Crowdfunding has become increasingly popular over the years. It allows people to fund projects with financial contributions from a large number of people. However, there are different types of crowdfunding. Donation-based gives the contributor nothing but the satisfaction of giving to a good cause or helping someone achieve a dream. Rewards-based gives the contributor something back, often the item being produced (like a game, book or music). But the really interesting one is equity crowdfunding.
Equity crowdfunding is when your contribution actually buys a small piece of equity in the company. That means that you’re entitled to a piece of any profits that the project achieves. While the projects are not guaranteed to succeed, it is a way to get in on a potentially lucrative investment opportunity (assuming you can handle the risk involved).
Now the first Hollywood movie to be fully funded through equity crowdfunding is available to invest in. I’ll Be Next Door For Christmas is a Christmas movie being created by a team who have collectively won 4 Emmys, an Oscar and a Golden Globe between them.
The movie itself
I’ll Be Next Door For Christmas is a comedy about a family that goes crazy for Christmas except for the 16 year old daughter. Her family’s antics are embarrassing and when her out-of-town boyfriend comes to visit for the holidays, she devises a plan. She hires actors and stages a fake Christmas dinner at the empty house next door. It’s safe to say that wackiness ensues. Jennifer Tilly and Laura Marano have already joined the cast.
The advantage of a Christmas comedy are 2-fold. The comedy genre has the second largest market share in movies (after adventure). And there’s also not a lot of competition in the Christmas movie space. You would think there would be a lot of Christmas movies, but think of your favorite ones. Elf is probably the most recent big hit and that was made way back in 2003. Then what? Christmas Vacation was from 1989. A Christmas Story was 1983. There really aren’t as many live action Christmas comedies as you might think.
How it all works
In this funding campaign, 100% of the gross proceeds are returned straight to the investors until they’ve gotten their initial investment back. At that point, the ratio adjusts and 50% of the film’s profits are returned to the investors in perpetuity (forever!). The minimum investment is $100.
Basically you would get paid back proportionately to what you put in. For example, if you invested $1,000 and the film raised a total of $100,000, you would own 1% of the movie. You’ll earn 1% of the proceeds until you get your $1,000 investment back. After that, you would get 0.5% of the gross proceeds the movie earns forever.
The business plan
The plan for this movie is going straight to on-demand. It will be released to iTunes, Hulu, Google Play and cable on-demand services. Going this route allows the creators to avoid paying 35-40% in distribution fees for theater release, keeping more money in investors’ pockets.
In addition to on-demand avenues, there are also plans to sell the foreign rights for international distribution. They will also be releasing the movie on Blu-ray and DVD. Merchandising, soundtrack and potential book rights all provide additional revenue streams that investors can profit from.
Opportunities like this weren’t available to the majority of people until the JOBS act was passed in 2012. This law allowed businesses to use crowdfunding to issue securities.
I think that this is a very interesting investment. While it is certainly no guarantee that you would make your money back, the earnings potential is huge. If the movie is a dud, you lose your investment. But if the movie ends up being a big hit with staying power, you could be receiving a check from it every year for the rest of your life.
It’s also not being thrown together by a bunch of inexperienced film makers either. The movie boasts an established producer and director along with a couple of actresses with plenty of acting credits to their name. It seems like there’s a recipe for success here.
While I wouldn’t pour your life savings into this, I think that there’s some serious upside investment potential here. It’s a way to give your portfolio a little diversity. I wouldn’t recommend it for the risk averse, but if you’re willing to trade risk for high upside, this might be for you. It’s essentially buying an asset which is what millionaires do.
If you would like to learn more about this or are interested in investing, you can find more information at their official site here.