Financing / Crowdfunding : Equity Crowdfunding for Film by Brad Rego

Hi Willem, there are a ton of people who can talk about distribution, it's done constantly. I'm thinking more about the equity crowdfunding part. That's the element where there seems to be a shortage of info.

Probably need to discuss funding & distribution together. What’s the point of borrowing money if you don’t know how to pay it back ?

I think I'm not doing a good job of explaining myself. Although I do agree that you should always have a good distribution plan in place before borrowing money, I would say that is true for no matter how you raise funds, whether from friends and family, debt financing, private investors, etc... So that part isn't any different than how you would normally go about setting up your payback plan. The part I'm talking about is just the process of equity crowdfunding. Why its different, things to look for, pitfalls , etc...

Maybe I'm wrong and this isn't a topic people are interested in, and that's fine, that's why I asked. I just know when I started mine I had a tough time because there was no information out there, and I made a lot of mistakes.

Congrats Brad! I'm actually working on my first indie feature length film and would love to hear more about your journey and approach. I'm sure there are quite a few indie filmmakers from the community who would really appreciate a webinar on equity crowdfunding. There really isn't enough info out there. I'm ready dude!

Thanks Lorenzo and congrats on starting to put together your first feature! I'll gauge the response I get on here and move from there, but aside from that, feel free to ping me if you are thinking about equity crowdfunding and have any questions.

Yes, Brad, I would be interested. Perhaps a podcast or ask Stage 32 if they would do a webinar. And let us know when you’re in production. Maybe a vlog? Good Luck!

No problem Brad Rego and a vlog would be awesome too!

Thanks guys, I'll reach out to Stage32 and see what they say.

Brad Rego congratulations on your success. I would also recommend you to do an AMA on reddit. It would help spread the name of your project, get more fans and maybe more investors along the way.

Thanks Julien! I've never done an AMA on reddit, but since we are wrapping up the investment campaign at the end of Nov, I'm doing two Q&A/AMA broadcasts on YouTube Live Friday Nov 23rd and Sat Nov 24th at 3pm (EST).

https://bit.ly/2TirF06

I'm a little late to the party on this, but I am very excited about the cryptid movie and wanted to add that Martingale also raised 100k from Equity crowdfunding, I believe they shoot in 2019,

( https://wefunder.com/martingale ), so it is absolutely becoming a viable option for funding a feature-length film and not a fluke or one-off.

Good to hear about your journey! Keep up the hard work. Looks good and good luck with the raise!

Been following your journey on the long road of equity crowdfunding for some time now. Not sure if you ever did the webinar but I would be interested in watching you sharing your experience. By the way, have you reached your financial goal? If so, when do you begin production?

Hi Chris, no I never did a webinar. I had contacted Stage32 a couple of times, but never heard back so I assumed there just wasn't much interest. I thought about doing it independently, but I don't really have the infrastructure to get the word out and make it worth it. As for the film itself, we have gotten closer to our goal, but haven't gotten all of it yet. Although, we have a few upcoming meetings set up with some additional investors, and we have a solid tax credit from the state lined up. So the hope is to close the gap sooner rather than later. In the meantime, we are still looking at a beginning of May shoot date, and have already secured the main locations, and have now begun to reach out to talent in order to cast the lead. The plan is to have everything ready to go so once we secure the last of the investors we can hit the ground running and still keep that date.

Hey Brad, bummer that there wasn't enough interest. Seems like a perfect topic for a webinar given the complexities inherent to equity crowdfunding. Having read through your Cryptid investor page several times over the years it's clear that the process requires assiduous attention to detail. Glad to hear you're that you have forward momentum with some of the pre-production leading up to May. Best of luck with your investor meetings.

Its funny, I have had several filmmakers reach out to me privately as they are looking at getting into the equity crowdfunding game and they have a lot of questions, because you're right, it is a lot of arduous detail that goes into the process, and I think that turns people off. For me, I'm just a filmmaker, not a business expert by any means, and so it took months of learning how to construct the campaign in the proper format to qualify it. That's hard to justify, especially when with something like Kickstarter/Indiegogo, you just need an email address to get started. I do hope we will see more and more equity campaigns pop up, but its hard, and my fear is if a few fail too quickly it will sour the option. I do really think it could be a great resource for $100k-500k productions. Thanks for the well wishes Chris. We'll continue to charge forward and get this done however we can.

Any updates as to this effort in 2020?

Hi LaSonya,

We ended up raising about $250k through equity crowdfunding and its connections. We were supposed to start shooting our movie in April of this year, but got shut down for the pandemic, so we are hoping to start production in September. I did reach out to Stage 32 about a possible webinar, but I don't think there was much interest as they never got back to me. We've been using the last couple months in quarantine to try and bring a little more money to the project outside of equity crowdsourcing to get a bigger name attached, the hope is to make something positive out of this pause.

Okay. Cheering for you and the team.

Hi Mark, It was a pretty long process but we are finally getting to the end of it. We ended up raising about $169k through the equity crowdfunding site StartEngine, and then through those connections ended up with a total of $270k for the overall budget of the film. We ended up filming it in October, but had to pause because of covid and weather, but finished it with a week of pickups last month. So we are currently in post production. I had a friend of mine who also tried the equity crowdsourcing method and raised about $350k through his campaign (https://www.startengine.com/an-angry-boy). Now those numbers are a little inflated because equity crowdfunding does have a lot more overhead, it requires hiring of lawyers and accountants, as well as the fees and such required to file and to keep the campaign running. Both of our campaigns we ran for about a year. Its definitely not a quick fix solution, that's for sure. I ended up clearing about $120k of the $169k campaign, and he cleared roughly $280k of his $350k. So that is something to consider, but I still maintain its a good resource for financing small budgeted films if, like me, you have exhausted all regular routes to raise money for film. I only have experience with StartEngine, but another friend of mind is about to start a campaign on WeFunder, so I'm curious what his experiences will be. Anyway, I would encourage looking into it if that sounds like something you would be willing to do, and certainly let me know if you have any questions.

Sounds like you are in the same boat I was in before this. My last feature I made for about $20k and it took about 4 years to make that back through Amazon, TubiTV, and a host of other streaming platforms. However I still think a bigger budgeted film can be viewed as a good investment. Especially with horror. With a higher budget you can get a larger scale story and also better production value. With better production value, you can attract larger distribution companies and make better deals. With a higher profile film you can get away from the giant package deals that my movies have gotten tossed into in the past. From the different sales and distribution people I have spoken to my $280k film is projected to pull in worldwide around $500k. Could be more, could be less, but I spoke to a variety of bigger named distro companies with solid reputations, and they all said the same thing, a $250k horror movie is a pretty good sweet spot. The majority of that money would come back through international sales. With a good sales agent that sells the movie territory by territory, its very doable. The problem is with a $30k movie, its hard to get a sales agent who would care. The start up costs for equity crowdsourcing will depend on how much you can do yourself. You have to build a company, create an operating agreement, create financial statements, cash flow balances, etc... Everything that would be required of a normal small business if you wanted to sell equity in it. All of it has to pass through the SEC, so its a lot. If you can do a lot of that yourself, the startup fees are almost nothing, if you have to hire lawyers and CPAs, then it can be a couple thousand. As far as where the investors come in, that's the other big cost, advertising. There is a decent amount of traffic that comes in through the platform, but you have to advertise through places like Facebook or Instagram in order to make sure you are constantly driving traffic to your site. The overwhelming majority of the costs that went into my campaign were advertising related. Out of the roughly $50k in costs for my campaign, 75% were for advertising. Hope that helps.

Could not agree more, same here.