These days, investing money is the smart thing to do. But if you’re a filmmaker and looking to create your latest film or an investor who wants to invest their money, the best option might be to go with equity crowdfunding.
What is Equity Crowdfunding?
You might be familiar with the term “crowdfunding” already. It’s a way of earning or generating funds from a large number of people or a “crowd.” Platforms like Kickstarter and Indiegogo, are two of the biggest crowdfunding platforms today, but they function purely as a rewards-based crowdfunding site. Meaning, in exchange for your donation or contribution, they offer rewards so you get a product, gift or recognition.
Meanwhile, another form of crowdfunding used mainly by filmmakers is equity crowdfunding. In this form of crowdfunding, in exchange for your donation, you (the contributor or investor) gets equity or shares in the company’s business or project. In film, you get a share of certain profits or equity from the film, depending on what’s being offered by the maker. The terms are dictated by those who set up the crowdfunding.
For filmmakers or companies looking to get their films created, equity crowdfunding offers the following perks:
- It lets you connect with potential investors faster. Because you’re targeting a specific niche of people (those who are willing to invest in your film), you can readily raise the targeted amount of the campaign quickly. All you need to do is place your campaign in front of a large audience to let them know it’s available.
- Aside from letting you create a film you believe in, a campaign like this gives you plenty of exposure. You get to stand in front of large businesses or investors. They’re not necessarily people who will invest but could become potential customers for your business or brand.
- Finally, it gives you a chance to engage with your customers or viewers. You are giving customers an opportunity to help you out and buy into possible profits. Your customers and viewers then become your ambassadors.
Should You Invest or Consider Using Equity Crowdfunding?
If you’re looking to invest in film equity, there are companies always looking for funding to create their next film or project.
Your job as an investor is to pick a brand or company you trust and invest an amount you are comfortable with. Like any investment, there are risks involved and you have to be okay with this too.
As mentioned, equity crowdfunding makes it easier for those who see filmmaking as a good investment actually have a place where they can do that.
On the other hand, as a company or filmmaker starting the crowdfunding, giving your investors a chance to make their money back ensures the people who invest believe in your capacity to create a quality project and to see it through.