Jamie talks to the New York Times about Crowd Funding.


Smell of the Greasepaint, the Funds of the Crowd

New York Times: 27 July 2014


LONDON — As an up-and-coming theater producer, Jamie Hendry didn’t have many investors when he started raising money for a musical based on the children’s novel “The Wind in the Willows.”

What his show did have was a famous title and a celebrity script writer, Julian Fellowes, the creator of “Downton Abbey.” And their publicity value came in handy given how Mr. Hendry was trying to raise money for the show here: by appealing to the masses.

He raised about one million pounds ($1.7 million) last winter by selling equity stakes in “Willows” in relatively small units of £1,000, £2,500 and £5,000 through an online campaign. Any British citizen could buy in with a debit card by visiting Mr. Hendry’s website, which included a plainly worded prospectus dotted with images of Toad and Mole, characters from the story. He had the money in three months from 400 people, and he now has a list of 10,000 others who signed up to learn about investing in the future. “Willows” hopes to open in the West End in the fall of 2015.

Call it entrepreneurship or gimmickry, but Mr. Hendry’s strategy was London theater’s most ambitious attempt at crowdfunding — and a method that will soon become an option for New York producers. Proposed changes to United States securities rules, which could take effect by this fall, will make it far easier for Americans to raise money the way Mr. Hendry did.

“The old-time producers with wealthy investors are a dying breed,” said Mr. Hendry, who is 29 and studied computer science and management in college. “Who’s going to put millions of pounds into a commercial musical when those people are no longer with us? We have to find ways to expand support for theater.”

Under the proposed United States rules, theater artists and producers would be able to publicize and sell equity stakes in plays and musicals online, which is now generally prohibited. The proposed rules would also expand the pool of potential backers.

Current rules make it cumbersome to enlist so-called nonaccredited investors, or people who earn less than $200,000 a year or have a low net worth: those who might be risking their life savings on a play or musical, say, given that 75 percent of Broadway shows flop. The proposed rules would make it easier for them to invest limited sums and allow Broadway and Off Broadway productions to raise up to $1 million a year through crowdfunding websites registered with the Securities and Exchange Commission.

Under the current system, most producers have long made private equity offerings to wealthy associates and friends, many of whom have invested in theater before. Broadway plays regularly cost $3 million to produce, and musicals tend to cost $8 million or more, and investors usually put up at least $25,000 apiece; the amounts are considerably less for Off Broadway. (The equivalent amounts in London are often one-third of Broadway’s numbers.)

“In American theater, we now have a powerful club of producers who work with wealthy investors to put on shows they like, and younger people don’t have access,” said Crystal Skillman, a New York playwright who has earned strong reviews for Off Off Broadway plays like “Geek!” and “Cut.” “Being able to recruit our own investors online could become revolutionary.”
Ms. Skillman and her husband, the comic book writer Fred Van Lente, are among the thousands of theater artists in the United States and Britain who have increasingly turned to crowdfunding websites like Kickstarter and Indiegogo for financing. But people donate though these platforms; they are not purchasing equity in shows.

Ms. Skillman said that she and Mr. Van Lente planned to look into selling equity in shows once the proposed securities rules take effect.

Broadway has had only one major attempt at crowdfunding: the 2011 revival of “Godspell,” in which 700 people invested $1,000 or more and made up about 55 percent of the show’s $5 million budget. The “Godspell” strategy was hamstrung, however, by the securities rules: Ken Davenport, the lead producer, said he could not make online sales as Mr. Hendry did, and recruiting nonaccredited investors involved red tape and legal expenses.

“I would crowdfund again, if it was the right show — ‘Godspell’ was about community, and we had a community of investors — and if the rules do become lighter,” said Mr. Davenport, who is going the traditional route of recruiting accredited investors as a lead producer for the Broadway show “It’s Only a Play” this fall.

“I just find it ridiculous in this country that we prevent people from investing in Broadway if they are not accredited and well connected to producers, and yet anyone can travel within 60 miles of their homes and bet their life savings at a casino,” added Mr. Davenport, who writes a blog called The Producer’s Perspective.

The “Godspell” approach has not caught on, because most Broadway producers look down on crowdfunding, citing the presence of their pools of experienced investors and the administrative headaches that Mr. Davenport had. But “Willows” could emerge as a new model, especially for Off Broadway as well as London. The producers of the current West End revival of “The Pajama Game” raised about $340,000 late last winter from 218 investors through the equity crowdfunding site Seedrs; the money accounted for 15 percent of the show’s capitalization. The limited-run production is scheduled to end in September and will probably close at a loss, although the producers declined to confirm that.

Other British producers are interested in licensing Mr. Hendry’s online platform, he said; he declined to name them. But several London producers said crowdfunding seemed like a tool for producers who needed cash or a stunt to raise the profile of younger ones like Mr. Hendry, who has also been a producer here on the Beatles’ tribute show “Let It Be” and the musical “Legally Blonde.”

“Jamie gave a very posh workshop of the musical at the Savoy Hotel, but it remains to be seen if his approach will work and if the show will indeed open,” said Michael Codron, a producer who has been mounting shows here and on Broadway for more than 50 years.

“When I started out, I had a group of people — agents, other producers, people I got from my accountant — who regularly invested with me, and I was sufficiently autocratic that I didn’t have to listen to their opinions,” said Mr. Codron, who was responsible for major premieres of works by Tom Stoppard, David Hare and Harold Pinter, among others. “Now, I usually take a deep breath and write my own check to get shows on, because there’s too much paperwork with investors today. Crowdfunding sounds like even more bureaucracy.”

Mr. Hendry said he had raised “a significant chunk” of his $11 million show budget, chiefly from traditional investors, including some in the United States. As for his online investors, most of them are affluent or middle-class professionals in their 40s, 50s and 60s from London and surrounding counties, and 91 percent of them had never invested in theater before, according to a survey by Mr. Hendry’s office.

“The game is on in London and New York to find the investors of the future,” he said.

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