Crowdfunding: a capital idea for commercial theatre
Published in The Guardian, 25.02.2014
Reckon you can tell a Wicked from a Which Witch? It might be time to put your money where your mouth is. The West End is turning to crowdfunding and it’s looking for a new breed of backer.
“Theatre is normally quite an expensive investment,” says commercial producer John Brant. “It generally starts from £5,000 or £10,000 up, which obviously rules out quite a lot of people.”
Brant and his co-producer Gavin Kalin are seeking to raise £200,000 for The Pajama Game‘s West End transfer – about 14% of its total capitalisation costs – through the online crowdfunding platform Seedrs, which allows people to invest as little as £10. They hit £40,000 within 24 hours.
“That’s a very good day,” says Brant, and the campaign has since approached £60,000. While they only benefit if they reach their target, the musical Happy Days, currently touring the UK, successfully raised £250,000 via the same channel last year.
To date, most online public investment in theatre has mostly been on a philanthropic basis. Donations are acknowledged as such with tokens of gratitude: signed programmes, press night tickets and the like. It’s not just hard-up fringe shows, either: American Psycho sourced $150,000 through Kickstarter last year.
When American Pyscho hits the West End and Broadway, its producers and their investors will start seeing returns, but its crowdfunders – including two that put up more than $10,000 apiece – won’t. They’ll have to make do with their Patrick Bateman Business Card USB sticks instead.
The Pajama Game‘s online backers, however, will get exactly the same financial terms as their offline counterparts. If the production makes a profit, they’ll get a cut on a pro rata basis. “It completely democratises the investment process,” says Brant. “Anyone can become part of a West End show.”
Of course, it also means that anyone could lose money on a West End show. But Brant insists the model isn’t about exploiting novice investors, nor about plugging funding shortfalls. The rest of the production’s costs are covered. “We’ve not pushed the panic button. We’ve not gone, ‘Oh, we’ve got to raise money, let’s crowdfund,” says Brant. “If people aren’t savvy to the world, we’re giving them the opportunity to drop in £10 and get a read on how the industry works.”
Instead, this is a deliberate attempt to find a new model and in that, it’s not alone. Producer Jamie Hendry tried a different approach earlier this year, offering the public the chance to invest in the new Stiles and Drewe musical, The Wind in the Willows, with a book by Julian Fellowes. He sought £650,000 – 10% of total capitalisation costs – but ended up raising £1m from more than 400 backers. Some of his usual supporters even scaled down their investments to allow others to join in “I was shocked so many people invested so quickly,” says Hendry.
The advantage, as Hendry sees it, is not just “widening the pool of investors” and bringing investment “out from behind closed doors,” but also in having 400 people acting as “the greatest ambassadors for the show possible, because they have an invested interest in it”. It’s meant great exposure too: 20,000 people requested an investor’s prospectus – and, unlike The Pajama Game, the show hasn’t even confirmed a theatre yet – it’s still in pre-production.
“It’s a new approach to raising capital for commercial theatre,” explains Hendry, “I’m sure there’ll be an abundance of similar offerings over the next 12 months and they’re all likely to be unique. There are many ways that productions can be positioned in that marketplace.”
Because the two models are different – even though both carry risks. One’s an acclaimed transfer, the other completely untested. Hendry built his own crowdfunding platform, because he “feels strongly that the investment should be direct with the producer”. Using Seedrs, Brant and Kalin must hit their target to benefit. They’ll also pay commission – as will their investors. Hendry’s, however, had to invest a minimum of £1,000 as a result.
However, as Hendry says, “The long-term aim here is bring more investors into the West End.” That, in turn, could change commercial theatre for good.
Photograph: Chichester Festival Theatre