It’s a new buzzword in the field of filmmaking, but in truth, crowdfunding has been around for a while. Marillion used fan funding for several oftheir albums since 1997, and movies have been doing it since 2004 (Demain la Veille). I’ve never tried it myself, so I thought I’d take a look at the different sites offering crowdfunding management. There are two types – “All Or Nothing” and what I like to call “Better Than Nothing”.
All Or Nothing Funding
It’s a simple idea. If you try to raise £5000, but you only manage £100, those who did invest won’t lose out, and you won’t be left trying to make a film on a fraction of the budget. Of course, it’s a double-edged sword – if you raise £4999, you still get nothing. At least if it all goes wrong, you don’t have to shell out.
Better Than Nothing Funding
This is the alternative. You keep everything you raise, but you pay a financial penalty for not reaching your target, and you still have to fulfill your obligations to funders.
The Cost Of Crowdfunding
There’s usually a payment handling fee of 3-5%. Additionally, there’s a funding fee which varies from site to site.
Is it legal?
I’ve wrestled unsuccessfully with this one, and inquiries to the Financial Standards Authority have met with silence. I suspect there’s a big folder at the FSA where all crowdfunding questions are kept until they’ve worked out an answer! What I do know is this: in the UK, accepting funding from more than five(or so) investors requires your company to be registered and approved by the FSA. However, there are exemptions, such as an Appointed Representative handling things. It may be that crowdfunding websites have this status, but I don’t know. There’s also the possibility of a loophole, as such funding could be seen as payment for goods or services (see “investment” below). The jury’s out on this one.
It’s fairly universal in terms of timescale – The project can be active for between 1 and 90 days, although the recommended period is around 50-60.
All these sites assert that they are merely facilitators, and don’t take any of your intellectual property.
In order to get people to fund your film, you need to give them a sweetener. This should vary depending on the amount of funding given, from something as small as an mp3, digital stills, to something as big as even a part in the film!
The sites are unanimous in their emphasis on advertising. Crowdfunding only works if people find out about your project, and as such, you need to make it eyecatching and easy to find. They recommend videos, photos, soundbites, making full use of social media links, and so on. It’s a full time job, too. You need to keep the momentum going for the full length of the project – if interest wanes, so will funding.
This is perhaps the most well known creative crowdfunding site. It uses All-or-nothing, and if you’re successful there’s a 5% fee. Unfortunately, they use Amazon Payments, and as a result you need US residency to be able to create a new project, so unless you have an American partner or bank account, kickstarter isn’t practical.
This has the benefit of being international, although there are extra fees involved – a $25 flat fee for international credit card transactions. Furthermore, as a better-than-nothing site, there’s a 4% fee if you reach your target, or a 9% fee if you don’t.
Rockethub is a better-than-nothing sourcer, with a 4%/8% fee and a fixed handling fee of 4%. There’s also a “launchpad” section, in which creatives can enter submissions for specific opportunities (like a small-scale mofilms.com).
Pozible is an Australian all-or-nothing crowdfunder with a specific UK portal. It charges a 7.5% fee (5% if you’ve previously been successful).
Crowdfunder is a UK All-or-nothing crowdfunder, part of business investors Crowdcube. It charges 5%.
There you have it. It might be illegal, you might have to make your film for a tenner, or not at all, and it’s a long slog. On the other hand, it’s definitely easier than getting Harvey Weinstein’s ear…