As part of Film Courage, you know how devastated our industry has been
because of the economic downturn and the technological changes.
Filmmakers, of course, are resilient and persistent, so many of us have
fought hard to grasp various methods to allow us to keep making movies.
One outgrowth of those efforts has been the crowdfunding technique that
blossomed in the past couple years. It has enabled many films to go into
This week, Congress has given us the potential to rebuild the independent
film industry, and we cannot allow this opportunity to pass us by. Congress
has passed the Entrepreneur Access to Capital Act (HR 2930).
You need to take action to assure its success.
Although crowdfunding has been successful in allowing filmmakers to
exercise their creativity, it rarely has allowed for budgets that paid for crew
and equipment, it rarely has offered profitability for a film, and it has not
contributed significantly to building the infrastructure that is so desperately
needed. The reasons for the shortcomings of crowdfunding are the stringent
rules from the Securities and Exchange Commission (SEC), which protects
individuals from fraud and manipulation in investment schemes.
To use crowdfunding, filmmakers must plead for donations from as wide
an audience as they can access, and the only tangible benefit that can be offered is a token “gift” in appreciation for the donation, just as tent preachers did a century ago. This results in small amounts being raised, often just enough to make the film if the crew is not paid and the equipment is put together by “beg, borrow, and steal.”
Suddenly, a new world is opening up for us.
The bill Congress passed would allow filmmakers to raise real investment
money of under $2 million, and you need to help push this through to reality.
The bill will change SEC rules to help small businesses raise money from
investors who seek equity ownership and profit potential. Filmmakers will
be able to use the proven crowdfunding process of seeking large numbers of
people for funding our movie projects, but now we can offer these people the opportunity to truly invest in the project as equity owners.
This will be possible without completing all of the paperwork and legal steps
required for a traditional initial public offering (IPO). An IPO costs more than $10,000 just for the paperwork involved, so very few filmmakers of low budget films can afford to go this traditional route to raise money.
Specifically, the Entrepreneur Access to Capital Act would exempt securities
from registration requirements if:
– The aggregate amount raised through the issuance is $1 million or less
each year ($2 million or less if the issuer provides investors with certain
financial information); and
– Each individual who invests in the securities does not invest, in any year,
more than the lesser of $10,000 or 10% of the investor’s annual income.
Filmmakers would be required to take certain steps, which include providing
certain information to investors and the SEC, in order to be eligible for the
crowdfunding exemption. Of course, fraud prevention will continue to be
a key element of the process. The bill would require the SEC to develop
regulations to implement this new authority and to set out actions that would
disqualify certain individuals from issuing securities under the exemption.
Further, the amount of potential fundraising is appropriate. The common
thinking in today’s independent film business is that the pre-2008 logical
range of $3 to $5 million for good production value has now dropped to
$1 million or less, so this legislation hits the “sweet spot” for independent
filmmaking. It would mean real money for real budgets, with wages (now
rare) for workers and adequate equipment rental, which in turn will mean re-
building the infrastructure of the independent film business.
Congress passed the Entrepreneur Access to Capital Act and it has been sent
to the Senate for further consideration. They need to hear from you. This
is very important; it is our chance to rebuild the independent film industry.
We have already proven that there is a huge appetite among consumers to
participate in funding our movies. The Entrepreneur Access to Capital Act
enhances this existing and proven potential.
Anything can happen. For instance, in our current political environment, “Hollywood” is often ridiculed and even considered an enemy, and the presumption that everyone is as rich as Steven Spielberg is popular. In this environment, it is possible that independent filmmaking could be excluded from the ultimate bill. There are already amendments being suggested to restrict who can use of the Entrepreneur Access to Capital Act. We must make sure that the independent film industry is not lost in political action.
President Obama supports the bill. In his September 8th Address to a Joint
Session of Congress on jobs and the economy, Obama called for cutting
away red tape that prevents many rapidly growing startup companies from
raising needed capital through a crowdfunding. He called for an exemption
from the requirement to register such public securities offerings with the
Securities and Exchange Commission. He is likely to sign the Entrepreneur
Access to Capital Act when it is sent to him.
WHAT WE MUST DO: In this environment, and with something this important to our future, we need to contact our representatives and speak up in support of this bill and let them know how critical its potential is for building the independent film industry. Thank your congressperson for having passed the Entrepreneur Access to Capital Act and explain your optimism for the independent film business. Then, encourage your Senators to pass the bill and assure that it embraces the independent filmmaking industry.
The Film Courage community needs to work together to make sure this
opportunity to rebuild the independent film industry does not get lost in the
Michael R. Barnard has been in broadcasting and filmmaking all his life, as producer, director, writer, and crew. His new novel NATE AND KELLY, an exciting and powerful historical fiction about American society–its fears, hopes, demagogues, and race relations a century ago–is available on
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