Wednesday 16th November 2016
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Indiegogo has introduced a new service that brings equity crowdfunding to its platform, enabling project creators to provide their supporters with financial stakes rather than just physical or digital rewards
The company has teamed up with investment and equity crowdfunding firm MicroVentures and launched a new portal on the Indiegogo site. This has been enabled by the passing of new rules by the US Securities and Exchange Commission back in May, allowing anyone to become an investor in companies with crowdfunding campaigns. Prior to this, only selected accredited investors were able to invest in early-stage companies.
A precedent has already been set for this when Fig, the games-specific crowdfunding platform that launched last year, finally received SEC approval to offer equity to its backers, starting with those who have invested in Psychonauts 2. Earlier this month, we spoke to Fig advisory board member Brian Fargo, who says equity crowdfunding will become a much more popular way to attract higher-tier backers when financing video games.
If both Fig and Indiegogo are able to successfully reward non-accredited investors, it could mark a shift in the crowdfunding scene and creators’ strategies in attracting funding support.
Campaigns offering equity rewards will appear on both Indiegogo and MicroVentures’ sites, although the transaction will be handled through the latter. To make the process more accessible to startups, the two firms have set up a regulatory filing process powered by iDisclose which prepares the necessary legal documents via an online questionnaire.
Startups using this service will be required to show how they plan to use the funds raised and, if successful, provide regular share information about how their business is doing. GamaSutra also reports that there will be upfront fees of around $7,000 for any developers setting up a project. Indiegogo’s normal crowdfunding campaigns are free, with the platform taking a 5% cut.
On the backer side of things, only those aged 18 or above will be able to invest, with the minimum investment defined as $100. There will also be an investment processing fee. How much backers will receive will be determined by the project creator.
Four projects are already set up to use Indiegogo’s equity crowdfunding service, including ArtCraft Entertainment’s massively multiplayer game Crowfall. You can read our interview with the studio about why it seeks to financially rewards it supporters here.