If only they had this when I crowdfunded Godspell.
Hold on to your offering documents, people, because raising money for businesses, including Broadway shows, just got easier.
Several years (!) after Congress passed the JOBS Act, the SEC finally wrote the rules on how for-profit crowdfunding (the most essential part of the Act) will work.
And it was worth the wait.
A little history . . .
When I crowdfunded Godspell, I used an archaic regulation called “Reg A,” which allowed businesses to raise up to $5 million. Already you can see why that regulation wouldn’t work for most Broadway shows, since most have budgets in excess of $5mm. And while sure, plays are less, since the legal costs for this kind of offering are so much more than a traditional “Reg D” offering (I spent around $200k for mine), you wouldn’t want to put that much of your budget towards that one line item.
Additionally, Reg A required you to register your offering in every state where you wanted to raise money. Want to raise money in Texas? That’s a separate filing and a separate fee. Florida? Another one. Nebraska? Oh yeah. Not only does this drive the cost up (each fee can be several thousand bucks), but each state has their own rules. For example, Texas wanted me to put down a $250k cash bond (I didn’t). Maryland wanted me to pass a Series 63 exam (I did). Ohio? Ohio didn’t even respond to us for three months. To call it a pain in the a$$ would be like calling Wicked sort-of successful.
For Godspell I ended up cherry picking the states where I expected to raise the most money (based on what I know about Broadway Investor demographics). And eventually, it all worked out.
But now? Well, now it’s all different.
Last week the SEC had a debutante ball for Reg A+, which allows companies to raise up to $50mm (so every show but Spider-Man could be covered), and eliminates the state registration altogether! Woo-hoo! (I like to think we had a little part in this . . . since I did an interview with the Office of Congressional Oversight after the JOBS Act passed, and railed against the state registration rule.)
But wait, there’s more. Reg A+ allows companies to raise money from both accredited AND unaccredited investors. That’s right, anyone can invest! (There are some restrictions, of course – unaccredited investors can’t invest more than a certain % of their net worth, and more.)
Yep, my friends, for-profit crowdfunding is here.
Now, whether Broadway Producers will use it, that’s another story. There will be more financial reporting required. The lawyers will charge more for this offering. Funding may have to be through a portal.
But I’ll be using it. For shizzle. Because my mission statement is to get more and more people involved in Broadway, and I know for a fact that more and more people want to get involved with Broadway by investing. They just haven’t been allowed to.
So I give Congress and the SEC an A+ for taking businesses into the 21st Century.
Now maybe we’ll be able to get Broadway into the 21st Century.
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