they have a pre,existing relationship with the issuer.

It is important to remember, however, that the ultimate investors must be “accredited investors”, and here the rules have changed slightly. The JOBS Act mandates that issuers relying on Rule 506 must now take “reasonable steps” to verify that each investor constitutes an “accredited investor” as defined in the Securities Act. At the least, this means that an issuer will no longer be able to rely on an unsupported representation by the purchaser that the purchaser is an accredited investor. Therefore, while the JOBS Act provides filmmakers the ability to cast a wider net and attract any accredited investor by means of a general solicitation, it will likely also place additional burden and expense on filmmakers to conduct some level of diligence on their investors to prove that they are accredited. The changes to the law also leave unanswered what methods or content the SEC will permit (or require) to be used in connection with a “general solicitation” and how activities conducted in connection with general solicitations may affect other fundraising efforts by issuers.

Despite these uncertainties, the removal of the general solicitation prohibition may provide filmmakers the ability to seek direct access to potential investors. Depending on SEC rulemaking regarding general solicitation, it may in some cases mitigate the need for filmmakers to rely on intermediaries such as brokers, placement agents and finders to introduce investors and to bear the financing fees associated therewith.

CROWDFUNDING

In recent years, films and other art and charitable projects have used Internet “crowdsourcing” donations to raise revenue. Instead of donations, “crowdfunding” would permit companies to take in small amounts of money as investments from numerous individuals. Websites such as Kickstarter and Indiegogo have previously acted as crowdsourcing portals based on a donation model. The JOBS Act responds to a growing belief among many politicians and business people that entrepreneurs should be able to use this model in an investment context.

Title III of the JOBS Act adds a new “crowdfunding” offering exemption to the Securities Act. The exemption is available to film producers and other issuers if the aggregate amount of all securities sold to investors by the production entity and its affiliates during the 12,month period prior to the latest transaction (including but not limited to any crowdfunding securities) does not exceed $1,000,000. The crowdfunding exemption restricts the aggregate amount that may be sold to any investor by the issuer during this 12,month period to either $2,000 or five percent of the investor’s annual income or net worth (if his or her annual income or net worth is less than $100,000) or ten percent of the investor’s annual income or net worth (if his or her annual income or net worth is $100,000 or more). In the latter case, the maximum aggregate amount that can be sold to the investor during the 12,month period is $100,000.

Both the overall limitation on the aggregate amount of securities that can be offered in the 12 months prior to the offering date and the caps expressed in the limitations on individual investors include not only securities sold pursuant to the crowdfunding exemption during those 12 months but also any other securities of the issuer purchased by that investor without regard to the 12,month period. This means, for example, that if a producer has raised $500,000 in a Rule 506 private placement, then for the next 12 months it cannot raise more than $500,000 in a crowdfunding offering.

However a filmmaker seeking to rely on the new crowdfunding exemption will not be able to simply post its offering on a website and accept offered cash. Rather, there will be a significant number of requirements on the manner of offering the securities and the types of information that must be made available to investors, the SEC and state regulators, as well as requirements for updating the information during the offering and after the offering is completed.

Perhaps most significantly, the JOBS Act requires that any crowdfunding offer be conducted through a registered broker or “funding portal”3, not directly by the production entity itself. To satisfy the JOBS Act’s requirements that the broker take responsibility for the crowdfunding offering, the broker is required to:

• provide various disclosures, including disclosures relating to risks, and other investor education materials (to be prescribed by SEC rule);

• ensure that each investor (a) reviews these disclosures and materials (in accordance with standards to be established by the SEC), (b) affirms that the investor understands the risk of potential loss of the entire investment and that the investor can bear the loss and (c) answers questions demonstrating that the investor understands the risks of start,up investing, illiquidity of the investment and “such other matters as the SEC determines by rule”;

• take measures (to be established by the SEC) to reduce the risk of fraud, including obtaining a background check and securities enforcement history on each officer and director of the production entity and each person holding more than 20 percent of that entity’s securities;

• make certain information required to be provided by the production entity (see below) available to the SEC and to potential investors at least 21 days prior to the first sale of securities;

• ensure that proceeds are only released to the production entity after a target offering amount is reached and allow for investors to cancel their commitments (as determined by SEC rule);

• verify (to the extent deemed necessary by the SEC) that no investor has exceeded the limits on aggregate investment in the production entity required by the exemption (see below);

• protect the privacy of information collected from investors (to the extent determined by SEC rule);

• not compensate any finder, promoter or others for providing “personal identifying information” of any potential investor;

• prohibit its own directors, officers orpartners from having any financial interest in the production entity; and

• meet such other requirements as the SEC may deem appropriate for the protection of investors.

To rely on the new crowdfunding exemption, the production entity must also comply with a number of disclosure and offering requirements. In particular, the production entity must:

• file extensive disclosure with the SEC and provide to the investors and the relevant broker or funding portal information regarding (1) its name, address and website address; (2) the names of its directors and officers and each person holding more than 20 percent of its shares; (3) its business and its anticipated business plan; (4) its financial condition4; (5) the stated purpose and intended use of the proceeds of the offering; (6) the target offering amount, the deadline to reach the target amount and “regular updates” on the progress of the offering; (7) the price (or the method for determining the price) of the securities offered and a reasonable opportunity to rescind the purchase commitment if the final price is not determined at the time the commitment is made; (8) a description of the ownership and capital structure of the production entity and the terms of the offered securities (including how the offered securities have been valued and the risks of being a minority owner); and (9) such other information as the SEC may require;

• not advertise the terms of the offering, other than to direct investors to the funding portal or broker;

• not compensate anyone to promote the offering unless the person clearly discloses the receipt of compensation in connection with any such promotional communication (pursuant to rules to be adopted by the SEC);

• file at least annually with the SEC (and provide to investors) reports of the results of operations and financial statements (as specified by SEC rule); and

• comply with such other requirements as the SEC may prescribe.

The SEC has been given 270 days to promulgate rules and regulations clarifying the crowdfunding exemption.

The information required to be made available by the issuer as described above is also to be made available to any state securities agency. Securities issued in a crowdfunding offer are exempt from certain state “blue sky” requirements except that notice filings may be required in the state where the principal place of business is located or where purchasers of 50% or more of the offering are residents.
The production entity accepting the investment remains liable for material misstatements and omissions in information provided in a crowdfunding offer. Securities purchased in a crowdfunding transaction may not be transferred by the purchaser for one year following the date of purchase except to the production entity itself, to an accredited investor, as part of a resale registration statement filed with the SEC, to a “member of the family of the purchaser or the equivalent” or, in the discretion of the SEC, in connection with the death or divorce or other similar circumstance affecting the purchaser. Finally, the JOBS Act provides that purchasers who acquire securities in a crowdfunding transaction will not be included in calculating the number of record holders that an issuer may have before it is required to make public disclosures under the federal securities laws.

Due to the 270 day period for the SEC to implement crowdfunding rules, filmmakers will be forced to take a wait and see approach on what the impact of crowdfunding will be on the film financing industry. The costs associated with engaging a funding portal remain unknown, as well as the full extent of legal and other professional assistance that will be required. In light of the $1 million cap on the amount of crowdfunding offerings permitted per year and the recordkeeping and other potential burdens associated with having a large number of micro investors, it is possible that crowdfunding may be less popular than some anticipate. Still, as Kickstarter and Indiegogo have proven in the context of donations, there are masses of previously untapped investors out there that the JOBS Act may now allow filmmakers to access.

If you have any questions or would like any further information about the JOBS Act or how Pryor Cashman can serve your legal needs, please contact the authors of this Legal Update or the Pryor Cashman attorney with whom you work.

1 On April 23, 2012, the SEC issued a notice reminding issuers that until the SEC adopts implementing rules any offers or sales of securities purporting to rely on the crowdfunding exemption would be unlawful under the federal securities laws.

2 See, e.g., Bateman, Eichler, Hill Richards, Inc. (pub. avail. Dec. 3, 1985); Lamp Technologies (pub. avail. May 29, 1997).

3 A funding portal is defined by a new Section 3(a)(80) of the Exchange Act as an intermediary involved specifically in the offer or sale of securities pursuant to Section 4(6) that does not (1) offer investment advice, (2) engage in solicitation of transactions in the offered securities, (3) compensate anyone for such solicitations or on the basis of sales of such securities, (4) handle investor funds or securities or (5) engage in any other activities that the SEC deems inappropriate. A funding portal is to be exempt from registration as a broker or dealer, but will nevertheless have to register with the SEC as well as with “any applicable self,regulatory organization”. It remains, however, subject to the examination, enforcement and other rulemaking activity of the SEC and such other requirements of the Exchange Act as the SEC deems appropriate and it must be a member of a national securities association registered under Section 15A of the Exchange Act (although the national securities association can only enforce rules adopted specifically for such portals).

4 Specifically, issuers using the exemption must provide the following financial information, depending upon the size of the offering: (a) income tax returns and financial statements certified as true and complete by the principal executive officer (if the aggregate offering amounts within the previous 12 months is $100,000 or less), (b) financial statements reviewed by an independent public accountant (if the aggregate offering amounts are between $100,000 and $500,000) or (c) audited financial statements (if the aggregate offering amounts are more than $500,000 (or such other amount as the SEC may establish)).

***

Copyright © 2012 by Pryor Cashman LLP. This Legal Update is provided for informational purposes only and does not constitute legal advice or the creation of an attorney-client relationship. While all efforts have been made to ensure the accuracy of the contents, Pryor Cashman LLP does not guarantee such accuracy and cannot be held responsible for any errors in or reliance upon this information. This material may constitute attorney advertising.


STEPHEN M. GOODMAN
Partner

Stephen M. Goodman is co-head of the Mergers and Acquisitions Practice at Pryor Cashman LLP. He has extensive experience representing companies in public offerings, private placements, and other complex financing and acquisition arrangements.

Mr. Goodman has also written on topics ranging from raising seed capital for entrepreneurial companies to the SEC’s whistleblower rules to the Supreme Court’s decision regarding material nondisclosure in Matrixx Initiatives, Inc. v. Siracusano, and has lectured on various aspects of capital formation at Columbia University, the City University of New York and the New York Academy of Sciences. His most recent article is “Still Room for Finders? Courts Question SEC View of Broker Activity” (BNA Securities Regulation & Law Report, November 14, 2011).

Mr. Goodman is a 1977 graduate of New York University School of Law, where he was Order of the Coif and Articles Editor of the Annual Survey of American Law.

KAREN M. ROBSON
Partner

Karen Robson has worked primarily in the Film Finance and Production practice of the Entertainment Group since 1986 and heads the Los Angeles office of Pryor Cashman LLP. Karen represents a variety of financiers, banks, equity investors, high,profile independent producers and production companies for which she structures film finance transactions and also provides production legal representation. She also represents individual writers, directors and producers in the motion picture and television areas.
For over twenty years, Karen has handled financing on multiple picture deals and single pictures, television mini,series and major documentaries. In recent years, Karen has represented both producers and lenders with respect to film financings which include senior and mezzanine debt and/or equity; international co,productions and U.S. tax incentivized financings.

Karen is also experienced in representing properties in the film, video, television and merchandising areas including properties in the family entertainment arena, including The Berenstain Bears, I Spy, a children’s television series featuring music artist Dan Zanes, and theatrical feature films based on a series of major children’s television and merchandising properties.

Prior to her career as an attorney, Karen had a brief career as a film actress in Australia, including a major role in Peter Weir’s cult favorite, Picnic at Hanging Rock.

DAVID E. PARSLY
Associate

David Parsly is an associate in the Corporate Group and represents public and private companies in a variety of general corporate matters, including corporate formation and governance, mergers and acquisitions, corporate finance, and securities issuance and compliance.

David is a 2007 graduate of the Benjamin N. Cardozo School of Law, and earned a B.A. from the University of Michigan in 2004. While in law school, David served as a judicial intern for the Honorable Richard B. Lowe III in the Commercial Division of the New York State Supreme Court, New York County.

www.pyorcashman.com

Categories
Truly Free Film

Crowdfunding a Collaborative Film

By Audrey Ewell

2012 is going to be the year of truly free filmmaker experimentation. 2012 is going to be the year of cross-platform collaboration. And 2012 is going to be the year of filmmaker to filmmaker collaboration. I don’t know how much of this will be true, but I know I wish all of it will be, and so far, there is no clearer indicator that all will be true than The 99% Film. We’ve heard from Audrey Ewell, one of the film’s collaborators, and we know she always has progressive and provocative ideas, so why should this time be any different. Today Audrey shares with other some of the new ways she and her team are making use of some of the plethora of options that are out there to enable us to truly build it better together.

Crowdfunding a Collaborative Film: Repurposing a Distribution Platform into A New Fundraising Tool.

99% – The Occupy Wall Street Collaborative Film began as a spontaneous project, and thus it began with no funding at all. While it might seem like a poster-child for crowdfunding opportunity, this film actually has some unique obstacles: for starters, many people who support us also support the Occupy Movement, and their spare dollars go straight to them. Our film is not part of OWS; although some of our 75+ filmmakers identify as part of it, we are a separate, independent project, and we receive no Occupy funding.

Additionally, donations to OWS itself dropped off markedly after the first heady days (when it seemed as though time had stopped at the moment in Sidney Lumet’s 1976 film Network when Peter Finch’s Howard Beale led the city in a chorus of “I’m mad as hell, and I’m not going to take this anymore!” only to resume in reality 35 years later at Zuccotti Park). Plus, with the otherwise lovely Christmas season turning potential funding into slippers and iPads, crowdfunding has been no picnic. We now emerge from the holidays with about two weeks left to hit our goal of $17,500. Two critical weeks, because make no mistake: we need those funds to keep going.

Before I get to the new tool we’re test-driving, let me back up for a second to talk about our overall strategy. First, we put together an outreach team: Stephen Dotson and Kari Collins on Twitter, Laura Alexander on Facebook, Annie Riordan doing direct outreach to influencers and organizations who might help spread the word, Ginger Liu on newswires, blog and social (non fb & twitter) outreach, and me on press releases, blog outreach, and traditional press.

But really, nobody wants to write about your damn Kickstarter campaign, so you have to find ways to make it newsworthy. I set this up as a five-week campaign (with the expected week of Christmas drop-off in the middle). Week one outreach was about the film itself; the collaborative nature and the way our process mirrors OWS got us some press that might be difficult for a more standard doc to achieve.

For week two, Billy Miller (one of our filmmakers, also a curator) gathered our first round of rewards: artworks by 12 contemporary artists. We contacted and posted to hundreds of art blogs. Then we added a fresh round of artists/works (a lot had already been nabbed) and let that slide over Christmas into week 3: when Aaron Aites, my film partner and also the main man behind the band Iran, worked with Kyp Malone (of Iran, TV on the Radio, and Rain Machine) to put together a slew of music rewards. Signed records and artworks from Conor Oberst (Bright Eyes), John Dwyer (Thee Oh Sees), Wayne Coyne (Flaming Lips) and many more fueled a new round of targeted outreach, but still, so much ground to cover by Jan 13th!

So when Darcy at Constellation got in touch to propose a new venture, combining their social screening platform with our Kickstarter campaign, I had to wonder if this might be a peanut butter and chocolate crowdfunding moment. I’d checked out Constellation when they launched; they mix classics (Grey Gardens, Rashomon) with newer and noteworthy indie films (Food Fight, Trouble The Water, Marwencol) and there’s a social element to the screenings: pre-set times to make it a group experience, Q & A’s with filmmakers, and chats with the audience. In their words:

“Constellation is your online movie theater. Just like a traditional theater, users purchase tickets to attend scheduled showtimes of films, or create their own showtimes. However unlike other online platforms, watching movies on Constellation is a social experience. Users can invite friends to showtimes they’re attending and watch together. Many movies are presented by VIP hosts, such as the films’ directors, actors, or other notables, who appear live in the online theater to answer questions from the audience during and after the film. “

So Constellation’s interested in working with Kickstarter (and presumably other crowdfunding sites) projects, and we’re interested in reaching our goal; we agreed to be the first to try it out. Although reluctant to divert our attention while in the thick of making the film, we think there’s a place for this in our fundraising strategy.

So this January 7th at 7:30 pm EST we’re holding a screening of 45 minutes of footage that’s been shot for our film, on Constellation.TV. It’s not a work-in-progress, and Constellation have been respectful of our need to not use that language, but it is a chance for our backers and others to see some of the material we’re working with, and to talk to us as we’re shaping the film. (They also let us lower the ticket price, and gave us half-off codes for our Kickstarter backers, plus free codes so all 75 of our filmmakers can be present – woo-hoo!) It’s a chance for us to get some feedback, build our audience, and possibly even meet new backers.

I don’t know how well this platform is working for finished films, but that also depends on each filmmaker’s goal with it (as with any distribution outlet). But it’s good to know that Constellation is open to this sort of fundraising event. I learned, while theatrically distributing my last film, Until The Light Takes Us, that event-izing really helps. So if you’re interested, this is the direct link to the screening: www.constellation.tv/99percent. Or if you need a reminder like I do, here is the Facebook invite. (Oh! And proceeds go toward our Kickstarter campaign!)

If this is successful, it could be a new tool in the indie filmmaker’s funding kit. So wish us luck; better yet, check out the screening, ask questions, and by all means, please invite a friend.

Audrey Ewell is a filmmaker living in Brooklyn, NY with her film partner Aaron Aites. They recently made the award-winning film Until The Light Takes Us, and they’re now working on a thriller called Dark Places. The 99% Kickstarter page is here.

Categories
Truly Free Film

Maximizing Distribution Through Crowdfunding

By Peter Broderick

HopeForFilm has had the pleasure of hosting several of Peter Broderick’s prior newsletters, but today’s is extra-special, working as a continuation of Jennifer Fox’s illuminating posts on MY REINCARNATION crowdfunding campaign. My filmmakers mistakenly think of the crowdfunding platforms for financial purposes, but as Peter points out, it works to build community, involve audiences, and generate publicity and a true sense of ownership.

MY REINCARNATION shows how a well-executed crowdfunding campaign can be used to maximize distribution. In addition to enabling the funding of the theatrical rollout, the campaign increased awareness among core audiences, generated substantial press coverage, and facilitated partnerships.

I’ve known and admired the film’s director Jennifer Fox for many years, and consulted with her on the distribution of her remarkable series, FLYING: CONFESSIONS OF A FREE WOMAN. As tenacious as she is talented, Jennifer has learned, during more than 30 years of independent filmmaking, that it’s “change or die.” After exhausting every familiar fundraising route from grants to pre-sales for MY REINCARNATION, she tried crowdfunding as a last resort.

Filmed over twenty years, MY REINCARNATION is a documentary about her teacher, the Tibetan-trained Buddhist master Chögyal Namkhai Norbu and “his Italian born son who refuses to accept the destiny he inherited from birth.” Although the film was technically completed and being shown at international festivals, Jennifer still needed $100,000 to pay the bills she’d amassed finishing the film after a producer defaulted on that amount.

MY REINCARNATION became a crowdfunding milestone. Through a 90-day campaign, Jennifer and her team raised $150,456, three times the official goal of $50,000. 518 backers gave an average donation of $290, more than any film had ever averaged on her crowdfunding platform, Kickstarter. The average was so high for two reasons. The film attracted two associate producers at $10,000 each (one of which was a group of 50 people living in China). The campaign also offered valuable one-of-a-kind rewards, such as a hand-painted Tibetan chest and a unique statue of the deity Vajrapan, which were available to contributors who gave between $2,500 and $7,500. Contributions were received from 32 countries and more than two-thirds of the money came from abroad.

There is much to be learned from this crowdfunding success. Jennifer contributed seven articles to Ted Hope’s Indiewire blog detailing her 42 crowdfunding tips. They should be required reading for anyone planning a serious crowdfunding campaign. Here are two of the essential lessons:

==> Build a strong team that can put in the necessary time and effort. While filmmakers should be centrally involved in a crowdfunding campaign, they need a substantial amount of help to maximize the effort. Jennifer spent 50% of her time on the 90-day campaign. She had three teammates – a staff member who spent 50% of her time on the effort and two part-time women (compensated by a percentage of the money raised). They handled key tasks including adding fresh content to the website, managing outreach to organizations, and expanding the mailing list.

==> Make a detailed budget for the campaign. This should include the site fee (Kickstarter charges 5% if you meet your goal, IndieGoGo charges 4% if you meet your goal and 9% if you don’t); the payment processing fee (3-5%); the cost of creating, acquiring, and shipping rewards; and any staffing fees. There are also likely to be some defaults in contributors’ payments (Jennifer’s were 2%). If you use a fiscal sponsor, which allows donations to be tax-deductible, there will be an additional fee of 5-7% (IndieGoGo waives its fee if you use one of its partner fiscal sponsors). Jennifer estimates that the total costs of her campaign will be between 20 and 25% of the money raised. It would have been higher if she had been compensated for the enormous amount of time she devoted to the campaign.

MY REINCARNATION is now playing in theaters around the U.S. It opened theatrically in New York City in October, five months after the crowdfunding campaign concluded in late May. It has already been shown or booked in 40 theaters, and was in its seventh week in New York when this went to press. It will surely play 60-70 cities through next April and Jennifer is hoping to reach 100. Erin Owens of Long Shot Factory is booking the film theatrically.

The crowdfunding campaign of MY REINCARNATION facilitated its distribution in ten key ways. The campaign enabled Jennifer’s team to:

==> 1- BUILD AWARENESS AMONG CORE AUDIENCES. Jennifer believes the key to Kickstarter success is a strong, reachable core audience. MY REINCARNATION has two sets of core audiences. One is centered on Namkhai Norbu’s 8,000+ students around the world (they are connected via a listserv and many also meet in local groups). This audience also includes other Buddhists, as well as spiritual, new age, and yoga groups. The second core audience is centered on Jennifer’s fans and supporters, who she has nurtured over many years and films. This audience also includes documentary lovers and independent filmmakers.

==> 2 – GROW A NETWORK OF SUPPORT. This network consisted of all of the contributors to the Kickstarter campaign plus people who were unable to help financially but contributed their time and effort. These supporters helped by blogging and eblasting. The most active ones were recognized online on the Donors Wall and onscreen in the film’s end credits.

==> 3 – ACCELERATE EFFORTS TO BUILD PARTNERSHIPS. Jennifer explained that the crowdfunding campaign “got us into outreach mode early.” Her team made a major effort to develop partnerships with organizations, including Tibet House and the Tibet Fund.

==> 4 – GENERATE SIGNIFICANT PRESS COVERAGE. During the campaign Jennifer shared her crowdfunding tips in her seven-part series. When the campaign ended with such spectacular results, she and her teammates widely distributed a press release and got significant coverage. Jennifer also wrote an article for The Huffington Post.

==> 5 – EXPAND AND REFINE THEIR MAILING LIST. Over the years Jennifer had developed a personal mailing list of 6000 names. Her team worked hard to expand this list of individuals and organizations, starting with California and New York and then moving on to other states. Jennifer’s list has now grown to almost 10,000 names.

==> 6 – IMPROVE THE FILM’S ONLINE PRESENCE. The team started with a solid website which they expanded with fresh content and videos, including outtakes of the film. They utilized user-contributed content through the website’s “share your story” section. They also made excellent use of the film’s Facebook page, which attracted many people from around the world.

==> 7 – RELEASE THE FILM THEATRICALLY. $15,000 from the crowdfunding revenues seeded the theatrical rollout. Jennifer harnessed the excitement created by the Kickstarter results to find the additional money needed for theatrical from a combination of donors and loans.

==> 8 – BOOST INTEREST AMONG DISTRIBUTORS. Erin from Long Shot Factory explained that many of the exhibitors she approached were already aware of the film. She cited the Kickstarter results to show that there was already an audience for the film. The crowdfunding success also helped get the attention of festival programmers.

==> 9 – STIMULATE SEMI-THEATRICAL AND EDUCATIONAL DISTRIBUTION. Following theatrical, MY REINCARNATION will have a strong semi-theatrical release during which nonprofits and universities will arrange special event screenings. Jennifer is also perfectly positioned to do her own educational sales based on the relationships her team has built with groups and organizations.

==> 10 – FACILITATE TELEVISION, DVD, AND DIGITAL DISTRIBUTION. The increased awareness of the film will foster DVD and digital sales, as well as boost the viewership for its POV televisions premiere. The DVD, which is not yet available, is already viewed as a collectible.

As MY REINCARNATION makes clear, a successful crowdfunding effort can jumpstart a film’s distribution. It accelerates everything that will eventually be done to foster distribution, including making a trailer, reaching out to possible partners, building a network of support, generating press awareness, and refining the mailing lists and web presence. Instead of waiting until the film is nearly done and trying to do all of this in the weeks or months before its release, crowdfunding can give filmmakers a year or two head start.

A crowdfunding campaign can also provide invaluable information and feedback, enabling filmmakers to better define their core audiences, determine the best avenues to reach them, and refine the positioning of their films.

When MY REINCARNATION’S Kickstarter campaign reached a tipping point, things began to snowball. They raised $60,000 during the final five days of the campaign. Jennifer’s team has been able to maintain the momentum from the campaign into the theatrical release and should be able to continue it through the next stages of distribution.

Filmmakers should design their crowdfunding campaigns to power their distribution. While their short-term goal is to raise money, their ultimate goal should be to create a long and vibrant life for their film.

© 2011 Peter Broderick

Peter Broderick is a Distribution Strategist who helps design and implement customized plans to maximize revenues for independent films. He is also a leading advocate of crowdfunding and crowdsourcing, championing them in keynotes and presentations around the world. You can read his articles at www.peterbroderick.com

Categories
Truly Free Film

Koo On “Your Audience is Worth More Than $”

Film may be 110 years old, the Film Industry a century, Amer-Indie, as a semi-organized infrastructure and process, 30 years, but as a creative community we are only a few years, at best, in. Sure the guilds have been here longer, but as an open & transparent, group, activity sharing information and aspirations, it’s taken the rise of blogging culture to bring us together.

As much as we are coming together on a general basis, indie film communities come together now around specific voices. Nonetheless, other than Kevin Smith there are very few folks who have truly built and served their audiences to such an extent that that audience is in fact a community that can be depended on to support a film to the extent necessary to move it through production and release. Or rather, until recently. Crowdfunding, more than just a money raising tool, allows us to measure how communities can truly make movies happen. Koo, who has built the much loved and very useful blog No Film School, now is making a film, and as he shares below, he couldn’t have gotten so far with the support from the community he has so loyally served.

My crowdfunding campaign to make a youth basketball feature film Man-child has made it most of the way to raising its $115,000 goal (!). I’ve been working tirelessly since launching the campaign on August 16th, and you can bet I won’t be sleeping much until it ends September 23rd (this Friday). I don’t know if we’re going to make it all the way, but in coming this far, I’ve learned a lot — and that’s what I’m here to share. This post is also the story of how as a community we got 11-time NBA champion coach Phil Jackson — arguably the greatest living basketball coach, and someone I’ve never met in person — to back my Kickstarter film.

You have at least two audiences

I run the indie filmmaking website NoFilmSchool, and the site’s readers comprise my primary audience for the campaign. But even if you don’t run a website, you still have a primary audience — your friends, your family, your high school and/or college, and any other networks that you might belong to. This is your obvious first stop in a crowdfunding campaign.

Whatever kind of movie you’re making, your film has a topic. That topic has an audience. In the case of Man-child the topic is basketball, and so in addition to my web site’s followers, there exists another community that is potentially interested in my film: basketball fans. This is your second stop: people who are interested in your topic. But I think when you go after the second audience is important, because there’s a difference between the people who know you personally and the people who don’t. The former are willing to lend a hand because it’s you. The second group needs a bit more convincing.

Credibility first

People have mentioned in the past a notorious dead time in the middle of a crowdfunding campaign. Without the excitement of the launch or the urgency of a deadline, crowdfunding campaigns begin to resemble a 2-liter of RC Cola with the cap off (they go flat). This is a great time to try to reach out to a new audience, because if you did your job in the first half of the campaign (and didn’t annoy your followers on Twitter) — you’ll have more credibility than you did when the ticker read “$0 pledged.” Once the campaign was able to demonstrate social proof thanks a number of backers on board — but only then — did I try to reach out to the second audience.

Audiences are like venn diagrams

There isn’t a lot of overlap between my following of independent filmmakers and the basketball community at large. They’re like venn diagrams: two circles that overlap but for the most part exist separately. If your friends and family are in the smaller circle, the point is to reach the people in the larger circle who have no idea who you are. This is how your audience is valuable in a way that has nothing to do with what’s in their wallet.

Internet is plentiful, money is not

I launched NoFilmSchool by living out of a suitcase for 10 months. I know what it’s like to be short on funds. But during those 11 months when money was nonexistent, what did I have plenty of? Internet. Wi-Fi on a friend’s couch. A free connection at Starbucks. 3G. Even people on the other side of the planet who might not ever have a chance to see your indie film in the theater have a ‘net connection (and many countries are way ahead of the U.S. when it comes to broadband speeds). So when running a fundraising campaign, think of your fans friends and followers as more than financial contributors. They’re your allies in morphing the two circles of a venn diagram into one.

Strength in numbers

In the case of Man-child, as soon as we hit the halfway mark of the campaign (time-wise; we were not yet to 50% funded), I wrote a post asking for help from NoFilmSchool readers. Not financial help, but social media help. Along with an instructional video, I included links to lists of NBA players, media members, and bloggers on Twitter. Dozens of us began reaching out on Twitter collectively, asking ball players and journalists to check out or at least retweet the Man-child Kickstarter campaign. Personally, I was totally ineffective. Promoting your own campaign/product/service seems more like spam than someone asking on behalf of a friend, and there is strength in numbers: public figures have tens if not hundreds of thousands of followers on Twitter, and getting their attention is a crapshoot. They get mentioned so often that you need luck on your side to be in the right place at the right time; the more of you there are, the better your odds.

One success story is worth the effort

Despite my own lack of success, thanks to the efforts of others, several NBA players — including two-time all-star Stephon Marbury — retweeted the Man-child campaign. More importantly, Executive VP of the Los Angeles Lakers Jeanie Buss watched my pitch video and became a backer — along with legendary NBA coach Phil Jackson. I saw a jump in the campaign’s progress and didn’t know where it came from, so I went to look at the backer list, and there was Jeanie Buss. I hadn’t reached her, but someone else had. I thanked her on Twitter and we started direct messaging. She told me Phil had matched her pledge. My head exploded.

Your campaign is like a film

Films are better when they have an arc; the same goes for a crowdfunding campaign. In the past, I’d seen crowdfunders issue a press release at the outset of their campaign, but I didn’t feel launching a campaign was enough of a story by itself to get picked up by anyone. 10,000 people have run Kickstarter campaigns, after all — and that’s just the successful ones. More than double that number have launched campaigns. But I did think this social media success story — and the name recognition of having Phil and Jeanie on board — was a story. So I wrote a press release designed to get the campaign in the hands of the basketball world.

The jury’s still out

As I write this, the jury’s still out as to whether this press release has successfully brought in more of the basketball world. As a one man band running this campaign all on my own, it took me longer to get the press release out than I would’ve liked — even working around the clock — and I haven’t given media outlets much time to write up a story before this Friday’s deadline.

When it comes down to it, though, whether or not the Man-child campaign is picked up by a large sports web site, the social media outreach effort was a success — the story told in that press release has become an integral part of not only the story of the campaign, but the story of the film. And Phil Jackson, are you kidding me?!?

Your audience is worth more than $$$

More people have internet access than have credit cards. In the past month I’ve gotten a lot of messages from people who don’t own a credit card but want to help the campaign somehow. These aren’t messages they’re sending via snail mail or smoke signals — they’re through Kickstarter, they’re over Twitter, they’re via email. They’re online and they want to help. My personal friends (who aren’t very active on Twitter) logged on and had fun seeing if they could get a big name to retweet it. Give your audience something to do other than cut checks!

The “dead” midpoint of a campaign is a great time to start asking for help to reach a second audience. In fact, if my own experiences are any lesson, I would go out with this initiative prior to the midpoint, because you want to give yourself enough time before your campaign ends for your collective efforts to have an impact.

Speaking of which — my campaign for Man-child ends this Friday, September 23rd, at 11:59pm Eastern. If we don’t make it, I will certainly have learned a lot in the process, but I’d love to learn a lot more by actually making the movie! So if you feel like getting some great rewards in exchange for your support, check out my campaign — a download of the full film is just $10, a DVD is $24, plus you’ll be sent the unique frames of the film that you made possible (details in my pitch video below). Best of luck with your own crowdfunding campaign, keep that second audience in mind, and thanks for reading!

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Truly Free Film

David Fine on “More Thoughts On Crowdfunding Campaigns”

This past week, we’ve had a lot of input from filmmakers who have used the IndieGoGo crowdfunding platform. Filmmakers have been sharing techniques and best practices on what made their campaigns a success. It’s a practice we hope will continue for all filmmakers, across all platforms, utilizing a wide range of tools. Let’s figure this out, together.

Today is no exception. Although a lot has already been said on the subject, there is still more that can be added about how to make crowdfunding really work for your film.

A FEW MORE THOUGHTS FROM DAVID FINE, OF SALAAM DUNK (Los Angeles Film Fest)

Make sure the trailer for your film is strong
We waited to put up our Indiegogo page until we were all really happy with the trailer. For many it was the first thing they saw of a project that they had been hearing about from us for quite some time. I think asking for small donations from friends in the same breath as showing them the first thing they’ve seen of your project will create more donations.

Don’t worry about setting your goal low
We were worried that people would see we got to our goal and stop giving. But they didn’t. It’s better for your $ and your morale to set a goal you think you can reach. That’s how we left this experience feeling anyhow.

Make your crowdfunding efforts a way to boost team morale
Keep full control of our project through crowd funding has been a blessing. But honestly, a big part of the boost that we got from IndieGoGo was morale. I had been cutting the film for 9 months and we were not yet in a festival. Having people respond so positively to our trailer, so positively in some instances that they donated money, that felt great and really re-energized me at a time when I was running out of gas.

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Truly Free Film

K Lorrel Manning & Michael Cuomo on “Riding The CrowdFunding Train To SXSW”

We all one know how to do more with the very little we have. This is the year the indie film world turned to each other for help. And people responded. It is so exciting that we are working together to get the work done. Indie / Truly Free Film has never been more of a community!

In just the first half of this year, eleven films that raised money on IndieGoGo appeared in the world’s leading film festivals. From Tribeca to Sundance, intrepid filmmakers learned the ropes about what it takes to make a splash in these festivals. This is the first in a series of posts are from the teams behind some of these films.

–Adam Chapnick, IndieGoGo

RIDING THE INDIEGOGO TRAIN STRAIGHT TO SXSW WITH HAPPY NEW YEAR

by Happy New Year Writer/Director K. Lorrel Manning & Actor/Producer Michael Cuomo

In January of this year, we received a call from the great Janet Pierson (Head Honcho of Film for SXSW) informing us that our film Happy New Year had been accepted into the Narrative Competition at the 2011 SXSW Film Festival.

Based on the critically-acclaimed Off-Broadway play, then an award-winning short film of the same name, Happy New Year tells the story of Sgt. Cole Lewis, a wartorn Marine who returns home after four tours of Iraq and Afghanistan to face his fiercest battle yet – the one against himself. The film is an entertaining yet hard-hitting look at the perils of PTSD (post-traumatic stress disorder).

We reviewed our budget and quickly surmised that we needed about $25K to not just make a decent splash at SXSW but have the additional funds to attend upcoming festivals as part of continued promotions. Though the news of our acceptance was huge, we were forbidden to publicly announce it for nearly 6 weeks. We had a group of investors but how in the hell were we going to raise $25,000 and not share our biggest news? Many stepped forward stating that they were not in the position to invest but wanted to help out in any way that they could. IndieGogo became the answer.

After studied several studying other campaigns on the IndieGoGo website and bombarding, Slava Rubin (one of the Founders), with dozens of questions, we began to plan our campaign.

Here were the milestones:

Shoot short behind-the-scenes pitch videos
By involving different cast members talking about his/her real life connection to the material we created a human element to the campaign. These scenes were interspersed with some scenes featuring them from the movie.

Announce the video roll out via email, Facebook and Twitter
We posted these videos every two weeks, an idea that proved to be extremely effective. It was a way to excite and inform our fans .

Turned our entire team into evangelists
Everyone from management to each of the featured actors became spokespeople for our campaign, each one going out of his/her way to spread the word. This won the project more support and created an in-built audience for the film.

Identified tactics for our last days of funding
We timed our last video to be posted an hour after the SXSW Festival announced the 2011 competition lineup. In hindsight, saving the biggest news for the final push actually turned out to be our best move.

We decided to parody Bob Dylan’s “Subterranean Homesick Blues” video by shooting our SXSW announcement in the midst of a snowstorm in a discreet NYC alleyway. This was a more celebratory video in comparison to our more serious videos and it turned out to be a game-changer. The shift in tone worked perfectly – we raised $26,390!

Our decision to join forces with IndieGogo was invaluable. The campaign forced us to become more aggressive and savvy in the area of social media. The pitch videos allowed us to exercise the creative sides of our brains that were often stymied with the challenges of post-production and festival strategy. And we were able to see that with a lot of hard work and faith, anything is possible. Would we do it again? Definitely!

HAPPY NEW YEAR – www.happynewyearsfilm.com

Categories
Truly Free Film

Adam Chapnick on “IndieGoGo Films Showcased at World-Class Festivals in 2011”

Google became a verb several years ago. In the Indie / Truly Free Film space we are close to verb-izing another company. But just like all tissues are not Kleenex, there are many crowdfunding platforms out there, and it is worth not forgetting that. Find the platform that works best for your film, as there are plusses and minuses on everything.

Today Adam Chanpick speaks of the films (and some of the benefits) of crowdfunding platform IndieGoGo.

14 IndieGoGo Films Showcased at World-Class Festivals in 2011

IndieGoGo filmmakers have been rocking the world stage in 2011. In the first six months, no fewer than fifteen films that successfully campaigned on IndieGoGo appeared in the world’s leading film fests, including Sundance, SXSW, Cannes, Tribeca Film Fest, HotDocs, and LA Film Fest. These films have gone on to win top awards (Tribeca Audience Award) and get picked up by top distributors (The Weinstein Company).

In my responsibilities at IndieGoGo and Distribber, I’m regularly asked for advice and help with all facets of film finance and distribution. After answering so many of these one-off questions with the words, “lots of IndieGoGo campaigners have already figured that out,” it’s clear the filmmaker community would benefit from an update from IndieGoGo filmmakers who have had success.

As background, since 2008, the independent film community has been a central part of the IndieGoGo family; thousands of films have raised money for production, distribution, festival travel, promotion, marketing and for many other film funding needs.

IndieGoGo is partnered with leading organizations like Fractured Atlas and the San Francisco Film Society to offer filmmakers fiscal sponsorship services (Fractured Atlas campaigns recently passed $1,000,000. Sheffield Doc/Fest, one of the world’s leading documentary events, also has been an active and innovative partner.

Below is are links to all the amazing films, grouped by the festival in which they appeared. I encourage you to check out each campaign to learn more about pitch videos and copy, updates and perk selections, and how to engage an audience.

LA Film Fest

1. An Ordinary Family

2. Wish Me Away (1)
Wish Me Away (2)

3. Salaam Dunk

Cannes

4. Cerise

HotDocs

5. You’ve Been Trumped

Tribeca

6. Give Up Tomorrow (Won the audience award!)

7. The Bully Project Film (Was picked up by Weinstein Co.)

8. Love Hate Love – Tribeca Travel

SXSW

9. My Sucky Teen Romance (1)
My Sucky Teen Romance (2)

10. 8 (Award winner)

11. Sound It Out (1)
Sound It Out (2)
Sound It Out (3)

12. HAPPY NEW YEAR

Sundance

13. The High Level Bridge

14. The Rocket Boy

All of these campaigns succeeded on many levels, but there are three key areas that they nailed: They each had a great pitch, a proactive team, and each found the audience that cares about their passion and interacted with them consistently and creatively.

Over the next four days you’ll hear from four of the filmmakers behind these success stories, who’ll share key takeaways, tips, and tricks about their journey from funding to festival. I hope their learning helps your film become the next success story.

Adam Chapnick
IndieGoGo