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Berlin: Crowdfunding Catches on With European Filmmakers

But popular financing vehicle throws up regulatory challenges Continent

Crowdfunding films in Europe is still in its infancy, but some enterprising producers have launched campaigns, using a few opportunities not yet available in the U.S. — and are facing a different set of challenges.

American filmmakers have mainly used reward- or prize-based campaigns on such sites as Indiegogo and Kickstarter, which some EU filmmakers use, and there are also country-specific sites like Touscoprod in France and Startnext in Germany. (For EU filmmakers, crowdfunding is usually a local affair, often limited to five-figure campaigns for niche interests or small populations within any given country.) Europe also has donation crowdfunding (with no rewards at all) and equity crowdfunding (soon to begin Stateside), in which investors take a stake in the film as they would a share in a company.

But because there are a limited number of equity crowdfunding investors allowed in Europe at the moment (a maximum 149 per country) and complicated regulations kick in when an equity campaign passes a certain threshold — which varies widely across Europe, from €100,000 ($135,000) in Germany to $338,000 in Austria to $3.4 million in the Netherlands to $6.7 million in the U.K. — some filmmakers are trying revenue-sharing campaigns, in which funders only get a share of a film’s box office or other income, not a share of the film itself.

All approaches present their own unique set of complications, and regulations are still evolving. Oliver Gajda, head of the European Crowdfunding Network, a lobbying org that tracks regulations and reps more than 15 outfits, says crowdfunding rules are set to change in the U.K. and France later this year.

For now, many filmmakers are sticking with the leading reward-based platforms. Among film crowdfunding sites, Indiegogo has the widest global reach and is the leading site overseas. Domestic champ Kickstarter’s use of the Amazon Payments system limited its expansion, but it’s gaining ground with new operations the U.K., Australia and New Zealand — along with at least one more European territory expected to be announced soon.

This year’s Berlinale boasts a few films from the leading platforms. Three are Kickstarter-funded Forum entries: two thrillers, “Thou Wast Mild and Lovely” and “She’s Lost Control,” and the Oscar-nominated doc feature “The Square,” pictured above. In the Perspektive Deutsches Kino section, the gay-themed thriller “Der Samurai” unspools and may be, according to site and fest reps, the first Indiegogo project in the Berlinale.

Filmmakers behind a $1 million equity crowdfunding campaign for the Nazis-on-the-moon comedy “Iron Sky” (a 2012 Berlinale Panorama premiere) just raised $182,557 in a prize-based drive for its sequel, “Iron Sky the Coming Race” — the biggest Indiegogo tally for an overseas film. On Feb. 20, “Stromberg — Der Film” (a bigscreen adaptation of the German version of “The Office”) hits theaters in Germany after a huge €1 million revenue-sharing campaign.

“Stromberg” and the first “Sky” film show both the promise and pitfalls of revenue sharing and equity crowdfunding, where producers turn fans into investors. Both projects used their own websites to raise cash from their fans.

“Sky” producers set up IronSky.net to raise a portion of their $10 million budget, the most expensive in Finnish history. Two hundred and eighty investors contributed $1,350-$8,130 — an average of $3,387 per investor — for the Finnish-German co-production.

Because of Byzantine regulations that are still somewhat in flux across Europe, only 99 funders were allowed from each European country. (The maximum funders per European country was upped to 149 last year, per ECN.) Ninety-nine came from Finland, more than 90 came from Germany, and the rest came from more than 20 other countries. Each came in with the promise of a proportional share of the profits (for example, a €5,000 investor would receive five times more than a €1,000 investor), plus a few perks seen in solely prize-based campaigns, like a screening, a ticket to the premiere or a visit to the set.

But the film made only $8.1 million in theaters globally, and producer Tero Kaukomaa says the 280 funders have only received about 10% of their investment back. He’s preparing their second annual financial report and says he’s “really working hard to make their money back” with products like the director’s cut DVD/Blu-ray.

“It will take some time,” he says. “I believe in the long tail with this project, and of course, it’s probably going to be dependent on how we succeed with the sequel and how it affects the first film.”

Ah, yes, the sequel. It’s a testament to fan loyalty of “Iron Sky” that, despite the disappointing B.O. and uncertain returns, the producers were still able to raise $182,557 — much more than the $150,000 goal — solely to fund the sequel’s development, breaking Indiegogo’s record for a non-North American project. The site’s two other top overseas titles are from the U.K.: the Benedict Cumberbatch-toplined short “Little Favour,” which raised £86,240 ($141,000), and the comedy feature “Ashens and the Quest for the Game Child” with a $73,690 kitty.

While Kaukomaa chose a prize-based campaign (including scripts and the Moon Trooper action figure) in part because of the complicated financial regulations involved with his earlier equity campaign, he says, “There are plans to give (the original 280 investors) the opportunity to be part of the sequel we are preparing now.”

He’s exploring a possible equity campaign for a new company, Iron Sky Universe, to develop a TV series prequel, games and other “Sky”-related projects.

In order to ensure creative control, “Stromberg” writer-producer Ralf Husmann mobilized fans of his German TV series, which ran for five seasons. In December 2011, they poured an amazing $1.3 million into a revenue-sharing campaign for the project in just a week, reminiscent of the astronomical $5.7 million poured into the Kickstarter campaign for “Veronica Mars.”

Around 3,300 people invested in Basic (€50), Bronze (€100), Silver (€250) or Gold (€500) packages with extra prize perks for bigger contributions, while Platinum (€1,000) comes with two tickets to the film’s premiere. If the film (to be released via an NFP Distribution service deal) sells 1 million tickets at the box office, the investors all break even, and earn a 50% return on each additional ticket sold. (If the film sells 2 million tickets, for example, a Basic €50 investor gets a €75 return, and if 500,000 see it, they get back €25.) The producers chose this type of campaign over an equity one, Husmann says, because there were less stringent regulations.

Brainpool, the film’s producer, set up its website with a financing platform from France-based music crowdfunding outfit My Major Company (MMC), which is doing its first film campaign.

Ticket sales can be tracked online, and Husmann says funders will get their returns beginning a week after a million ticket sales are reached.

Given the legal complexities of crowdfunding in Europe, you have to use an existing platform with an establish infrastructure, he explains, to cover any legal and other financing issues.

Companies are also cropping up to cater to the new gold rush: One the “Sky” producers may work with is Northern Europe-based outfit Invesdor, which does crowdfunding of startup companies.

To avoid potential headaches, some overseas producers are using existing platforms in new ways to support specific aspects of their projects. Indiegogo international head Liz Wald cites the Aussie feature “Me and My Mates vs. the Zombie Apocalypse,” which raised $41,439 on a $30,000 campaign just for “practical effects, zombie makeup, stunts and blood.”

There are clearly many reasons for filmmakers and producers to be enthusiastic about crowdfunding. But with regulations still in flux and varying widely throughout Europe, ECN head Gajda says, they should proceed with caution as the arena evolves.

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