What is Crowdfunding?

Crowdfunding is a popular tool to raise money for causes or new business endeavors. It is the practice of funding a project or venture by inviting a larger number of people to invest or donate smaller amounts of money via the internet as an alternative financing option to finding a few larger investors.[1] Since filmmakers are always struggling to raise enough for their projects, they have started using crowdfunding in order to finance films without having to secure funding through traditional methods. [2] This allows people with less visibility or access to larger investors to find a way to fund their ideas. However, raising money for films is the same as for any startup, few make money but the successful ones make a very good profit.[3]

Top Crowdfunding Sites for Funding Films

There are many options for crowdfunding platforms and people using this method (“crowdfunders”) need to do more than post a page hoping to be sent money. These platforms are websites that provide crowdfunders with the tools needed to conduct a crowdfunding campaign. It can be hard to choose one with hundreds of options–including Junction and Slated–but three popular choices are Kickstarter, Indiegogo, and Seed&Spark.

Kickstarter: Kickstarter is a popular crowdfunding platform with campaigns running between 1-60 days. A project must reach its funding goal or it does not receive any money. This approach motivates crowdfunders to actively run their campaigns while managing risk. Kickstarter campaigns can be started in multiple countries and funded by supporters all over the world.

Indiegogo: Indiegogo is a large crowdfunding site with roots in film but also lists other types of projects. It was an early entrant to film crowdfunding and is popular among artists. The site’s film category lists the top crowdfunded films with a number of films raising hundreds of thousands of dollars.

Seed&Spark: This crowdfunding platform is different because it is not just a place for filmmakers to raise money for their projects.  Seed& Spark is also a site for fans of independent films and web series to discover new projects and independent filmmakers they will enjoy.[4]

What do Backers Get?

Generally, backers either give money just to support a project they are passionate about or receive a perk promised by the crowdfunder for their contribution. These perks can vary depending on the type of project and the amount of money given.[5] Some backers prefer to have ownership interest by investing in the project and expect their money returned to them even with interest when the project sells. This type of investment is regulated by the SEC and it is advisable to seek legal assistance if crowdfunders are soliciting this type of investment.

If you are interested in using crowdfunding for your next project, whether an independent film or a new company in development, contact our offices for assistance.

[1] Tim Smith, Crowdfunding, Investopedia (Jun. 26, 2019) https://www.investopedia.com/terms/c/crowdfunding.asp

[2] Zack Miller, The Top Crowdfunding Sites for Funding Films, The Balance Small Business (Feb. 3, 2019) https://www.thebalancesmb.com/film-video-crowdfunding-985225

[3] Id.                                                                                     

[4] Michael Koehler, How to Use Crowdfunding to Finance Your Indie Film: Discover the 4 keys to a successful crowdfunding campaign, The Lights Film School (October 27, 2014, 10:00 AM, modified May 7, 2018 4:15 PM).https://www.lightsfilmschool.com/blog/how-to-finance-an-independent-film-crowdfunding-conclusion

[5] Id.