News

Fig And Psychonauts 2 Still Don’t Have Approval For Crowd Investing

by Mike Futter on Jun 30, 2016 at 10:00 AM

In May, Fig co-founder Justin Bailey told us that the crowdfunding and investing platform was close to getting necessary approvals. “We believe we will finalize any moment, and will let everyone know as soon as we hear from the SEC.” Two months later, the organization is updating its filing as it has not been given the green light to proceed.

Fig is partnering with FundAmerica, which will handle back-end management for the the online platform, keep track of who owns shares, and manage other aspects of the stock. Fig is changing its filing in three ways in hopes of winning SEC approval, which is holding up its ability to collect on unaccredited investments for Psychonauts 2 and other projects.

The new filing streamlines the process, such that the organization need not create a separate limited liability corporation for each game. Instead, all funds will go into Fig’s working capital and then managed via development advances.

The company is also instituting milestone-related disbursements. In the original filing, Fig would have distributed all investment funds at the start of the project.

Finally, even though all funds will go toward Fig’s working capital, each game will be reported individually. Investor dividends will not change. They’ll still be based on revenue minus developer royalties, publishing expenses, and Fig’s service fee.

“While it’s taken us several months longer than we anticipated to get you these details, we felt it was time well spent,” writes Fig CEO Justin Bailey. “Our mission is to build a vibrant, sustainable game ecosystem of fans, investors and developers that will last for years to come. That means we need to make sure the terms we set now with our Fig Game Shares and the PSY2 offering provide a solid foundation for the future.”

Fig's first project eligible for crowd investing, Psychonauts 2, successfully closed in January. Unaccredited investors that have offered to purchase shares are still waiting for the ability to execute their share buys. To learn more about unaccredited investments as it relates to Psychonauts 2 and Fig, check out an extensive breakdown of the risks and benefits.

[Source: Fig]

 

Our Take
Everything about this feels like Fig moved into crowd-based investing prematurely. The company said on multiple occasions it was close to getting approval.

Instead, potential unaccredited investors are holding non-binding options to purchase. They can walk away with no penalty. In significant numbers, it would have an impact on Psychonauts 2’s development, as well as other projects with shareholders in wait.

I believe far better investment opportunities are out there that won’t tie up your principal for years. But if this is something you are considering, consult a financial professional and understand both the risks and potential benefits.