Equity Crowdfunding A Movie – An Opportunity for a Passive Income Stream?

Gentle Readers,

Any blogger with more than one post in a niche gets random emails soliciting posts or access to your platform. Most of them are clearly spam. They are the equivalent of offering to write a post about Viagra for a lesbian’s financial independence blog. They all claim to have read you and love your blog, but they’ve never interacted with you on any platform. (Hint, I’m on twitter and facebook and right here at www.zjthorne.com). No liking a tweet. No blog post comment. No indication that they’ve read you at all.

This time was different. The approach was interesting because they actually did some homework on me. They showed that they had read one of my pieces, or at least the title. They put in the minimal required effort to pique my interest. They are the first. There are perks with being first.

When you approach someone like you respect their time, they are more inclined to listen.

Based on our interactions, I believe this person’s idea was worth investigating. They did not ask for a post, and this is not a sponsored post. This is what happens when people respect others’ time and expertise (let’s joke and pretend I’m an expert here, thanks).  I am not receiving any money for this post and I have not decided if I would invest in this project.

Enough with the caveats.

What is Equity Crowdfunding?

Title III of JOBS Act made online equity crowdfunding legal. In a nutshell, you do not have to be an accredited investor in order to participate in some opportunities to invest now. Accredited investors have a lot of money and the government assumes that they know what they are doing when it comes to investing. Thus they are allowed to invest in securities that are not registered with financial authorities. The government thinks that slick folks won’t be able to pull one over on accredited investors and that they don’t need to be protected from themselves.

Those of us who do not make enough money are now allowed to buy equity in an early stage company. You are reading a FIRE blog and I assume you know what equity is. The goal is that this asset produces returns. You can invest in some startups now. That’s the gist of equity crowdfunding.

What is the opportunity?

That Christmas Movie LLC is seeking investments to get a Christmas Comedy out the door for the 2017 Holiday Season, “I’ll Be Next Door For Christmas.”  It is going to be a full length feature film and claims that it will be the first Christmas movie to raise funds this way. (The JOBS Act did not make this legal until 2016, fyi)

Essentially, they are making a low-budget Christmas Movie with some very talented folks, who’ve made comedies I’ve enjoyed before. They will leverage the money earned through equity crowdfunding to access other capital at a cheaper rate.  They’ve reached their minimum goal already and intend to make a movie on whatever budget they end up with. If I understand it correctly, they will not use more than $2 million total to produce this film.

If you have anywhere from $100 to $100,000, you can purchase a share of this security. You are buying Revenue Participation Rights. It is impossible to know what the interest rate would truly be, because that will depend upon returns, if any.  They’ve set up the company in a way to allow the investors to receive 100% of the adjusted gross proceeds up to the repayment amount, that is the $100 to $100,000 you put up. After all investors are repaid, 50% of adjusted gross proceeds would go to investors on a pro-rata basis. There is no term. You buy it and hope to receive residuals forever.

There is even a lesbian link

Jennifer Tilly joined the cast. She is not a lesbian, but she starred in a lesbian classic, Bound. Queer women throughout the US are grateful to her.

What do you think? Should I invest? I have the writer/director’s email and am not sure what questions I should be asking. What would you ask? 

Net Worth Week 25 – Mentor Edition

9/16/16 9/23/16 9/23/16
Joy 1100 1100 1100
Travel 323 323 323
Down Payment 19 19 19
Retirement 21 21 21
Health 45 45 45
Moving 283 283 283
EF 1004 1004 1004
Business 1 1 1
Bed 0.29 0.29 0.29
Life 871 1732  1596
IRA 9854 10079  10033
Brokerage 395 402  400
CC (largest) -4699 -4693  -4660
CC (longest) 0 0 0
Rewards Card 0 0  -701
SL 1 -102726 -102858  -102957
SL 2 -45223 -45283  -45328
Earnest -8126 -8143  -8160
Net Worth -146867 -145967  -146981
Percentage Change -.22% .60%  -.69%

Any recommendations for paying your employment and quarterly taxes as an LLC?