Crowdinvesting is Now Legal in the U.S., but Kickstarter Isn't Interested in Equity Funding
Earlier this year there was a back and forth between the U.S. House and Senate regarding a bill called the JOBS act, which among other economy-stimulating provisions, included a specific section that addressed a type of crowdsourcing that is referred to in many circles as crowdinvesting. The JOBS act ultimately passed, and the crowdinvesting provision stayed. Basically, it allows any person to invest a certain amount of money into a film and then receive equity without having to go through the SEC or be a qualified investor. This type of investing has already existed in the rest of the world, and one of the most successful examples is with the film Iron Sky. Many were hopeful that Kickstarter, with its large infrastructure for anything crowdsource-related, would help facilitate crowdinvesting. Unfortunately, that doesn't look to be the case.
Scott Macaulay over at Filmmaker Magazine is reporting that Kickstarter has no plans to move away from crowdsourcing as we currently know it. Kickstarter CEO Perry Chen recently had an interview with GigaOm, and this is what he had to say about Kickstarter possibly entering the investment crowdsourcing realm:
Some people have made assumptions about what we would do. We’re not interested in that model. We’re going to keep funding creative projects in the way we currently do it. We’re not gearing up for the equity wave if it comes. The real disruption is doing it without equity. The real disruption is when you break down the funding of a project into all these little bits. When people are giving $5, $20, $50 — people don’t need to receive a return on their investment. People are giving relatively affordable amounts of money and they decide how much they give. So many ideas, in general, in the world are not about and are not going to make money. Those things need a model. That’s the world we come from. That’s what we wanted to support.
So if you live in the U.S. and were excited about the new provisions of the JOBS act, it's a little disappointing that Kickstarter is not interested in being an intermediary in the investment model. Their hesitancy is understandable, as investment side can bring with it an entirely new set of headaches, but there are plenty of projects that could benefit from crowdinvesting. It's also possible that Kickstarter is worried about the increased fraud that would likely come from people giving hard-earned money and expecting a return on that investment. It will be very difficult to attempt this sort of crowdsourcing without a trusted organization like Kickstarter to back up your project.
Perry and Kickstarter, however, have no plans of slowing down, and they are looking to expand the company into many more categories. For example, cities have approached them about doing certain projects that are, at the moment at least, outside the scope of what Kickstarter currently allows. Surely they've got some interesting ideas in the pipeline, but it's still disappointing that we may have to go elsewhere if we are interested in crowdinvesting our film.
Should Kickstarter get into crowdinvesting? Let us know what you think.