Welcome to Just Crowdfund the $&*# Movie!, where indie moviemaker Jayce Bartok talks about the dos and don’ts of crowdfunding from the trenches of his own crowdfunding campaign. Have a question for Jayce about his movie, Tiny Dancer, or just crowdfunding in general? Ask away at .

Tiffany and I have our plane tickets and hotel room in Park City, which means it’s now time to set up meetings at Sundance; we’ve started emailing agents, sales agents and producers about grabbing some coffee on Main Street and talking about funding Tiny Dancer. As I’m formulating our plan of attack to get at least $75,000 more for its budget, I see that the little indie engine that could known as “crowdfunding” has gone legit.

It took me quite a few reads to make sense of what is going on out there, but basically, President Obama mentioned crowdfunding in a recent address about the economy, citing the method as ideal for injecting life into small businesses by means of small investments from unaccredited investors (read: You and me, who have no money and are otherwise known as “unsophisticated investors”). All this springs from the Entrepreneur Access to Capital Act (a.k.a House Bill 2930), which was introduced by Rep. Patrick McHenry (R-NC) and passed in the House of Representatives on November 3rd. The act, which has yet to be approved by the Senate, will create an SEC registration exemption for businesses using crowdfunding to seek low levels of investment. It seems that Reps, Dems and grass rooters alike want to see crowdfunding go legit. To quote IndieGoGo CEO Slava Rubin, “[the legislation] would really open up the funder base.”

What does this mean for moviemakers and artists who, like Tiffany and I, have been chopping wood on the crowdfunding block to make our projects become reality? In a nutshell:

  • You can crowdfund up to $2 million from investors without having to register with the SEC (which sounds like a pretty complicated process). You can raise those funds from unaccredited investors, but you have to provide audited financial statements to qualify for the $2 million cap and file the “raise” with the SEC. Otherwise, you are capped at $1 million.
  • The maximum investment from an individual is capped at $10,000 or 10% of their net worth, whichever is less.
  • You can use a third party intermediary (e.g., crowdfunding platforms like IndieGoGo and Kickstarter) to handle cash management. (In the Senate version of the bill, use of an intermediary is required.) As a precaution against fraud, if you’re using an intermediary you’ll have to raise at least 60% of your target in order to take possession of the money raised. That way, investors are protected against their money being used to fund someone’s rent instead of the project they thought they were donating to.

These are just a few highlights for what seems like a huge step forward in the crowdfunding movement. To be clear, the big change for us, the crowdfunders, is that this is not considered free money—these are actual investor-securities that grant ownership interest to the investor. Many of us have been raising funds that are, basically, free money. Or if you have a fiscal sponsor, like we do with Tiny Dancer, it’s a tax deduction. Now, I’m not clear on what the small fish like Tiffany and I will do from here on out about getting straightforward donations. Will we have to give shares to our backers? A year from now, will we be besieged with questions like, “Hey, I get a piece of your movie, right? I mean, I gave you $100.” I gather that there are registration exemptions for certain crowdfunded securities (outlined in Section 4A of the Securities Act), which spell out what our recourse might be. When I get to Section 4A, I’ll let you all know… unless someone out there can help interpret. I’d love to hear your thoughts!

Overall, I think the bill is great, because now we can really try to raise a significant budget ($2 million) for our projects in a completely legitimate way by offering our investors the comfort of knowing the SEC (HAHAHA!) has created guidelines and encouragements. When sitting down with potential investors at Sundance, I can say, “Give me $10,000 for a share!”

Of course, many are fearful that an increase in small businesses soliciting investments via crowdfunding will also mean an increase in scam artists getting money from investors for start-ups that will never deliver. Personally, I can’t foresee any more fraudulent behavior that what we’ve already seen in “traditional” investing. I mean, if the big banks have made such mistakes, maybe it’s time to put some of our trust in the hands of individual investors and small business ventures—like independent film.

Jayce Bartok is an actor and moviemaker who runs Vinyl Foote Productions from Brooklyn with his wife Tiffany. Currently, you can see him on USA’s “White Collar” and in the upcoming feature film Predisposed, opposite Melissa Leo. Follow The Independent Collective at twitter.com/ticnyc to stay updated on the Tiny Dancer crowdfunding campaign.