Kickstarter and IndieGoGo have practically become household names at this point, with countless people donating money to projects. One of the most popular ways companies have used the platforms is to help fund the development costs for video games without having to use the traditional publisher route.
One common complaint for this method of fundraising is people don't quite get back what they give. That's where Fig steps in. Instead of simply donating money to a project, backers can instead invest money in a revenue stream. This means you could actually see returns from your investment, and even make some money in the process.
"Kickstarter is exactly that, you get a one-time boost," said Justin Bailey, the CEO of Fig. Bailey sat down with iDigitalTimes at this year's E3 in Los Angeles. "It seems if you use crowdfunding, there should be something in it for the crowd as well other than just the t-shirts and stuff."
On the flip side, Fig allows backers to invest in a revenue stream, getting profits back once a game is released and actually sold to customers.
"With Fig, you don't invest in a game title, you invest in a revenue stream," Bailey said. "We pay people out quarterly, based on how much these games earn."
Fig has found in more common rewards-based crowdfunding campaigns, where backers can only expect a handful of prizes for giving money, higher-end donations are not as common anymore. "If you look back on Kickstarters and IndieGoGos over the past nine months, you'll see virtually no participation in the $1000 and up tiers," Bailey said.
"If you compare it to three or four years ago, there was a huge amount of participation," he said. "What we're seeing is that the people willing to do $1000 of investment is climbing."
Of course, dropping $1000 on a video game investment isn't exactly an option for everyone, and can be incredibly risky. This is why Bailey and the advisory board at Fig (filled with known video game industry veterans and crowdfunding experts) make sure they vet each project before the campaign can start.
"Last year, only 17 percent of gaming Kickstarters were successful," Bailey said. "Of those 17 percent, a lot of them actually came through informal networks, with people either knowing Brian [Fargo], Tim [Schafer], Feargus [Urquhart], Alex [Rigopolus] or Aaron Isaksen. Those are five people on our advisory board. You can see the vast majority that succeed in the 17 percent were known to this community. It's just helpful to know that they have some touchpoint with someone in the industry, because that provides us some background on them and provides its own de facto vetting."
This ensures each game on Fig can actually live up to its promises. "When we look at these games, we want to make sure there's a track record, that they're able to develop a game to a certain quality and that we think they can do what they say they are doing," Bailey said.
What good is an investment platform if the projects involved aren't known to at least get finished and released?
Transparency and accountability are also key for Fig, as it should be for any investment. It's easy to find out more information about investing on a game's pitch page and on Fig's SEC filings. This is why the games that have used the platform have been from companies with ties to the advisory board. In the future, other projects will be considered, but they present more of a risk for investors compared to known and trusted studios.
Once the time comes for the actual campaign, a game's ability to sell gets tested.
"The actual crowdfunding campaign is kind of proving out a market," Bailey said. "If the campaign fails, it's not a horrible thing. It just proves there isn't a market for the game.If it succeeds, then we have reasonable confidence the developers will be able to successfully develop their game and deliver what they have committed to."
"But what about me?" you may be asking. "I want to invest in video game projects, but still don't have the money to spend on investing." If what Bailey hopes comes true, changes to Fig will allow for just about everyone to get involved.
"Right now it's about $250 per share for the lowest investment," he said. "At some point in the future, I'd love to get it down to $50 and that would be the lowest tier. People could pledge $50, get a share of the revenue stream and get a free copy of the game."
As of right now, Fig only offers one campaign at a time, and only six campaigns have actually taken place. This probably will not change any time soon, but secondary campaigns may spring up alongside the main ones.
"I can see there being multiple campaigns where there's a big project and a small project," Bailey said. "We've always wanted to pair those up."
With one big and one small project, both can hopefully help each other out. "If you have a big project, you bring in that community," said Bailey. "This can allow for a smaller developer to get some exposure they might not have seen before."
Now that there are four completed Fig campaigns, a few surprises have popped up for Bailey. One is regarding the level of support (and who is involved in said support). The other is the reason why people are investing in the campaigns.
"We already have over 3,000 people who have registered to be unaccredited investors with us, and we have over 300 accredited investors," Bailey said. "On the accredited investor side, there's a lot of famous people in there."
Without giving away too much information, Bailey said these investors include notable video game industry names as well as successful entrepreneurs with very high net worth and high-profile individuals.
As for why people want to invest through Fig, the No. 1 reason is simply because they are passionate about a particular project.
"We've been polling people on why they are making investments. The No. 1 reason is people want the games to exist," Bailey said. "No. 2 is that they want to have a chance at a modest return and not just give money away."
All this sounds great in theory, but Fig hasn't really had the opportunity to show itself working quite yet. The first game funded through the site, called Outer Wilds, is nearing a final release date. Once released, revenue starts getting shared between those who invested. Once that happens, and people see results, Bailey is confident more people will be comfortable enough to start with crowdfunded investment.
So what do you think? Will you be intesting some money into a future project on Fig? Do you think youd be interested once other projects start earning money for investors? Let us know your thoughts in the comments section below.