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Game financing startup Fig, which helps game developers raise money from fans, said it can now receive investments from unaccredited investors (or ordinary fans) for game-crowdfunding campaigns.

Enabled by accounting regulation changes with securities laws, the change could open up a whole new set of opportunities for game startups and fans alike. Now fans will have a chance to own a piece of the action. The change will go into effect for a third Fig campaign, coming up shortly.

Fig chief executive Justin Bailey told GamesBeat that Regulation A+ of the JOBS Act changed securities laws to enable ordinary people to fund game development in exchange for publishing rights and owning a share in the company raising the money. So unaccredited individuals (or people who aren’t already super rich) can now invest in a startup and share in the financial rewards if it is successful. That’s the difference between getting a free T-shirt from a crowdfunding campaign and getting a pile of money from a successful investment.

Bailey, the former chief operating officer of Double Fine Productions, started Fig in August as a new crowdfunding site built specifically for games. He partnered with some big names and studios who previously had success on Kickstarter: Tim Schafer (Broken Age), Brian Fargo of InXile (Wasteland 2), and Feargus Urquhart of Obsidian (Pillars of Eternity). Each has pledged to launch campaigns for new games on Fig.


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Previously, Fig was allowed to raise investments for startups only from accredited investors. Pre-approved under SEC regulations, accredited investors earn a minimum salary of $200,000 or possess a net worth of at least $1 million, not including their homes.

With this next campaign, more fans can be investors, though they may not invest more than 10 percent of their annual income or net worth. The minimum a fan can invest in the upcoming campaign is $1,000, and the maximum is $10,000. The minimum will change with each campaign.

“I think this is the future of crowdfunding,” Bailey said. “Companies are opening up and are being more transparent with fans. This is the next evolution. Fans should have the opportunities to participate in the investment.”

People contributing money for games under development will now separate into two groups. Those who pledge less than $1,000 can still receive various rewards, based on the amounts they pledge. Those who invest more than $1,000 will be considered investors in the project, and they will receive investment returns based on the shares that they own.

“We believe that fans, in addition to having the opportunity to participate in the rewards-only tiers, should also have the opportunity to buy shares and participate in the financial success of a title,” Bailey said in a statement. “This is important because we don’t feel that there should be a class distinction between fans and investors. Our belief is that fans and investors are one in the same — they are individuals who lend financial support to make a project possible, and they should all have an opportunity to participate financially. Now they can.”

Bailey said that previous crowdfunding tools (such as Kickstarter) have declined in popularity, partly because fans can’t participate in the rewards of investment. He noted that campaign pledges of more than $1,000 have declined significantly as have the last-minute donations that appear just before a campaign deadline.

But Fig’s own model has its own challenges. Fig’s first campaign was a success. It took about nine months to put all of the details together for the third campaign.

But 5th Cell, a game company that used Fig for a crowdfunding campaign, tried to raise money before this change (allowing unaccredited investors to contribute) went into effect. But the campaign failed. 5th Cell received $5,000 in pledges for reward-based fans while it was seeking $50,000. And on the investor side, 5th Cell was seeking as much as $1 million, but it received only $100,000 in pledges. Under the Fig model, a company has to hit its targets, or it doesn’t get to keep the money. 5th Cell tried to raise money for a free-to-play game dubbed Outer Wilds.

“We have a fixed time and fixed campaign goal,” Bailey said. “It’s all or nothing.”

Bailey said that Fig learned that free-to-play games aren’t good models for crowdfunding campaigns, and so Fig won’t do them in the future. The change in the law that enables unaccredited investors to participate in the future is also going to be a boost for future campaigns, Bailey said.

“I’m disappointed that Fig didn’t come out of the gate stronger,” said Joost van Dreunen, chief executive of market researcher Superdata. “Both of the initial games have dedicated teams behind them but the necessary pedigree to see things through to completion. So I understand that they’ve widened the pool of potential investors, but I’m not sure this currently adds a lot of value. By comparison, Kickstarter has reach, but is also home to a growing pile of undelivered promises. With Fig it seems that the developer quality is there, but it is the audience that has yet to deliver.”

But Billy Pidgeon, a longtime game analyst, was more optimistic.

“Fig is a very innovative and disruptive platform, and should attract more attention with major wins and losses and big impact on investors,” he said. “As gamers and individuals can now invest more easily in game development, a game’s success or failure will have bigger impact on individuals outside of professional circles.”

Under the JOBS Act’s Regulation A+, businesses can raise up to $50 million in capital from the general public online. This regulation was intended to encourage funding of small businesses, and one of its goals is to open the opportunity for investment to a broader audience. Since the SEC review of Fig’s filing will take time, Fig will take non-binding reservations from unaccredited investors for $1 million of shares that are being set aside.

Next May, under a revision dubbed Title 3, a new option will emerge under securities law. Under that change, the filing costs will go down, the reporting requirements are lower, and the limit that can be raised is $1 million. That option could be very well suited for video game campaigns, Bailey said.

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