KickStarter Fig - a new equity-based crowdfunding platform - shut down, RIP

[Telengard]

Silly. People investing in the arts for art's sake don't expect a return. That's the point of what they're doing. They're sponsoring artists. And while video games are not Art, they are part of the arts & entertainment realm, and they have always interested philanthropic investments, or patrons, or patreons. In fact, old school indies before Kickstarter all had donations pages (which most people ignored, sure, but not everyone).

Hate it if you want to, doesn't mean it isn't a facet of the game world that has existed for thirty years.

 

[Neckbeard Shitlord]

Silly. People investing in the arts for art's sake don't expect a return. That's the point of what they're doing. They're sponsoring artists. And while video games are not Art, they are part of the arts & entertainment realm, and they have always interested philanthropic investments, or patrons, or patreons. In fact, old school indies before Kickstarter all had donations pages (which most people ignored, sure, but not everyone).

Hate it if you want to, doesn't mean it isn't a facet of the game world that has existed for thirty years.

In kickstarter ir can be philanthropic. You give the indie guys a chance to have enough cash to become truly self funding/indie and not have to suck up to publishers. For fig there is no real chance to break free from the investors, so really you have to be pretty dumb to waste money on fig.

You have to be dumb to spend years and years on an indie project then go to someone for INVESTMENT as well, and have them take all the profits.

So really I think fig is crap and the only cynical purpose I see to it, is to fleece a few people out of kickstarter money, for projects that already would have gotten funded without it.

 

[Mustawd]

How did I waste so much time on this place. The discussion on video game is just as mediocre and misguided as on any other forum. Your pretend to be edgy and counter cultural, but really, Witcher 3, Divinity, Pillars, Fallout and other casual games end up being the most discussed. You turn a forum that was at it's core to discuss video games without constraint into a circlejerk with the atmosphere of an highschool playground. Which should be disturbing to anyone with stable mental health. You, yes you reading this sig, are likely struggling with serious mental or familial issues, both most likely, but you have the self righteousness of a Saint. The forum is divided between those who fully embrace their degenerate state of life and promote the most abject form of hedonism, and those in full denial spewing a distorted pseudo traditionalist doctrine, missing the irony of doing so in their current predicament. The exception of those of you here who shill for your own game and benefit from the disposable income of NEET (Or you infinitron for most likely working for a data collection firm, at least I hope for you your boting is actually a job). I can safely say that half of you will end up committing suicide at some point, and the other half surviving under heavy mental medication. Starting with the owner of this place. Dark Underlord I don't give you 5 more years before you end in a mental institution. You will never be happy beyond your prozac euphoria.
Goodbye.

Nbeard, is that Trex's goodbye?

 

[IHaveHugeNick]

Its dead Jim.

 

[ArchAngel]

I wonder who is going to be fool enough to give money to their next crappy project. They better have something really good planned for next one or Fig will die superfast.

 

[28.8bps Modem]

Surely after the dismal performance of the last two, nobody will volunteer for certain death on fig. It's going to have to be a Double Fine or InXile project next up, otherwise they might as well shut up shop.

 

[Dickie]

Just now finding out about this. Am I understanding this correctly that some guys looked through submissions and this F2P Diablo clone was the best idea of the bunch? I guess F2P games do make the most money these days, so if their goal is to maximize ROI, it kind of makes sense.

 

[Fairfax]

$104,080 raised

$8,528 in 11 days, or $775.27 a day. They need 511 days to fund the project at this rate, and the campaign has 15 days left. They just have to extend it to 05/30/2017.

 

[Archibald]

Myterious backer will fund it on last day.

 

[Alienman]

All fig projects automatically gets the "mysterious stranger" perk.

 

[Mustawd]

SEC has finalized the rules around crowdfunding under the JOBS Act exemption: link

TL;DR version below with larger detail in spoiler tags.


1. Fig will have to report an Income Statement, Balance Sheet, and Statement of Cash Flows in accordance with US Rules. It will have to be reviewed or audited by a CPA. Which basically means a bit more transparency into sales and profit than a private studio

Spoiler

1. The financial information a company is required to provide will depend on the size of the offering and amounts it raised in other crowdfunding offerings over the previous 12 months:

• Issuers planning to raise more than $500,000 must provide US GAAP financial statements that are audited by an independent CPA, but issuers conducting their first crowdfunding offering may provide US GAAP financial statements that have been reviewed by an independent CPA if audited financial statements are not available.

2. Fig will operate as a private company, but will need to disclose financial information in line with a public company. Which means their administrative costs can be expected to go up quite a bit. Means more salaries for lawyers and accountants.

Spoiler

Crowdfunding issuers will meet the definition of a public business entity (PBE) in US GAAP and must follow US GAAP for PBEs in their financial statements. Like emerging growth companies, issuers of crowdfunding securities may use the extended transition periods for private companies to comply with new or revised accounting standards, but they must disclose this election in their first offering statement and apply it to all new or revised standards. Issuers that don’t elect this accommodation in their first crowdfunding filing must follow the transition periods for public business entities.

3. Equity offerings must be executed through an intermediary registered to the SEC to make it more legit.

Spoiler

Requirements for intermediaries

Offerings must be conducted on an online platform6 operated by a broker or a funding portal that registers with the SEC. Intermediaries must provide investors with educational materials, take measures to reduce the risk of fraud, make information about the issuer and the offering available and facilitate communication between the issuer and potential investors.

Intermediaries are prohibited from offering investment advice or making recommendations about purchases of securities displayed on their websites. Intermediaries are also prohibited from holding financial interests in issuers unless they receive them as compensation for services performed in the offering and the interest consists of securities of the same class, terms and rights as the securities offered to investors.

Overall not a ton of big changes. But it's interesting that they'll need to be disclosing sales and profits.

 

[Irenaeus II]

I guess lawyers and accountants were the only winners in all these shennanigans.

 

[Mustawd]

I guess lawyers and accountants were the only winners in all these shennanigans.

Not really. It helps any current and potential investors as well. One of the big misgivings I personally had in investing was the transparency of how royalties would be paid. How do you know they're not underreporting sales figures to pay you less in royalties?

Now that they have these requirements it definitely makes me feel more comfortable in investing. Which will probably not be happening for another 5-7 years or so. :D

 

[Hegel]

A fool and his money

 

[Irenaeus II]

How do you know they're not underreporting sales figures to pay you less in royalties?

Owning the business and monitoring day-to-day operations.

 

[Mustawd]

Owning the business and monitoring day-to-day operations.

Err...not as an investor. You don't have that kind of access. At least not as a given.

 

[Irenaeus II]

I have a business you can invest in here at my shop, just follow me to this alley.

 

[Mustawd]

I have a business you can invest in here at my shop, just follow me to this alley.

 

[Hegel]

Err...not as an investor. You don't have that kind of access. At least not as a given.

They are not legally bound, but the contracting party of a PPM is bound to a certain degree of disclosure. Even in the case of a syndicate of angels (thus accredited investors), in the signed term sheet you'll want to arrange for a seat. Your committment will be the last step after a detailed due diligence (thus review of business/marketing plans, financials etc.)
Investing is hard, period. Basically nothing new under the sun other than granting access to dummies.

 

[Mustawd]

They are not legally bound, but the contracting party of a PPM is bound to a certain degree of disclosure. Even in the case of a syndicate of angels (thus accredited investors), in the signed term sheet you'll want to arrange for a seat. Your committment will be the last step after a detailed due diligence (thus review of business/marketing plans, financials etc.)
Investing is hard, period. Basically nothing new under the sun other than granting access to dummies.

I mean you're right. But how much experience do you have with crowdfunded PE? I personally have none. And I'm willing to bet that a lot of these $1000 investors don't necessarily have a ton of experience in PE period After all, all you need is an income of $200,000 individually and you are an accredited investor. So it's not a given that they have any experience on what a typical legal arrangement with a GP might look like. The investment agreement might not be all that friendly.

I mean traditionally PE involves much larger sums of funds than $1,000. By your last post I'm sure you're perfectly aware of this. Again, I would argue Fig is not your typical PE experience.

Like I mentioned in another post, I used to be an auditor, of which I had PE firms as my clients. And like people, companies run the gamut on how aggressive they are in their accounting. Regardless of the type of disclosure a setup like you described might have, I wouldn't entirely trust the financials they're putting out without them being audited or at least reviewed first. I mean compare the first campaign with the most recent. You seriously think the first campaign was 100% funded by the legit investors they're trying to attract rather than funds already held by the partnership from previous seed money?

 

[Hegel]

I don't have any experience in the crowdfunding industry but I'll tell you what any sensible investor would do whenever a company he's invested in or he deems mismanaged underperforms. Either sell his stake/go short (not in the case of private companies subject to liquidity restrictions) or proceed to ammass a larger stake (if undervalued), lawyer up, ask for a board seat and proceed either with a management shake-up or advance the proposal of a share repurchase program (if suitable).
In the case of private crowdfunded gaming companies you're giving away control for nothing in return as your own money doesn't really matter anymore. Now, your argument is self defying: I didn't trust Enron and Arthur Andersen or MBIA, why would I trust XYZ Games (despite those now improved standards of transparency)?
That's why publishers (and PE firms with strong media arms like Apax or Accel-KKR, or specialized funds like Silver Lake and Elevation) exist, at their core publishers are media investment companies.

Besides, do you realize how many copies those 5+ mil budgeted crowdfunded indie games need to sell to guarantee a modicum of return? And how many games will perform that well? Most won't even reach the break-even point.
It's even worse than betting on horse races, the hit and miss nature of the market makes this whole thing an elaborate fleecing machine. Invest somewhere else, if you really like art then contemporary art is a safer bet.

 

[Irenaeus II]

It's like betting on a horse race where you can't know if the horses will reach the finish line.

PS: Contemporary art is literally shit and menstrual blood.

 

[Hegel]

Joined: Jun 9, 2015

Location: Rio de Janeiro, Cidade Desespero

 

[Irenaeus II]

What? We have horse races and contemporary art here too. It's still shit. The art, the races are cool.

 

[Mustawd]

I don't have any experience in the crowdfunding industry but I'll tell you what any sensible investor would do whenever a company he's invested in or he deems mismanaged underperforms. Either sell his stake/go short (not in the case of private companies subject to liquidity restrictions) or proceed to ammass a larger stake (if undervalued), lawyer up, ask for a board seat and proceed either with a management shake-up or advance the proposal of a share repurchase program (if suitable).
In the case of private crowdfunded gaming companies you're giving away control for nothing in return as your own money doesn't really matter anymore. Now, your argument is self defying: I didn't trust Enron and Arthur Andersen or MBIA, why would I trust XYZ Games (despite those now improved standards of transparency)?
That's why publishers (and PE firms with strong media arms like Apax or Accel-KKR, or specialized funds like Silver Lake and Elevation) exist, at their core publishers are media investment companies.

Besides, do you realize how many copies those 5+ mil budgeted crowdfunded indie games need to sell to guarantee a modicum of return? And how many games will perform that well? Most won't even reach the break-even point.
It's even worse than betting on horse races, the hit and miss nature of the market makes this whole thing an elaborate fleecing machine. Invest somewhere else, if you really like art then contemporary art is a safer bet.

Not making an argument to invest. and I agree with you on audited financial statements =/= accurate financials. I'm merely arguing that some of the requirements the SEC is putting on them help improve the accuracy of said financials and can serve to improve transparency.

Personally, I'd be willing to give $1,000 just for curiosity's sake. See what their more detailed business plan is as well as the due diligence materials they have. It's not analysis, wrong or right, that I see everyday. A lot of the PE funds I audited were Real Estate, and reading the Due Diligence packages for each property/building was probably the best part. That's not the only reason to invest of course. I could probably buy plenty of analyst reports with $1,000. I guess I'm just saying that $1,000 is a small price to be in the front row when this thing succeeds fails.

Plus, it'd have to be something that'd make me want to donate a lot of money to by merit alone. Then throw in the fact that you're participating in this setup that's the first of its kind. So I guess my ROI is more qualitatively based than mere financial return.