Crowdfunding Your Creative Project

Posted by Super User
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on Wednesday, 30 July 2014 in Blog Posts

Creative endeavors are often a reflection of contemporary society.  In musical theatre for instance, Gershwin reviews are now few and far between, while productions featuring more kickstarter-badge-backerup-to-date musical styles such as hip-hop, and rock abound.  It stands to reason, therefore, that funding methodology for the arts should move with the times, as well.

Crowdfunding has quickly become a popular method for grass-roots capitalization of creative projects, mostly through websites such as Kickstarter and Indiegogo.  Larger and more mainstream productions now seem to be jumping on the crowdfunding bandwagon with projects such as Zack Braff’s new movie "Wish I Was Here" having been funded through a Kickstarter campaign, and Jaime Hendry’s new production of “The Wind in the Willows” being funded with small investments via the production’s own funding website.  The lesson for all of us in creative businesses is that as audiences change with the times (fans of Gershwin are becoming quite rare, for example), the capitalization methods for projects in the arts are undoubtedly changing, as well.

"Change begets change."
- Charles Dickens -

With the funding model of larger projects moving from the typical paradigm of a small number of investors each contributing large amounts, to a model with a far greater number of investors each contributing a smaller amount, it was inevitable that regulators took notice of this change.  In the United States, the Securities and Exchange Commission appears to have recognized the benefits of crowdfunding, and is addressing this shift of funding methodology with a proposal for new rules, now in its comment phase.  Those looking to fund future projects in the U.S. should keep an eye on the proposed changes, and comment should they have any concerns.

Surely, the trend towards crowdfunding not only offers producers additional options for funding their endeavors, but also provides the opportunity for key grass-root feedback as to the potential popularity of projects.  Utilizing crowdfunding as a method of market research could help producers minimize risk very early on in their projects.  In other words, if a crowdfunding campaign is highly successful, it may be an indication that the production will follow in that success.  As an additional benefit of fruitful crowdfunding campaigns, producers will have access to an interested group of supporters to whom marketing efforts may be directed, and with whom market research may be conducted.

With the changes in crowdfunding investment rules likely to be made by the S.E.C., and the benefits of engaging a new and broader group of investors in the arts, the future looks bright for those that recognize and ride the wave of crowdfunding likely to arrive in the near future.  Certainly, those interested in having large creative projects funded via crowdfunding should be familiar with the rules that govern such investments, and should ensure that their organization is set up to both attract and maintain a wide-ranging group of investors.

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