Has the SEC just changed the rules for film funding?

Back at the end of March the SEC (Securities and Exchange Commission) updated an investment scheme known as “Regulation A+” (got some SECy names over at the SEC!) which will go into action on June 19.

The Hollywood Report has an article about it, linked below, but I thought I’d chime in.

Reg A+ redefines how companies can seek investment in vehicles – including film. THR opines that this might change crowdfunding as Reg A+ offers the chance for the investors to get money back on their investment, unlike the normal Kickstarter model where the investor gets no financial return but gets ‘perks’ for stumping up the cash.

Be clear: this will change little for the small film trying to raise money. The paperwork requirement is too costly and complicated for a guy in his garage making a SciFi short. Reg A+ WILL help the studios to put films on the auction block for open investment – i.e letting them tap into a kind of crowdfunding that sits better with large corporations.

Reg A+ has two tiers (with slightly different paperwork requirements) – up to $20 million and $20 – $50 million. This will also be HIGHLY attractive to mid-level funders looking to get in on name productions.

I see this as potentially harmful to small filmmakers. If someone sets up a Kickstarter-like website that brokers these Reg A+ deals then that will seriously bite into small films. I’m sure the general public would rather put $100 into ‘Iron Man 5’ than ‘Mom’s backyard shenanigans’, especially if not only do funders get a digital download but they also get the chance to get a small return.

I’m curious to see the ripples here.

Here’s The Hollywood Reporter article

Published by

Phil Smy

I am currently a student in the Raindance Film Degree Masters program. This site comes from the research I am doing as I learn more about film production and distribution.

Leave a Reply

Your email address will not be published. Required fields are marked *