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| 3 minutes read

Divine Exemption: A Success Story of Crowdfunding and Production Financing

For most creative projects, the process requires confronting the daunting first step of the proverbial blank canvass. The creator must, in fact, create something out of nothing. And to be sure, the accomplishment of the creation itself is praise-worthy alone. However, if the creator envisions her work being viewed by the masses, considerable funding is typically necessary – particularly for works in the film and television industry given their uniquely high productions costs.

Financing such projects has traditionally proved challenging for many, especially those without notable production credits to their name. The capital necessary for sustained production or large-scale distribution is largely controlled by established industry players (e.g. movie studios, television networks), large investment banks, and high-net worth individuals. However, the Wall Street Journal recently reported that, through the use of exempt securities offerings and online donations, one company was able to successfully raise enough capital for sustained production of a television show. And while this accomplishment is certainly notable, the jury appears to remain out as to whether this success story is more of a one-off victory for the show’s producers and audience versus a larger paradigm shift.

In short, the television program, “The Chosen,” is a modern-day re-telling of the story of Jesus Christ and his disciples. As reported by the Wall Street Journal, the show has relied upon well-known, but atypically successful, methods to finance its production – crowdfunding. The show, through a limited liability company, “The Chosen, LLC” (the “LLC”), offered shares to the general public through exempt securities offerings, and the production received online donations from its audience.

Specifically, in June of 2019, the LLC commenced an exempt offering of Class A Preferred Units (think ‘stock’ but for a limited liability company as opposed to a corporation) pursuant to Regulation Crowdfunding (“Reg CF”). The Reg CF offering followed an earlier exempt offering pursuant to Regulation A, which commenced in June of 2018. In the Reg CF offering, the LLC offered 1,070,000 units to the public, at $1.00 each. Per the LLC’s filings with the Securities and Exchange Commission, the LLC closed its Reg CF round after having raised $1,069,962 - just under the maximum amount it could have raised.

However, the total amount raised through the LLC’s Reg CF offering, while more than just pocket change, likely only scratched the surface of the overall production budget. The show’s producers also turned to other manners of crowdfunding to finance production. Per the Wall Street Journal, fans of the show have invested “$40 million and counting into the show’s production budget [which] was enough to pay for three out of a planned seven seasons.” Per the Wall Street Journal, these sums reportedly trounce the previous record holder – a television show named “Mystery Science Theatre 3000” – which managed to only raise “about $6 million on Kickstarter for one revival season.”

The success of this show’s fundraising efforts must pay due respect to the exempt securities offerings made available to the producers of the show. But the vast sums raised overall tell a more-interesting story of the power of effectively leveraging direct channels to donors via social media. Per the reporting by the Wall Street Journal, the producers acknowledged that viewership was low at the outset, but spiked after the show began to be primarily distributed for free through the “Chosen” app (cut to Quibi rolling over in its digital grave).

There does remain a potential X factor in the success story of The Chosen – that of religion. The genre of The Chosen stands in contrast when examining its successful financing efforts side-by-side with other more-secular film and television projects that sought to finance their works in a similar manner.

With that said, for individuals of any or no faith, who are trying to get their ideas on the silver, small, or mobile screen, it may be worth a second glance at the concept of audience engagement in connection with crowdfunding activities. Per the article, online donors of The Chosen have been rewarded with on-screen cameos and set visits, and other perks, including access to livestream events that double as viewing parties, and streaming behind-the-scenes access. For creators with limited access to capital, this form of interactive engagement may provide an improved return on a project’s crowdfunding activities.  

If you are interested, you can read more here and here.

“But what makes ‘The Chosen’ even more of an outlier is the way it is supercharging the crowdfunding model to sustain production through multiple seasons.”


crowdfunding, venture capital, capital markets and securities, intellectual property