Legally Embattled VidAngel Movie-Streaming Site Raises $10 Million From Fans

VidAngel, which is being sued by major Hollywood studios for copyright infringement over its $1-per-movie streaming service, said it has raised $10.1 million in funding from a “mini-IPO” that sold shares to supporters.

VidAngel banked the bucks under the U.S. JOBS Act of 2012, under which qualifying companies can raise money from the general public. SEC rules previously limited startups to raising funds from accredited investors, defined as individuals with a net worth over $1 million.

The Provo, Utah-based company positions itself as a “family-friendly” streaming service that lets customers use community-created filters to eliminate sex, violence, profanity or other objectionable material from movies. Customers of VidAngel are able to purchase a DVD from the site for $20, after which they can set content-blocking filters and stream the movie online. Users can then “sell back” the movie to VidAngel to receive a $19 credit to stream more movies.

Big studios say VidAngel is breaking the law.

Disney, Lucasfilm, 20th Century Fox and Warner Bros. filed suit against the company this summer in U.S. District Court in Los Angeles, arguing that VidAngel is “no different than many other unlawful online services.” The studios contend that the service creates unauthorized copies of movies on DVD or Blu-ray Disc that are then streamed to customers. A preliminary injunction hearing in the case is scheduled for Nov. 14.

VidAngel has defended itself by saying the service is perfectly legit under the 2005 Family Home Movie Act. It claims that law authorizes it to stream “lawfully purchased movies for home viewing with objectionable content filtered out pursuant to each customer’s individual choice.” The studios have countered that nothing in the Family Home Movie Act gives VidAngel the right to copy and stream their copyrighted movies and TV shows without authorization.

Titles currently on offer at VidAngel include new releases “Sausage Party,” “Bad Moms,” “Star Trek Beyond,” “Nine Live” and “Independence Day: Resurgence.”

The company is citing the $10 million crowdsourced funding as evidence of its large grassroots base, and CEO Neal Harmon says VidAngel is prepared to fight the battle to the Supreme Court if necessary. VidAngel is being represented by L.A. law firm Baker Marquart.

“VidAngel isn’t just a company; it’s become a movement,” Harmon said in a statement. “The outpouring of support we’ve received since the lawsuit was announced is unprecedented.”

According to VidAngel, nearly 40,000 customers have donated to its legal defense fund, and a total of 7,553 individuals invested in the mini IPO. About 8,000 customers have written letters to federal district court hearing the case explaining why movie filtering is important to them, according to the company.

The company touts the support of several religious, conservative and parents’ organizations, including the Parents Television Council, the National Center on Sexual Exploitation, Media Research Center, Traditional Values Coalition, Focus on the Family and Donna Rice Hughes’ Enough Is Enough.

VidAngel has previously raised funding from Alta Ventures Mexico, Kickstart Seed Fund and Stoneway Capital. The company was founded by Neal Harmon and his brothers Jordan and Jeffrey, who also run a digital ad agency, the Harmon Brothers.

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