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Crowdfunding and Investing

Announcing The Fig Finishing Fund

A new way to support developers with final polish, localization, marketing and fees for platforms like Steam Direct

At Fig, we’re continually looking for opportunities to remove the barriers to entry for developers to unleash their creativity through games. That’s why we’re psyched to announce the Fig Finishing Funds!

As of today, and through the end of the year, Fig is committing up to $500,000 to help developers overcome two hurdles in crossing the finish line to a successful game launch — including fees to access publishing platforms such as Steam Direct and building fan awareness through paid marketing.

Here’s how the Fig Finishing Fund works: for each developer who attracts 1,000 or more backers for a campaign that succeeds on Fig, we will guarantee at least $20,000 of Fig Funds from the investment side of the campaign – sourced from our network of investors or Fig itself. Developers will be able to use these funds to finish their games, support more languages, and defray the costs of distribution — such as the fees that will be charged by Valve’s new Steam Direct program (set to come online this Spring). Valve hasn’t yet determined how much it will charge developers, but it has estimated that fees will range from $100 to as much as $5,000. Investments from the Fig Finishing Fund are intended to help developers cover these costs so they can spend their money on completing their games.

The remainder of the Fig Finishing Fund investment can be used to tackle a second challenge familiar to most independent developers: getting the word out. As digital marketplaces become ever more crowded, it gets harder for game launches to overcome the noise and be discovered. That’s where the Fig Finishing Fund comes in. By giving developers resources they can apply to marketing their titles, developers are free to dedicate more fan-raised money to making their games. As always, developers funding their game through Fig will also be able to take advantage of Fig’s co-publishing services to further help market those games.

At Fig, we don’t make money by running crowdfunding campaigns, but are instead aligned with developers and investors, in that our upside is based on the ultimate commercial performance of the games we help publish – we make money only when games funded through Fig sell well.

This program further aligns us and our community of investors, developers and fans. Investors benefit because this increases the chance that titles they’ve invested in come to market successfully and reach their intended audiences. Fans also benefit when their favorite titles get a better shot at being published.

We believe strongly in the need for titles not only to be offered on major publishing platforms such as Steam Direct, but also to have funds to conduct the marketing that can be crucial to the success of those games.

If you are a developer and are interested in learning more, drop us a line at devs@fig.co. We’d love to talk with you.

— Justin Bailey  

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Thank You for an Incredible Year!

Thanks to you and thousands of other game fans throughout the world, we were able to cap off a truly amazing 2016. Fig.co hosted four of the top 10 biggest crowdfunded video games of 2016. Those four titles accounted for nearly two-thirds of the total amount of the year’s top 10 crowdfunded games.

Our community propelled Fig.co’s campaign success rate into a lofty 78%. That’s over four times the normal success rate for video game campaigns according to ICO Partners and two times the success rate of all the projects for a leading crowdfunding platform, according to Statista. But while most well-known crowdfunding platforms are strictly for rewards-based campaigns, Fig.co last year became a unique place where game fans could choose to get rewards or equity related to a game project—or both! Many of you chose both, pledging a combined $8.7 million to support and invest in securities related to titles such as Psychonauts 2, Wasteland 3, Jay and Silent Bob: Chronic Blunt Punch, Consortium: The Tower, Kingdoms and Castles, Make Sail and Trackless. For more fun-filled facts, check out our infographic below, chocked full of tasty data we’ve gathered from 2016.

In 2016, we learned a lot about our community. More than 3,700 of you backed more than one game through rewards crowdfunding, pledging an average of $133.71 per project. That in itself is great, but what’s truly astounding is the average amount our community invested in support of games—$2,800.

Why is this so significant? Because it tells us that there are thousands of fans like you who value independent games so much, you’re willing to invest 21 times more money for an equity stake in support of titles you believe in. You’ve shown that there is a vibrant, engaged community willing to step up and play a critical role in an ecosystem that funds a new generation of games.

In short, you helped us achieve the goal we set out to accomplish a year ago—to create an ecosystem where studios can stay independent, new talent can be discovered and revenue can be shared with the fans and investors who’ve helped them along the way.

Looking back at 2016, we are deeply grateful to you—our community. Looking forward to 2017, we can’t wait to introduce our investors and backers to even more high-quality game projects that set a new bar for innovation and creativity.

— Justin Bailey and the Fig Team

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We’re SEC Qualified: Let the Games Begin!

I am excited to share with you that Fig Publishing Inc. has just been qualified by the U.S. Securities and Exchange Commission (SEC) to sell Fig Game Shares—PSY2 for Psychonauts 2.  

What does being qualified mean? Two things. First, it means that nonaccredited fans who reserved equity shares related to Double Fine’s Psychonauts 2 will now be able to complete their purchase of Fig Game Shares—PSY2. (We’ll reach out to those of you who placed reservations next week with instructions.)

Second, it means that as of now, Fig is the only crowdfunding publishing platform where non-accredited investors can earn a return based on a game’s sales.

This is a first for our industry. But with Fig Game Shares being the only investment of its type to pass through the SEC process under Title IV of the JOBS Act, it also has the potential to evolve publishing for all of entertainment and fundamentally change the narrative of crowdfunding. Until now, equity crowdfunding for games in the U.S. had been publicly available only to wealthy, accredited investors. Additionally, investors could only purchase equity that offered a return based on the financial performance of a company—not based on  the financial performance of a single game. No longer.

This qualification opens the door for Fig Game Shares, a brand new type of security, one that lets everyone invest in Fig, support the development and publishing of games, and financially benefit from the sales of their favorite games. With Fig Game Shares—PSY2 as a blueprint, we plan to create and qualify with the SEC new series of Fig Game Shares that pay returns based on the sales of additional games..

This week’s SEC qualification is a long-awaited milestone—both for our company and for our industry. It has taken us several months to get here. Part of the reason it has taken us so long is due to the ambitious nature and far reaching implications of our approach. Because Fig Game Shares are innovative in tying returns to a single game’s sales, we needed to work closely with the SEC to answer their questions and to make sure we considered all the ramifications, both to protect investors and facilitate the free flow of capital. After all, it’s not every day that a new type of security is born!

What makes me most excited about this announcement is that we can now move full steam ahead with our initial goal when we launched Fig — to create a community of fans, investors and independent developers, with Fig as publisher, to work together to bring about new, innovative games. We’re especially grateful to our community and to the amazing fans who participated in our campaign for Psychonauts 2.
Now, let’s go make some great games!

IMPORTANT MESSAGE: An offering statement relating to Fig Publishing, Inc.’s Fig Game Shares – PSY2 has been filed with the U.S. Securities and Exchange Commission and has been qualified. Prior to any investment in Fig Game Shares – PSY2, you should review a copy of the offering circular included in such offering statement by clicking on the following link: https://www.sec.gov/Archives/edgar/data/1658966/000121390016017011/f1a1215a5_figpublishinng.htm, or by requesting a copy by phone at 415-689-5789 or by writing to Fig at 599 Third St., Suite 211, San Francisco, CA 94107. No offer to sell any securities, and no solicitation of an offer to buy any securities, is being made in any jurisdiction in which such offer, sale or solicitation would not be permitted by applicable law.

Fig’s Transfer Agent and Updated SEC Filing

We’ve been busy over the last few months putting a bunch of key components in place for our journey of bringing the first video game investment opportunities for non-accredited investors, aka, fans like you.

So here’s the scoop. First, Fig is partnering with FundAmerica, a leading crowdfunding technology company, to provide back-end services for our online platform Fig.co. In addition, Fig has also engaged FundAmerica, through its FundAmerica Stock Transfer, LLC, as its SEC-registered transfer agent and registrant for Fig’s Game Shares, including our Fig Game Shares — PSY2. As our transfer agent, FundAmerica will keep track of who owns Fig Game Shares and help manage other details of stock ownership.

When Fig conducts its offerings, investors will be able to reserve and complete their investments entirely online, starting with Fig Game Shares for Psychonauts 2 (PSY2). Below is the page investors will see when they are directed to our site to buy their Fig Game Shares — PSY2:

Invest Flow

As you can see from the screenshot, we’re aiming to make it as easy as 1-2-3.

Second, we’re updating our filing with the SEC. The filing describes a number of important changes to our structure. Here’s an overview of some of the key points:

  1. Streamlined Structure — Our prior structure called for creating an individual Limited Liability Corporation (LLC) for each game co-published by Fig. Now, proceeds from the sale of Game Shares for multiple projects will go into the working capital of Fig, which will manage the distribution of funds to developers as part of our publishing business through development advances. For a quick visual of the investment flow, check out the chart below.
  2. Developer Milestones — Instead of giving developers their development advance at the start of the project in one lump sum, we’ll be parsing payments based on the completion of development milestones. Investors will also get updates during development. Coming from a development background ourselves, we feel this creates greater accountability and transparency for all involved.
  3. Fig Game Shares Track Specific Games — Even though proceeds from the sale of Fig Game Shares are contributed to Fig directly, the dividends investors receive will still be based on the revenue generated from sales of the specific title that their Fig Game Shares track, minus the developer’s royalties, publishing expenses and Fig’s Service Fee and revenue share.

It’s important to note that Fig Game Shares are just one potential source of funding for developing a game. With Psychonauts 2, for example, developer Double Fine has already collected money from the rewards-based crowdfunding campaign it successfully conducted in January on our Fig.co platform. We’ve also already collected Fig Game Share investments from accredited investors. Double Fine also has its own money it’s committed to the cause.

The next step in our journey is confirming and collecting on the reservations made by non-accredited investors during the Psychonauts 2 campaign. This is where we’re heading with the updated SEC filing that’s being submitted today.

Infographic

The reason why it’s so important to sweat the fine print is that the Fig model has never been done before. We’re building this to last, and to help evolve crowdfunding, so that fans have an opportunity to invest in us and receive a return from a successful game. So we need to get it right — for investors and developers.

If we succeed, Fig will be the only place where fans can buy a brand new type of security, one that’s tied to a game’s revenue, rather than the performance of an entire company. This has a couple of advantages over buying traditional equity in a startup company. First, investors don’t have to wait for a studio to be acquired to cash out, which is in itself a very rare occurrence in games. With Fig’s Game Shares, they should begin to see dividends within a few months after a game is developed and ships. Second, investor dividends are based on sales, rather than profit – this further helps to align investors’ interests with that of the developers in working efficiently to balance development cost with the final quality of the game. (Of course there are risks, too. Please review our latest offering circular for all our information.)

While it’s taken us several months longer than we anticipated to get you these details, we felt it was time well spent. Our mission is to build a vibrant, sustainable game ecosystem of fans, investors and developers that will last for years to come. That means we need to make sure the terms we set now with our Fig Game Shares and the PSY2 offering provide a solid foundation for the future.

We hope you agree!

Justin Bailey
CEO Fig

LEGAL LEGEND: An offering statement relating to our securities has been filed with the Securities and Exchange Commission but has not yet become qualified. These securities may not be sold nor may offers be accepted prior to the time the offering statement becomes qualified. You may obtain a copy of the most recent version of the preliminary offering circular by clicking on the following link: https://www.sec.gov/cgi-bin/browse-edgar?company=fig+publishing&owner=exclude&action=getcompany.

No money or other consideration is being solicited in connection with this information, and if sent in response, will not be accepted. No offer to buy securities can be accepted and no part of the purchase price can be received until an offering statement on Form 1-A is qualified pursuant to Regulation A of the Securities Act of 1933, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. No offer to sell any securities, and no solicitation of an offer to buy any securities, is being made in any jurisdiction in which such offer, sale or solicitation would not be permitted by law.

How Investing in Game Shares™ through Fig works

I thought it would be helpful to show how Game Shares pay dividends based on the potential success of a game. There are two phases: the fundraising phase and the future game sales phase. It all starts at the Fig.co website. We made a nice flow chart so you can see how it works, and it’s all explained below.

flowchart

The Fundraising Phase

You can back a project in two ways: making pledges and investing in Game Shares.

Pledges

The first is by making a pledge. This is just like rewards-based crowdfunding. You want to see the game happen, you want a copy of the game, and you want other rewards, so you make a pledge. If the project is successfully funded and the game is made, you receive the game plus any rewards you signed up for.

Your pledges go directly to the developer. Your pledge is made through Fig.co, through a credit card processor. They charge a transaction cost of about 2.7% of your pledge. Fig doesn’t charge any fees (like the 5% transaction fee and additional 5% platform fee some crowdfunding platforms charge) to the developer for your pledge. That means 97.3% of the money you pledge goes straight to the developer to help make the game.

Game Shares™

Reward crowdfunding can be lots of fun, but the success of many crowdfunded games has made a lot of people (including us) wonder: Why does it have to stop at rewards like a T-shirt or your name in a backers’ list? Why can’t gamers and backers share in a game’s success? That’s when we came up with the Game Share™. (We’re applying for a trademark, because we think it’s pretty cool.) This is an investment security you’ll be able to buy on Fig.co. Game Shares are designed to track the game’s sales receipts collected by Fig. When and if the game makes money through sales, Game Shares are designed to pay you dividends.

Fig generally uses 5% of the money it raises from the sale of Game Shares to help cover our publishing and offering costs. The remaining 95% goes to the developer as the development funds for the game.

Funding the developer

Once payment for the Game Shares has been collected, Fig pays this money to the developer in one lump sum. Why is this important?

Well, normally, a publisher pays a developer bit by bit, in “milestone payments” dependent on the developer passing periodic reviews. The developer passes the next review, and receives the next milestone payment. These reviews can take up to 40% of a developer’s time—that’s time spent on overhead, instead of making the game. With Fig, the developer gets the money all at once. They also don’t have to submit regular milestone reviews to receive that money, although we do have inspection rights (See Fig’s FAQ section on Fig.co). This means the developer can spend all of their time working on the game. (We know it sounds crazy, but that’s how we think it should work, and we think you’ll agree.)

Future Game Revenue Phase

Assuming the game is successfully published and starts to make money from sales, those sales start to be paid out to Fig, which in turn distributes the sales receipts to the developer and investors. For each game, Fig will set up a limited-liability company (LLC). This keeps everything nice and separate and self-contained for each game project. Fig manages this LLC and makes sure the investors get paid. That means the developer doesn’t have to make those payments, or take on the onerous accounting that goes along with them. Again, the developer can focus on making the game. (We know, it still sounds crazy.)

When the game sales receipts are collected by our LLC for the game, Fig takes 5% of this money to cover the cost of our ongoing services such as publishing, paying investors and maintaining regulatory compliance. Our contribution can also include distributing and paid marketing when the game launches, making us a co-publisher. The remaining money is divided between the investors and the developers, with the developers typically receiving the majority share (with a 2.5% distribution to Fig). This means our best interest is the same as that of the developer and investors—making the games as successful as possible!

This system has two benefits: You, the investor, are paid from the same pool of sales revenue as, and at equal priority to the developer. This also means the developer’s best interest is aligned with your best interest.

So, in Conclusion…

That’s pretty much it. By setting up an LLC for each game, we’re creating a system that is straightforward, transparent to both developers and investors, and fully aligns the interests of Fig, the developer and you – the investor! We’ve taken a lot of the time-consuming, expensive hassle of milestone payments, publisher reviews and investor payouts off of the developer’s plate, so they can focus on the job you want them to — making a great game!

Thanks,

Justin Bailey
CEO, Fig

Do you still have questions? Does any of this business jargon not make sense to you? Send us an email at invest@fig.co and we’ll explain any aspect of the investment process.