Question for

Friend of mine with a VR company suggested I look into crowdinvesting to finance my TV pilot. I don’t know where to begin since crowdinvesting is so new. I also don’t see any crowd investing sites that let TV or movie projects on yet. Can you give me any ideas to research or sites to look up? 

Answer by Brandon Blake, Entertainment Lawyer:

Thanks for a great question about crowdinvesting. I have represented more than 50 feature film and television series over the last 16 years and regularly consult on film and television projects for clients, so I have been hearing the buzz around crowdinvesting. Crowdinvesting is going to be big this year, and a couple of companies like, look promising.

With some tax incentives and foreign co-production opportunities ending in 2016, any new sources of film and television finance will be welcomed. The potential for crowdinvesting to provide access to the $2 trillion dollar private equity market is the reason many producers are interested.

Crowdfunding Versus Crowdinvesting

First off it is important to make the distinction between “crowdfunding” and “crowdinvesting.” Companies like and have been around for a while offering crowdfunding, which is donation based. That means that producers are prohibited by law from offering any percentage of the profits to someone during crowdfunding, thereby creating a tax problem for the donor. Any money donated must be kept track of for the donor’s Lifetime Gift Exemption, as well as the donors Annual Gift Tax Exclusion. The IRS puts limits on both how much money can be gifted in one year, and throughout someone’s lifetime.

Crowdinvesting, however, is entirely new and just getting off the ground now because of the change in SEC regulations late last year. A company called is one of the front-runners, and several others are joining in too. Crowdinvesting allows users to offer profit participation to investors, creating a real investment that can gain value and pay back the investor if the project makes money.

Previously it was only possible to offer an investment in a film or television series to investors by setting up a securities offering, filing an exemption with the SEC and preparing offering paperwork for every investor before reaching out to potential investors. This is both time consuming and expensive, and crowdinvesting can replace that whole process.

Changes In The Law

What makes this all possible are several recent changes in the law.  First, Regulation CF finally went into effect mid-2016. The SEC had prohibited any crowdfunding portals to start operation until Regulation CF was completed, and the regulations were delayed since 2012, when Congress first passed the JOBS Act.

To show they mean business, the SEC has also amended Regulation A, creating Regulation A+ at the same time, which is another potential avenue for crowdfunding portals. These amendments and new regulations are going into effect now, with the last changes to become effective May 22, 2017.

How To Choose

There are a number of crowdinvesting platforms in operation now, which basically break down into two separate groups, as they are utilizing different regulations passed by the SEC.

One of the most visible new crowdinvesting companies is Microventures, thanks to its partnership with Indiegogo. This is what is called a Reg CF based funding portal. As of my last investigation of the company there are no film or television projects being accepted at this time. The reason for this primarily owe to Reg CF itself.

First, Reg CF requires funding platforms to take liability on behalf of the listed companies. That means that companies under Reg CF are going to be hesitant to take on what are usually considered more “risky” ventures, and film and television projects certainly have a high risk profile. Secondly, in order to try to reduce that risk to the company, Microventures apparently requires expensive “vetting” and “analytics”. Finally, users are still required to prepare their own offerings and securities filings, so the upfront costs are actually higher than conducting a private offering independently.

The second type of crowdinvesting platform is relying on Reg A+ rather than Reg CF. The most notable company in this group is Because different regulations are being relied upon, the site is open to any type of business, and already has a range of film, television, and media projects listed.

Additionally, no “vetting”, “analytics” or even a business plan are required, and the platform also handles the securities compliance through a third-party, so that the upfront costs charged for membership represent the only expenses a producer would face in getting a project listed and in front of investors.

While no doubt there will continue to be more entrants into the crowdinvesting field in 2017, it looks like the industry is breaking into two different versions, both targeting different markets.

After so much anticipation, it is great to see the SEC finally open the door to crowdinvesting in the United States. With the upfront costs so low, there is no reason producers should wait any longer to get involved.

As with any entertainment matter, please do not make a decision about complex issues without consulting an experienced entertainment lawyer first. Feel free to contact my office at about a quote.

- By Brandon Blake, Entertainment Lawyer