How the JOBS Act is a Game Changer for Fan Investors

The JOBS Act, which stands for Jumpstart Our Business Startups, has a convoluted congressional history. The law itself is meant to energize the funding environment for small businesses in the USA by pruning the dense thicket of rules and regulations that surround our country’s financial and securities industry. It came on the heels of the infamous 2008 Great Recession, when small enterprises were squeezed against the wall with more force than most of them could stand. Countless beginning enterprises were eliminated and fell by the wayside simply because of slough of red tape they needed to wade through to get further seed money and boosted investment credit. This bipartisan project to relaunch the entrepreneurial spirit of America was made law by Barack Obama back in April of 2012. Previous bills like it were beaten down in committee in both the House and the Senate because of the influence of large corporations that did not wish to see any type of government ‘handouts’ made available for small business — although they themselves benefited greatly, and still continue to benefit greatly, from the many corporate tax laws that allow them to legally bypass a good portion of their tax bills in the United States.

It appears that the biggest impact, or at least the most publicity, has come from Title Three, which is labeled as the Crowdfunding Act. This is probably because it is creating innovative ways for businesses to use crowdfunding to create and distribute securities — a financial transaction that was heretofore illegal in most cases. Equity Crowdfunding was finally allowed for all types of companies in 2015, and the final provisions of the act went into effect on May 16th last year.

Before 2012 only well-off investors who could afford to be accredited by the SEC for investing in something like a game company. Since then the average investor is also allowed to play the field through equity crowdfunding under Regulations CF and A Plus. The first gives entrepreneurs authority to raise a million or less by equity financing within a one year period. A Plus permits new startups up to fifty million in initial investment funds. Websites seeking to connect investors to entrepreneurs, such as NextGen Crowdfunding have cropped up, allowing individuals easy access to start-ups.

To the developer or independent studio executive the availability of equity crowdfunding, as expanded under Regulation A Plus, has revitalized the game industry. Since accredited investors are now joined by the rest of the investment industry, the availability of capital is potentially immense — it’s almost like perpetual sustainability within a crowdfunding ecosystem. Entertainment properties are now able to exploit their fan base, turning them into potential fan investors. Venues like Crowfall are reaping huge benefits from this restructuring of the investment environment. In fact, the whole face of the game investment has morphed with the introduction of crowdpublishing by companies like Fig, for their game Psychonauts Two.

Fig executives are taking full advantage of the potential of fans investing in their video gaming company. Their analysis shows a tremendous hunger among video gamers to open their wallets to invest in the games that they play the most. Estimate now hover around 28-hundred dollars per fan game investor — and that’s way beyond the typical reward pledge of around sixty dollars. An equity channel where fans can not only invest but stand a good chance of making a profit, based on performance stats of their video game, has truly been a game changer for Fig — and possibly many other similar companies in the future.

Melissa Thompson
Melissa Thompson writes about a wide range of topics, revealing interesting things we didn't know before. She is a freelance USA Today producer, and a Technorati contributor.