Skip links

Fig Blog

Crowdfunding and Investing

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.

 

Reader Interactions

Leave a Comment

No HTML allowed. Markup Syntax is allowed.

6 Comments

  1. OK, but what formula determines the percentage of the cut paid to the developer versus the percentage paid to the investors?

    • Great question! It’s actually determined on a per-game basis, in which we collaborate with the developer on a percentage that’s favorable to both the investor and the developer. We want both investors and developers to feel good about using the platform.

  2. Hey that’s great, you got some branding. Now when are you going to explain to the Psychonauts investors why you’re a week past the deadline you set to give an update?

    • Ok, so an update was sent out AFTER I posted the above message. Still, as I said, it was a week past the deadline you set to communicate. Further, it has been 5 weeks since this email, and there haven’t been any subsequent emails. Can we get you to commit to a regular update schedule, just to know you’re still alive? Beyond Psychonauts 2, I haven’t heard ANYTHING from the other games offering investment regarding the investment process. To be honest, I’m starting to feel flighty about this whole thing, since you don’t seem to be forthcoming about anything. I’m sure it’s a complicated new procedure, but seriously, keep people who have put forward thousands in the damn loop.

      • Hey JW,

        Thanks for following up on this. Per the email we sent out, we’re still part of ongoing discussions with the SEC to get our qualification approved. Please understand that this involves a lot of work from our end, as we revise and edit our offering statement until it it fit for approval. As this is a relatively new process, it’s not easy for us to give a solid timeline for a precise time when that will happen. As before, do know that we’ll provide more updates as soon as we’re able.

        If you’re interested to know more, our latest preliminary offering statement can be found on SEC’s website sec.gov.