March 16, 2012

Crowdinvesting Bill Stalls in the Senate, Watch a Scene From Crowdinvested Film 'Iron Sky'

There have been hundreds, if not thousands of films that have been crowdfunded and have appeared at film festivals - but only films overseas (because of U.S. laws) have been crowdinvested. If you haven't seen the term before, or if you've never heard of the film, you should check out our previous coverage of the space Nazi film 'Iron Sky.' The film raised almost a million Euros from crowd investment, and 300,000 Euros in traditional crowdfunding money. The largest sum of money came from outside financing, which totaled 6.3 million Euros. The film recently showed at Berlin and SXSW, and it hasn't been released yet, but you can watch the opening scene now.

From Indiewire:

The film has been critically panned thus far, but that still doesn't take away from how massively successful the crowdfunding and crowdinvesting campaign was.

Even though it's been posted before, I think it's interesting to watch again their strategy for outsourcing their work:

It's also interesting that as I'm writing this today, there comes news that the JOBS bill, after being passed in the House, has stopped in the Senate. This bill is particularly important for filmmakers because there are provisions which allow for crowdinvesting here in the U.S., which would be a major step. To quote from the Filmmaker Blog:

The JOBS Act aims to change that, allowing businesses, including filmmakers, to solicit actual investment over the internet. A person — even someone not qualifying as an “accredited investor” — could invest up to $10,000, or 10% of his or her income (whichever is less), in a startup capitalized at $1 million or below and receive an equity position in the business.

While there was hope last week that this legislation would quickly pass Congress and be signed by the President, that schedule now appears unlikely. As Tommarello, quoted in the Forbes piece, said, “Best case scenario is that this would pass in May. Then the SEC would begin rulemaking. We’re at least a year away.”

There are certainly many negatives that can come from crowdinvesting, but it's truly the next step in financing for independent films. Crowdsourcing thus far has provided countless filmmakers with necessary money that they otherwise wouldn't have, and I can only imagine that if the bill passes and we can accept real investments here in the U.S., it will be a far more positive landscape for independent films.

Here are the complete provisions of both bills, thanks to user Shenan for finding this link from the Vim Funding Blog:

A look at H.R. 2930 and S. 1791

House Bill 2930, which was passed on 11/3/2011 by a margin of 407 to 17, outlines the following key provisions for raising investment capital through crowdfunding:

  1. Up to $1 million may be raised in a 12-month period, or up to $2 million if audited financials are provided to potential investors.
  2. Companies raising funds through crowdfunding may use social media, general advertising, and other similar means to spread the word to prospective investors.
  3. An investor may invest up to $10,000 or 10% of their annual income (whichever is less) in an individual offering. Investors do not need to be “accredited”.
  4. Crowdfunding-round investors would not count toward the 500-investor threshold at which companies are required to go public.
  5. The issuer must state a target amount, and then must raise at least 60% of that amount for the round to occur. If the 60% threshold is not reached then no funds change hands.
  6. A licensed intermediary may be used to execute the transaction. Intermediaries shall be required to warn of the risky and illiquid nature of these investments, take reasonable steps to reduce fraud, carry out a background check on the issuers, maintain records per SEC rules, and shall not offer investment advice.
  7. State securities laws are preempted in this type of offering, which means that pre-registration of offerings with state agencies will not be required.
  8. Raising money through crowdfunding will not prevent you from concurrently raising funds through other existing mechanisms.

Senate Bill 1791 outlines a similar crowdfunding exemption, with a few important differences:

  1. The per-round limit is set at $1 million, and the per-investor limit is capped at $1000.
  2. An intermediary will be required, not optional.
  3. The state rule-making authorities will have more of a say in registration and other requirements.

Link: Iron Sky - Website & Iron Sky (Opening Scene) - Youtube

[via Indiewire & Filmmaker Magazine Blog & Vim Funding Blog]

Your Comment

14 Comments

Let's hope this passes. Such a dangerous web trying to get investment in a film, the rules and regs can really get one in trouble if they're not careful and easily stall a project from getting funded. It would be great to offer crowds equity in a film with out all the SEC hoopla...

March 16, 2012

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Lance Bachelder

...What was that? Unconvincing space suits. A stereotypical black guy that manages to be just plain racist instead of funny-self-aware-racist. NAZIS IN FUCKING SPACE. ...Wait. This is a movie about Nazis in space. *processes information* This will be the best B-Movie since The Room. I can't wait! :D

March 16, 2012

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With the Iron Sky trailer - would bullets do that in space? Since there's no gravity, they would just hopelessly float around. Right?

March 16, 2012

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Let's not poke holes into this realistic drama.

March 16, 2012

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Joe Marine
Editor-at-Large
Shooter/Writer/Director

Ha... ok. Good point.

March 16, 2012

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Gravity has nothing to do with it. If a bullet is succesfully shot it would reach higher speed because of vacuum. Think of satellites. But there is no point in firearms as they depend on explotions which depend on oxygen. No sound neither.

Nothing beats "2001..." to me.

March 17, 2012

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maghoxfr

Actually, sure, bullets would do that in space. It's a projectile being launched by a propellant. Doesn't need air, except maybe to fire the propellant, but than can be fairly easily resolved. Think of it this way: could someone throw a rock at a target in space?

I actually thought it was fairly realistic how the bazooka blew up the landing capsule without a fiery explosion, which would be accurate because of the lack of oxygen.

March 16, 2012

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Shenan

Joe, this is really interesting. I had never even thought about the idea of crowd investing, or realized that it was easily legal in the US. Curious for more information, I googled for and found this useful little intro article about the idea, which also describes key points of the proposed legislation: http://www.vimfunding.com/2012/01/crowd-investing-101/

March 16, 2012

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Shenan

That's a good link that summarizes both bills very well. I'm going to add it to the post.

March 16, 2012

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Joe Marine
Editor-at-Large
Shooter/Writer/Director

Cool, I'm glad that it was useful!

March 16, 2012

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Shenan

The JOBS Act passed the Senate with tweaks for better investor protections. http://www.politico.com/news/stories/0312/74363.html

March 22, 2012

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TonyRockyHorror

That's great news! Now we just need it to pass the House. This statement is just sad, there will be scams no matter what when it comes to getting money from people:

Merkley said the crowdfunding portion of the House bill is “simply a pathway to predatory scams.”

March 22, 2012

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Joe Marine
Editor-at-Large
Shooter/Writer/Director

The house version of this bill should not pass. It is easy to be romanced by how good this sounds like it could be for independent filmmakers trying to fund their projects but the bigger picture is scary. This bill strips away a boatload of protection for individual investors and allows companies to raise funds while disclosing less than even before the 2008 crash. It also incents them to stay private for a long time, keeping investors in the dark all the while.

The Senate version sounds more responsible but I have not seen the details of that one yet. If it fixes the glaring problems in the house version then let's hope the house votes it through.

March 22, 2012

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It did not pass. The Senate reworked the bill and actually passed it today, so now it has to go back to the House. It seems like they added back in a bit more protection for investors.

http://www.politico.com/news/stories/0312/74363.html

March 22, 2012

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Joe Marine
Editor-at-Large
Shooter/Writer/Director