Last week I moderated the panel on “How to Make Crowd-Funding Work for Filmmakers”- for the Winston-Baker’s 3rdannual Film Finance Forum West. I would like to call special attention to it because I think the panel marked a seminal moment in the evolution (and convergence) of filmmaking and technology.  That may sound slightly overstated, considering it was my own panel, but hear me out…

Backstory: If you’re unfamiliar with the concept of crowd-funding, let me explain. It’s basically using the internet to raise funds from the public (i.e. the masses, the crowd) for the purposes of financing a movie, an album, a start-up, or whatever it is you and your crowd want to finance.  Exactly one year ago I wrote my first article on crowd-funding, in which I was skeptical of it being a means for financing an entire film’s budget, yet was optimistic the model could be used to augment traditional film financing structures.  The question raised was how to generate a return on the crowd’s investment without violating federal and state securities laws.  The only viable workarounds at the time were and, both providing platforms through which a filmmaker could solicit donations from the public in return for memorabilia, DVDs – or other chotchkies.  These models were limited, but pioneering, though not as pioneering as the godfather of crowd-funding: Soupy Sales.

I may be a financier who works within the traditional film finance model, but I’m not traditional.  In other words, I like disruption and I’m open to change.

Fast-forward to last month’s article on the Democratization of Film, where I posted that very soon the three historic barriers-to-entry (financing, production and distribution) that independent filmmakers must routinely overcome will no longer be insurmountable.  It’s already happened to production (I can shoot an HD movie on my iPhone and edit it on my iMac), and finance and distribution are soon to follow.  How soon?  About two weeks later: at the 3rd Annual Film Finance Forum West, where an inconspicuous crowd-funding panel presented IndieGoGo, Audience Productions and Sokap, three new crowd-based companies that can topple the remaining barriers-to-entry, and fully democratize filmmaking.

We already discussed IndieGoGo (but will circle back to it).  Audience Productions is the first film company to be authorized by the SEC and 20+ states to use both the internet and crowd-funding to sell shares in their films for the purpose of raising their financing.  George Brumder, the CFO, said it took them over two years of haggling with the SEC to finally win the approval.  Just go to their site, pay $10, and you’ll own a piece of history with upside potential.


Yep. That was the sound of the financing barrier falling down.

Sokap, on the other hand, has created a micro-licensing platform that allows filmmakers to raise money for their films by licensing their U.S. and Canadian distribution rights on a localized level.  So if I see a film listed on Sokap that I think will resonate with a community that I am dialed into, then I can license (through Sokap) the right to market and distribute the film in Santa Monica, Westchester, Springfield, Dallas, Chicago, Vancouver, Los Angeles, Manhattan, CA, NY, DC, ON, wherever.  According to Phil Botana (who represented Sokap on the panel), it doesn’t even need to be a major city, but any town with more than 2,000 people.  As the local distributor of your selected territories, you can show the film in local theaters, sell it through local merchants, or directly to interested people or organizations in your territory.  You just pay a small upfront license fee to the filmmaker which allows them to make the film and then you market the film until it’s delivered, and collect a distribution fee from the revenues you generate.  Like Audience Productions, this addresses filmmakers’ critical need for alternative sources of financing while at the same time, also addresses the critical need for alternative forms of distribution in the U.S. and Canada, which have all but vanished due to skyrocketing mass-marketing costs.


Uh-huh. That was the sound of the distribution barrier falling down.

Where does this leave IndieGoGo?  I think (and the audience members at the Panel agreed) that the introduction of Sokap and Audience Productions elevates IndieGoGo from a niche funding vehicle into the film equivalent of a filmmaker’s Friends & Family or Angel investing round.  Filmmakers can use IndieGoGo (or Kickstarter) to raise funds to option screenplays, pay for a writer, organize their legal paperwork, create sizzle reels, create a budget/schedule, make offers to talent…whatever they need to get their project to such a point that they can get it listed on Sokap or filed with Audience Productions, in order to complete the balance of the financing.  If they can’t get past the IndieGoGo round, then the audience has spoken.

The companies on this panel – IndieGoGo, Audience Productions, and Sokap – collectively represent (for the first time) an end-to-end crowd-based solution that can allow independent filmmakers to circumvent the Hollywood financing and distribution bottlenecks.  With strong assists from Apple, Canon and Red Cameras, the Development, Finance, Production and Distribution of independent films… have now been democratized.  The proverbial foot is in the door.

I think it’s worth noting that when technology writer Kara Swisher (who moderated a panel that preceded mine) sardonically declared to this room full of film financiers that their traditional film finance models will be obsolete in five years, she was dead right.  But, when one of her panelists subsequently declared that crowd-funding would have no future beyond a gimmicky marketing novelty, he was dead wrong.


  1. I’m always skeptical of things that put even more time pressure on the auteur or the usually one person who tasks themselves with getting an indie made. It’s not enough to only be good at your craft, you now have to be sole marketer, financier, and distributor. All these tools are great, except you end up devoting 5 years of your spare time to make it happen, which is not a sustainable way to create art and develop yourself into a filmmaker with a voice.

  2. I just attempted a two-month campaign on IndieGoGo to part-fund a short film. Out of a desired $8000 we managed to raise $405 (with $100 of that coming in via a cheque I’m picking up personally). IndieGoGo states that the first 40% of funds usually comes from your own network (eg. friends and family) which basically makes it a collection point for money from people you already know. Do that part in person and you save yourself the cut that IndieGoGo takes (as well as the processing fees from Paypal and your bank) although that has to be offset against your own travel costs! I’ve had some great conversations with people whilst promoting via social networking but talk never turned into money. While crowdfunding is a great idea in theory, I think that it takes a certain type of project, and like the article says – if you don’t hit your target, the audience has spoken…

    • @Daniel, Thank you for sharing your experience. IndieGoGo and Kickstarter are technically crowd-patronage sites, whereas Audience Productions and Sokap have positioned themselves as crowd-financing, because they offer the potential for a financial return to crowd-financiers. Will this be enough to jump start this new model? I hope so.

      • I believe the pool of investors is still not big enough to consider funding anything but ultra micro budget films. Anybody who’s considered committing anything more than 10K to film would like to know much more about the filmmakers and the process before testing waters through Audience or Sokap. These are likely going to be micro investments, the same way works.

        You could think they will copy the business model big theater productions have adopted in the past (with a huge marketing company targeting privileged individuals), but most of these campaigns bust and people don’t ever invest on it again. It only takes one bad experience.

        And I disagree with you about 250K is the new $2.5 M. Most budgets under $5 M are +- half labor, half anything else. Even though when you shoot digital you can afford smaller crews, you still need qualified labor to do the necessary work. I just did a 150K movie with four name actors, I’ll never do it again. Too hard to keep a bargain and a happy crew. The human factor is the most important aspect when performing a quality production, no matter the budget. You can’t pay $50 a day to everybody for too long.

        You are still going to need one or two (or seven) major sugar daddies to sum up the equity you need. The normal guy would spend $50 faster on the neighbor’s daughter save-a-puppy campaign than in your next great filmmaking idea.

    • I’ve found shorts a lot harder to fund this way than tele or feature projects, as mum-and-dad investors cannot see a potential return, so it becomes an act of charity to pony up the dough. Other, more commercial oriented projects, and docs with social issues, can often attract a crowd through either their commercial potential or giving a voice to a niche constituency.

  3. Interesting delineation there – I suppose it’s an evolution of the term. Swapping ‘rewards’ for financial ROI should take the concept to a higher level and attract a different sort of crowdfunder/financier. Crowdfunding in its current form is still taking its time to catch on in the UK and my guess is that crowdfinancing will take even longer. I remain hopeful all the same.

  4. Great article, Jeff, however I’m not sure traditional film finance models will be dead in five years. Of course it was a sardonic comment.
    And crowd-funding truly should be more than a gimmicky marketing novelty.
    I think the SEC structure will be key.
    Also, I must say as a filmmaker that there is still a problem with REDCAM/HD being of acceptable quality on big screen theatrical release. It’s fine for cell phones, TVs and other smaller screen mediums.
    But we tend to forget that studios and distributors pay huge sums of money to prepare a REDCAM/HD film for a 35mm master negative from which 35mm prints are made for the theatrical releases.
    Most films in today’s theatrical marketplace are still filmed on 35 mm.
    It’s tough for megapixels to compete on the molecular levels you find with film.
    Having said that I, like the others, remain hopeful that the crowdfunding platforms for finance, production and distribution continue to grow.

    • I think it’s ok to shoot theatrically on Red/HD, but for the time being, I would still shoot the VFX plates on 35mm.

    • I just had a film hit theatres last weekend and it was an HD to 35mm blowup. The scanning/recording technology and film prints have advanced so much that I don’t think quality is an issue. Not to mention, as the lab pointed out to me, most films will do a DI and print to film anyway (even those shot on film) so shooting 35mm does not always mean your post costs will be that much cheaper.

  5. Looking at the websites especially at audience productions the things that gets me is how it seems to so completly abandon the traditional models.

    The current idea of the site is to launch an eight million dollar rommantic comedy. Fair enough. Except the site doesn’t talk anywhere about foriegn sales, Tax credits etc that could reasonably easy turn an 8 mill investment into a 6 million one. It also doesn’t talk about cast attachements which if your paying 8 mill for a rom com you better have some of. In short its business model is a 100% equity model for a product that doesn’t on the face look like its worth it.If i where investing i would think like that.

    Which is kind of where i go. The traditional method of film financing isn’t going away, its tricky but seem useful. However if you combine these together you might have something-if i could spend 20 bucks to get 50 dollars worth of film stock(which agressive film financer can do) i think yeah that something.

    • The more i research this the more then looks like an intresting idea. While the phrase “this violates securites and exchange laws” line is used a lot, some research suggest its reasonably easy to register for a million dollars of equity, and not that hard for less then 5. While i think Audienceparticipation 8 million dollar business plan is ludicrious, smaller and with regonition of other busines streams might have some merit here.

      Thanks Jeff for at the very least getting me thinking. And not for the first time.

      • Securities offerings require very precise, almost static, finance plan. You can’t tell the SEC that you want to raise $8m “but if you only raise four then you’re going to supplement the rest with tax credits and pre-sales, etc.” They want to know exactly how much you’re going to raise and exactly how you’re going to spend it.

  6. What I do like about Indiegogo over Kickstarter is that they have “baked in” deals with fiscal sponsors Fractured Atlas and the SFFS, so if you have a fiscal sponsorship agreement w/ one of those orgs, you can offer potential donors a tax deduction w/o being charged additional fees.

    Ditto what Scott said about Audience Productions… why go through all the trouble to file and administer public shares if 1) they’re so restricted and capped 2) the prospectus can’t seem to provide evidence that it will return a profit. It makes more sense to pursue high net worth donors under a charitable/social mission.

    The arts/culture non-profit sector is in as much upheaval as the film industry concerning revenue models, marketing, using the power of crowdsourcing, engaging audiences via social media, etc. There’s alot being discussed in that world that I think we can absorb and borrow from, via sites like 24 Usable Hours, Technology In the Arts and Diane Ragsdale’s blog for Arts Journal…

    • Whether or not Audience Production has the definitive model for internet-based IPO financing, remains to be seen. But I think they deserve acknowledgment and support from the indie community for dedicating a lot of time and expense to trying something new and blazing a new trail. Surely you all have $10 you can spare for a share (that’s two lattes).

  7. If a twenty five dollar film funded in one of these ways becomes a hit and gives its two dollar investors a huge return, then the crowds will line up to lose their money in the next ten films that never make it. If something like this doesn’t happen then I can’t see a great future for crowd funding.

  8. P.S. There are a lot of gamblers in Asia and there is a lot of money outside the U.S. and if a daring entrepreneur took the crowd funding idea offshore, as some of the online casinos have, then a structure might be created that is appealing to investors – then it might work.

  9. I have to agree with everybody who’s saying that crowdfunding could only work for ultra low budgets. There’s just no way to attract enough very small investors to fund anything else.

    Instead, it seems like it would be easier to get a much smaller number of larger investors to put money into a film-exclusive hedge fund IF it were run by somebody with the business savvy to spot a well put-together project as well as some kind of track record in picking successful film projects. I know that person is rare if not non-existent, but a team that could pick projects the way a studio presumably does (only better) would seem to me like a very viable fund. And actually, there probably are quite a few producers and development execs who would be ideally suited to running such a fund.

    A film isn’t too dissimilar to any other type of business venture or product aimed at consumers, and statistically, entertainment projects are no more risky than any other investment vehicle. An impartial, tasteful fund manager should be able to equal the results of any other type of fund.


    • I see crowd-funding (in the short term) as viable all equity or equity + tax credit financing for budgets up to $2m. That is a great thing — it’s salvation for producer of movies up to $2m. But I also see crowd-funding as a viable supplement to larger finance plans. It shouldn’t be all or nothing.

  10. Hi Jeff,

    Thanks for the info on CF.

    I agree that it would be a viable way to only fund films up to 2mil.

    However, as Andrew stated up top these digital tool really dig you into a deeper hole of time an responsibility. he only way around this is to have an untraditional producing team to tackle this issue so, the auteur can concentrate on the craft.

    The big question I have is who is actually going to finance a film? What is the profile of that person?

    People are pulled in so many directions financially that investing in a film seems like an abstract idea compare to giving to charity.

    In both cases the giver may not know the person(s) but one has more of a human element of helping and giving (charity) than the other. In other words, a person would think do I give my money to a cause that needs it on a human level or on an entertainment level. Which gives the greater return of personal satisfaction?

    This [equation] seems to me to be a major barrier for CF to get full traction in the public’s eye.

    Any thoughts?




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