Exactly 7 months from now is … Christmas! You guessed it! I don’t do Christmas for the obsessive overconsumption. But I love Christmas for the food, the snow fights, chilling with the family and watching a great Christmas comedy. I love creative ways of making money. I also love the power of communities. More than all of that I love collaborating with entrepreneurial people.
That’s why when I was approached by the Associate Producer of the world’s first investment crowd funded Christmas movie, I got immediately interested.
What is investment crowdfunding
Investment crowdfunding is a way to source money for a company by asking a large number of backers to each invest a relatively small amount with it. In return, backers receive equity shares of the company. – Investopedia
Not many people have heard of investment crowdfunding yet, and we find we have to do a bit of explaining. But for investors, it boils down to this big difference from Kickstarter — if the movie makes money, you make money. – David Willis, founder and CEO of That Christmas Movie LLC
What is the movie about
Let the producers themselves tell the story, after all, that’s what they are best at:
The film “I’ll Be Next Door For Christmas” is a witty comedy about a family that’s crazy for Christmas. Except for the 16-year-old daughter – her family’s over-the-top Christmas celebrations have made her life miserable. When her long distance boyfriend decides to visit for the holidays, she’s determined to spare him her family’s Christmas obsession. She hires actors to play her parents and stages a fake Christmas dinner in the empty house next door. What could go wrong?
How can you invest in the movie
The investment crowdfunding campaign is currently accepting investments on the equity crowdfunding platform, Wefunder. The initial $100k raise is the first round. The final goal of $850k will come from other sources of finance in the private sector. So far, investors responded and the campaign reached over 600% of its minimum goal.
All the funds raised will be used for production and marketing of the film. The producer believes it will generate revenue at that time, and for decades afterward. The company forecasts (but does not guarantee) gross revenues of $3.2 million over a three-year period after release.
You can participate as an investor, make this movie happen and make a profit out of it. Before you do so, make sure you check out the risks section below.
What will you get if you invest in the movie
You’ll own a piece of the company (revenue participation rights). There are some great perks for early investors, like behind-the-scenes peeks, visiting the set, a producer credit, meeting the cast, walking down the red carpet at the premiere, and more!
That Christmas Movie LLC, the company you invest in, has a single purpose: to make and market the motion picture “I’ll Be Next Door For Christmas,” and to derive revenue from that intellectual property.
The short-term goal is to produce the best Christmas movie they can and release it during the 2017 holiday season, with the aim of attaining profitability in one season.
The long-term goal is to continue to market the film to create a revenue stream for decades to come because they believe that Christmas movies are an evergreen asset.
Why I think this is a legit and fun way of investing
If you always wanted to be a movie producer, here’s your chance. When you put money in this project, you don’t donate, you invest. If the film makes money, you will make money.
- Ultra Transparency
The campaign on Wefunder is a full-blown business plan – a very detailed cost effective production budget, competitor and market analysis, team and credits, marketing, exact timetable, etc.
The producer is extremely responsive in answering questions in regards to the campaign and the movie. This is a level of transparency rarely seen in Hollywood.
The team has impressive credits – an Oscar®, 4 Emmys®, and a Golden Globe®.
- Movie distribution
The business model is focused on going directly to consumers via iTunes, Hulu, cable Video-On-Demand, Google Play, and other online avenues, with a small theatrical release. They can bypass distributors this way, which saves the 35-40% distribution fee. That means the movie will be in profits sooner, so they can pass those savings on to investors.
- (Self) Marketing
The team is reaching out to bloggers, influencers, and the crowd to gain publicity.
- Profit distribution
100% of the adjusted gross proceeds from the movie goes straight into the investors’ pocket. Then, once the investors have gotten 100% of their initial investment back, that ratio adjusts. 50% of the film’s profits are theirs in perpetuity. That’s forever and that’s a mighty long time.
The producers, don’t get a dime in profit participation until the investors are paid back in full.
- “Put It Up On the Screen” culture
The intention is to put the majority of the funds into hiring recognizable cast and making high-quality production so that it all looks better on the screen.
- Plan B, C, D
There is a very detailed plan on what happens if they don’t raise the final $850k.
What are the risks if you invest
Investments in the motion picture industry involve a high degree of risk. While they intend to generate revenue in the future, they cannot assure you when or if they will be able to do so.
There can be no assurance that:
- the producers will be able to obtain any additional funds beyond the asked $100k in the crowdsourcing campaign.
- the producers will complete, release or distribute the movie.
- the movie will generate any revenues or that any such revenues will be sufficient to return to the investors all or any part of their investments.
Here is what might go wrong:
- Economic Conditions
The company’s business and operations are sensitive to general business and economic conditions in the U.S. and worldwide along with local, state, and federal government policy decisions.
- Competition from better-funded companies with more experience may affect the success.
Many competitors have significantly greater financial, technical and human resources and superior expertise in the production and marketing of films. Thus they may be better equipped to develop and commercialize films.
- Labor Laws / Conditions Labor laws for actors or strike by actors’ unions may affect the ability to complete the movie.
- Risks related to competition for the leisure time and discretionary spending of audiences, which has intensified in part due to advances in technology and changes in consumer expectations and behavior.
In order for the Company to compete and grow, it must attract, recruit, retain and develop the necessary personnel who have the needed experience. Recruiting and retaining highly qualified personnel is critical to the success.
- Audience acceptance
The success is primarily dependent on audience acceptance of the films, which is extremely difficult to predict and, therefore, inherently risky.
- Lack of key man life insurance
Although dependent on certain key personnel, the company does not have any key man life insurance policies on any such people.
- The film might never be made
If the film fails for any reason, is never produced or is abandoned, the investors will not receive any return on their investment. The investors will lose all of their investment amounts.
- Limited Rights of Investors
The investors no voting rights. The investors will have no right to participate in the business or affairs of the company.
You have the chance to literally make filmmaking history! You will be one of the very first people to help make a feature length narrative film using equity crowd funding! The minimum investment of $100.00 is a good way to dip your toes in the investment crowdsourcing world.
On the other side, you should not invest any funds in this offering unless you can afford to lose your entire investment. In making an investment decision, you must rely on your own examination of the issuer and the terms of the offering. This includes the merits and risks involved.
READ VERY CAREFULLY the campaign and the attached documents before you proceed further!
Update, 27th July 2017:
The initial campaign on StartEngine reached $226,100. This was not enough to make the movie for the 2017 holiday season as the producers hoped. This leaves them with plenty of time for post-production and to ramp up publicity for a 2018 holiday release.
The crowdfunding campaign is now moved to a new platform Wefunder, in order to gain exposure to more investors.
I don’t benefit in any way from sharing this crowdsourcing campaign. My only benefit is a very good comedy this Christmas if everything works out as planned. I find it an out-of-the-box investment opportunity and I want to share it with my audience. I take no responsibility for the outcome of it. Proceed at your own risk.