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KickStarter Fig - a new equity-based crowdfunding platform - shut down, RIP

Blaine

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I take it this hasn't been posted yet?

 

Blaine

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concern trolls

Ah, feminist buzzwords are my favorite. I can harvest some decent outrage from that alone. That's good, then. I found the video on my own a week or two ago and only just now remembered its existence.

Turn off your brains and turn up your love and nostalgia for the man who definitely didn't lie to you and rip you off, he's a cool guy still and will surely deliver something great. Pay no attention those damn concern trolls. Only enemies and haters in disguise could possibly harbor differing opinions or reservations. Instead, pay—pardon, invest—your money in Fig.

Regards,
t. shill
 

J_C

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I take it this hasn't been posted yet?


This has been posted a lot, and you know it. Attention whoring much?

I'm pretty sure Double Fine is intentionally trying to run itself into the ground with this game, there is no way most of these investors are getting a good return I don't think they can sell shares either. Hopefully a good game comes out of this.
DF doesn't run fig. Saying that makes as much sense as saying that Obsidian/inXile wants to run fig into the ground.
I'm pretty sure Double Fine is intentionally trying to run itself into the ground with this game
I'm sure they do. That's why they are struggling to stay afloat nomatter what, so they can go bankrupt intentionally.
 

IHaveHugeNick

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Turn off your brains and turn up your love and nostalgia for the man who definitely didn't lie to you and rip you off

Fake outrage for attention, run into opposing opinion, self-reference your own post out of desperation to pretend you actually had a coherent point to make. Your attempts at farming concern brofits are as transparent as they are torpid.
 

Mustawd

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The author of the video makes some assumptions that I think are a bit over his head.

In private equity shell companies are a common occurrence as are complicated partnership and tax structures. Anytime we audited a PE firm it was always a pain to navigate the mish mash of legal entities we had to account for. So it's very likely that this whole "fig co. Is not financially viable!" is all overreaction.

Then again I'm no lawyer. Neither is the video's author. He says he has a masters in accounting, but so do I. Plus real world experience with PE firms. Yes, there's a possibility there might be some sleight of hand with its legal structure, but I honestly think there's nothing illegal going on. There might be some obfuscation, sure. But most people who invest don't read or understand SEC documents anyways. News at 11.

I'm too lazy to really delve into the SEC documents now as I'm up to my eyeballs in SEC docs already for my own company. Maybe in a fit of ADD I can take a closer look at it later. Regardless, a corporate lawyer is more suited to provide real analysis on the legal ramifications of fig's legal structure.
 

mutonizer

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[..]fig's legal structure.

I'm not naive but deep down, any company requiring this type of "legal structure" is there to scam someone, someday, somewhere. There is no other reason for it.

Not saying it's illegal, but to me it's usually contrary to the "spirit" of the law (which I know is long dead most everywhere and nobody gives a fuck).
 

Mustawd

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Literally 100% of PE firms I audited had complicated legal structures. Some of which are completely legitimate and are a result of the fact that many PE projects can involve a variety of partners and sometimes are intermingled in interesting ways.

And then there are a ton of tax reasons to structure them in specific ways. Plus, partners can sometimes disagree and sue each other. It's good that a clear legal structure is established, even if complicated to the layman, in order to minimize complications later. Finally, there are also legit accounting/legal reasons to have such a structure. It's inside baseball accounting terms, but it has to do with being able to raise bonds from an entity that's legally at arms length from another. It gets more conplicated from there. But it's an example of how a legal entity can "seem" to be broke, but are basically a part of another entity. Or how a bigger entity who is financially struggling can raise highly rated bonds off a healthy arms length related entity.

Also, let's be clear. PE firms exist to make investment returns. They're not a nonprofit. They're going to do their best, which includes the necessary legal structure, to maximize their ability to operate well. It has nothing to do with the feelz of the "spirit" of Polish Christmas or whatever.

TL;DR Welcome to the world of Private Equity, fig investors. You'll like it here. You'll float. Down here we ALL float....
 

Mustawd

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These PEs are a cancer on society overall, but a legal one. Hence why the "spirit" is dead.

You think it's a cancer to have complicated legal structures? How so? Also, keep in mind that PE firms have a lot less of an impact on society than corporations do. They just do their own thing in their little corner of the world most of the time. They also, on average, tend to employ a lot less people per firm. So their impact, on a per firm basis, is also minimized.

I tend to think most codexers just distrust stuff they have no experience with. In this case business in general. I mean there are reasons to be skeptical, but it's hardly an orgy of corruption/fraud that some people tend to think it is. There is of course its fair share of it, but no more than in any other institution or no more than in people's general life. When I used to work in insurance, on average 1/3 of people would attempt to commit insurance fraud one way or another. Some were more successful than others, but they at least tried it. Individual people in the public are no more innocent than any other large institution.

Anyways, moving on to the bigger point, obfuscation is the main threat to fig investors here. In other words, the corporate structure is complicated enough where a casual investor probably has no clue what his legal and financial powers are. What happens in the event of the firm imploding? What happens if it dissolves? What happens if it takes out debt and defaults? Can it even take out debt? These are some real questions that most investors should ask themselves, but I think hardly any of the gaming crowd has bothered to even think about it.
 

mutonizer

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These are some real questions that most investors should ask themselves, but I think hardly any of the gaming crowd has bothered to even think about it.

I agree, but that's because you need to practicaly spend your entire life and career to even understand wtf that shit means (or rather, how bad you're gonna get fucked over and therefore not get involved).

And there again, my point...
These things ONLY work by abusing a deep and ultra complex system of laws onto people who got no fucking clue because that's not their job. If nobody was dumb enough to believe stupid shit, they simply wouldn't exist since there'd be nobody to fuck over. Happily (or sadly), there will always be dumb fucks.
 

Mustawd

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If nobody was dumb enough to believe stupid shit, they simply wouldn't exist since there'd be nobody to fuck over

That's the real crux right? There's a reason why, until very recently, you needed to be an accredited investor with a net worth of $200k or more to buy shares in a non-public company/issuance.

But it's not fair to blame the firms IMO. They're just working with what they have and they've been doing it like this forever. All of a sudden there are new entrants with less knowledge and they get blamed? sorry, but that's just lazy. Yes, it's difficult to catch up, but the onus should be on the investor making an informed decision anyways.

I mean, wouldn't you read up on what kind of PC you want before buying? And isn't the consumer's fault if they don't and they get something that doesn't fit their needs?

EDIT: Of course I do agree that blatant and purposeful obfuscation is wrong. That's a different story altogether, although it might seem that all PE firms are doing it from the eyes of a layman.
 
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mutonizer

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I mean, wouldn't you read up on what kind of PC you want before buying? And isn't the consumer's fault if they don't and they get something that doesn't fit their needs?

Society and laws are there also to protect the weak and the dumb, otherwise it's just a jungle, no laws, and everyone who can fuck everyone else who can't. I mean why not but then it's a different ballgame :)
It IS fundamentally their own stupid fault of course but these laws are also made, heck written in a way, so that nobody outside of the system can actually understand them. That's why in some countries some people are trying to push "plain language" system for laws, so that everyone can actually understand laws they are supposed to live by everyday.

Personally I (try to) never (ever) do shit I don't know about.
When I buy parts for my PC, it takes me days/weeks of research usually. Then again, you'll never see me in a kickstarter, in a fig-thing, or even buying a lottery ticket or any shit like that. I'm sort of a literal atheist in that I don't "believe", in anything, especially shit I know nothing about (of which they are a shit tons).

I'm also not at all the target for this kind of things usually :)
 

Mustawd

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Society and laws are there also to protect the weak and the dumb, otherwise it's just a jungle, no laws, and everyone who can fuck everyone else who can't.

Agree to disagree here. Yes, to some extent laws should be in place to improve disclosure to make things clear. But IMO, it's a slippery slope in making too many of these laws and eventually eroding any sense of responsibility from the consumer/investor. But like I said, agree to disagree here.

Regardless, this is more of a critique on the overall laws. PE firms are just reacting to what the current system is. Of course, the management of said companies would rather have to disclose less, which is why disclosure to investors is an extremely necessary and useful thing.

That's why in some countries some people are trying to push "plain language" system for laws, so that everyone can actually understand laws they are supposed to live by everyday.

Investing is complicated. Accounting is complicated. I have a master's in accounting. And there's no way for me to explain complex accounting rules without losing a lot of the important nuance that surrounds it. So in using "plain language" you begin to give the illusion that things are not as complex as they are. In which case it begins to have the opposite effect as intended. Shit IS complicated. That's why it's complicated.

Anyhow, I think my main point here is that complexity does not necessarily equal purposeful obfuscation. However, complexity can definitely aid in said obfuscation if the company so desires it. So yeah.That's what I'm trying to say, and that's why the video is a bit premature in its presentation of fig's structure.
 

Xor

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I seriously doubt that Fig is set up to be a scam. What would be the point? I also don't think Schafer is intentionally misleading people with his game pitches. He's just arrogant and buys into the hype surrounding his name, and he's not a skilled enough manager to set realistic goals for himself and his company. It's why his games were better before he got famous and when he was working under a publisher.
 

Blaine

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Investing is complicated. Accounting is complicated. I have a master's in accounting. And there's no way for me to explain complex accounting rules without losing a lot of the important nuance that surrounds it. So in using "plain language" you begin to give the illusion that things are not as complex as they are. In which case it begins to have the opposite effect as intended. Shit IS complicated. That's why it's complicated.

Anyhow, I think my main point here is that complexity does not necessarily equal purposeful obfuscation. However, complexity can definitely aid in said obfuscation if the company so desires it. So yeah.That's what I'm trying to say, and that's why the video is a bit premature in its presentation of fig's structure.

You're absolutely right about the need for complexity in rules systems that people actually have to use and abide by in the real world. I come from a family of lawyers, I spent many hours helping my sister study for the bar (although I'm not a lawyer myself), and I know firsthand that while rules systems are often hideously complicated, it's for a reason.

There generally needs to be a rule (and usually several or many rules) for any possible scenario relevant to the given field of expertise, be it law, accounting, civic procedure, or what-have-you. Also, any open loophole can be abused by someone clever enough to worm their way through it, so there must be rules that address and close those loopholes. And on, and on, and on... if rules systems were simple and easy to understand, there would be countless unaddressed scenarios and open loopholes.

I very much appreciate your actually making valid criticisms of the video's message, rather than spraying fan-skunk everywhere as some are wont to do. However, I do have one partial rebuttal: Selling "investments" to everyday people, almost all of whom you can be sure don't have the expertise (nor the means to hire someone with that expertise) to properly understand all that complicated wizardry and thus exactly what they're getting into, is a bit shady in and of itself.
 

Mustawd

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I very much appreciate your actually making valid criticisms of the video's message, rather than spraying fan-skunk everywhere as some are wont to do. However, I do have one partial rebuttal: Selling "investments" to everyday people, almost all of whom you can be sure don't have the expertise (nor the means to hire someone with that expertise) to properly understand just what they're getting into, is a bit shady in and of itself.

*shrug* Blame Obama or the SEC if you'd like. They're the ones behind the JOBS act which allows it.

Should you blame Fig for using existing law? Meh, maybe or maybe not depending on your ethical opinion. Personally, I think Fig has done a bit that will help "ordinary" investors, such as the Break even calculator for each of their games. They even include the ability to change assumptions on profitability. But overall they don't trip over themselves to make things easy for the first time investor with little financial/business sophistication.

Even that little calculator thing can be over people's heads. For example, what's a reasonable expectation of costs for a game to ship? What about a AAA game? An indie AA game? Are profit margins usually low or high? I don't know. And a lot of other people don't know either as this type of game-specific financial information can be unavailable. Even when it is published, it's usually done because the game did well. So it's a built-in confirmation bias if you only examine those games.

Again, this is where having industry-specific and general PE experience can be helpful. Because you start to understand all the questions you need to ask as an investor instead of just accepting what the firm is telling you at face value. To an extent an audit is helpful, (although Hegel doesn't seem to think they are worth much), but even that does not necessarily provide information on forecasts or due diligence for each project.

Then again, I don't remember to what extent investors had access to revenue or any other type of financial models or due diligence packets. In my auditing days I remember these packets existed, but they were usually presented to an investment committee tasked with making the final decisions on whether or not a specific project was undertaken or asset was purchased. I don't recall if these ever went to specific investors.

Anyway, I digress. My point is that, like the example of "plain language" disclosures, a simple cost benefit calculator gives the impression that trying to forecast how much a game will sell and how profitable it will be is simple and straight forward. When in reality, if they have a good budgeting/planning team, Fig's management probably has a series of complex financial models with many different assumptions and with different scenarios (e.g. high, mid, or low sales scenarios). And I doubt many fig casual investors really understand this. So their simplified opinion of how risky a particular investment can be is most likely way off.

TL;DR Yeah, I agree with you. It's a bit shady to let people with no experience or know-how in investing to give to Fig as it is now. But Fig is hardly alone in this.
 

Hegel

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I've already made my stance clear on FIG throughout our previous exchange, Mustawd. Only accredited investors should have access to risky investments, the others can always gain exposure via a mutual fund or by buying shares of a lender or of a PE company (some of which are publicly traded).
 

Blaine

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Should you blame Fig for using existing law? Meh, maybe or maybe not depending on your ethical opinion.

I read your entire post, but want to respond to this specifically.

I don't in any way blame Fig for using existing law, but at least one of Fig's founders has a history of 1.) mismanaging monies given him in order to complete projects (Broken Age); 2.) mismanaging the projects themselves (Spacebase DF-9); and 3.) making promises that he cannot keep. These points combined with the potential for abuse afforded by the new law is where I see most of the shadiness.

While I understand the viewpoints of those who don't believe that points 1, 2, and 3 are nearly as bad as I make them out to be, or who disagree with my characterization of what occurred, I nevertheless beg to differ. In his defense, Schafer typically does respond to criticism: http://steamcommunity.com/app/246090/discussions/0/613936673464943075/

It's one thing when people are making donations or payments to crowdfund or purchase a game. Unless they're very stupid, they should know that that money is gone, whether or not the game succeeds. This is easy to understand.

Offering investment opportunities on the other hand will inevitably tap into people's sense of greed, possibly compelling them to invest a lot of money (or rather, much more than they can reasonably afford) expecting to receive a return. Given Schafer's shaky track record, I feel that this is potentially a very bad thing. Furthermore, sound investments are nearly always made dispassionately, whereas with Fig, nostalgia and enthusiasm for gaming are involved... in other words, everyday Joe investors have an emotional stake in it as well. This thread is ample evidence of that.

All in all, it's a potential (although not guaranteed) recipe for disaster.
 

Hegel

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You should blame Fig, because the economic rationale of this whole thing is fleecing the stupid.
 

Blaine

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You should blame Fig, because the economic rationale of this whole thing is fleecing the stupid.

They definitely want that "emotionally involved and inexperienced everyday Joe investor" money. Of that there can be no doubt whatsoever.

Nonetheless, JOBS opened the door for it, and it's also worth considering that plenty of crowdfunding backers have been clamoring for "real investments" in their favorite projects for years. Some proportion of the stupid are working feverishly to fleece themselves, whether they know it or not. It's perhaps more of a collaborative effort.
 

Hegel

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That's why we have laws, so that the "stupid" can't harm themselves. Please notice how this whole thing is marketed, it's an investment but the funnel is "hobbies" "pet projects" "non mainstream videogames" (give us your money, but please suspend your judgement, we're making the stuff you've always wanted!).
There is no free lunch in a sidecar investment, hence why and what are they offering? If they could achieve the promised returns why not keep everything to themselves instead of allowing the average Joe to join, especially now that issuing debt is way cheaper than equity issuance or profit sharing agreements? The people behind FIG know this, which is why I have an extremely low opinion of equity crowdfunding (so I'm talking about JOBS and general forms of solicitations to the public and offerings), it's akin to venture investments in spirit but unlike limited partners, the average Joe doesn't have nearly enough money or expertise to play the game, yet they are voluntary catering to those people with little concern for their best interest.
Notwithstanding how VC as an asset class - therefore managed by professional - on average underperforms the market, so figure how far this thing could go (even more so with indie games which might make or break a lone developer but are far from being an optimal investment in terms of returns, let alone earning a yield for dozens of different financial sponsors).
Basically, publishers exist for a reason (and investment banks are the gatekeepers). Indie developers can always bootstrap, kickstart or take a loan; fucking with Average Joe is not only wrong but reeks of entitlement. They want to develop games and earn a salary whereas the risk is borne by the "investors" which they are intentionally luring with hopes of future misrepresented returns.

My two cents.
 
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Mustawd

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Should you blame Fig for using existing law? Meh, maybe or maybe not depending on your ethical opinion.

I read your entire post, but want to respond to this specifically.


Yes, I tend to agree with your response. I was mostly playing a bit of Devil's advocate because some people's view of ethics is "as long as it's legal it is fine with me". In which case what Fig is doing is just fine by those kinds of people.



There is no free lunch in a sidecar investment, hence why and what are they offering?

They are offering MineCraft-types of returns. Like you said this is a type of VC, of which only 10-30% of ventures survive, let alone prosper. So from a traditional stand point, I don't see how it's any different than any other typical VC project. Extremely high risk and extremely high (potential) rewards.

If they could achieve the promised returns why not keep everything to themselves instead of allowing the average Joe to join, especially now that issuing debt is way cheaper than equity issuance or profit sharing agreements?

Well to me this is less about just the returns, and it's more part of an overall bigger strategy to become more independent of the traditional publisher-developer model. Or at the very least it gives them more leverage to make the kinds of games they want. Doing this on a single company basis is much more difficult than banning together as a group/niche industry and spreading the risk. And Fig provides a potential vehicle to do this.

As to why crowdfunding? I think we both know the answer to that is to spread the risk around. Which, seeing that most of these suckers are not even thinking about any of this, is pretty damn shady. I mean inXile, DF, and Obsidian benefit directly in bargaining power. It's been said before that crowdfunding like Kickstarter provides visibility into how successful a game might be. So when inXile, DF, or Obsidian want to take a loan or broker a deal with a publisher, they can use Fig as leverage. "See how successful these indie games are? It means we deserve a lower interest rate on our debt" "Oh, Publishing Company XYZ, you don't want to give us better terms? It's ok, we'll just Figstart our game. as you can see it's been very successful".

And this type of Crowdfunding is unique. Since the games that go one there are directly curated by the head honchos at inXile, DF, and Obsidian. So continued success helps to create a consistent funding pool. Meanwhile, Kickstarter is a larger risk due to the sheer number of projects, but also due to the fact that a string of bad projects can turn people off to the platform altogether.

This type of return is completely being funded by the risk an investor takes at no real risk to any of the companies. Plus, if an investor realized how they are being used, they might balk at the terms of the agreement. Basically, the investor not only puts up most of the risk in capital, but then does not benefit or share in inXile, DB, or Obsidian's bargaining power? Yeah, sounds like a raw deal to me.

Again, we don't know, but I would imagine more sophisticated investors might realize they're putting up capital for both the sales of the game and for the benefit of these indie companies' bargaining power. And if it were me, I'd want the investment agreements and return % to reflect this.

It's no different than if a VC firm invested in Facebook. Yes, they want returns. But they also make sure as hell that some kind of shares/control/ownership in the company is coming their way. Again, if this was a traditional business model, then maybe a game-specific return might be appropriate. But this type of model is completely new and speculative. It seems that game-specific returns only are not really appropriate here.


TL;DR (below)

it's akin to venture investments in spirit but unlike limited partners, the average Joe doesn't have nearly enough money or expertise to play the game, yet they are voluntary catering to those people.
 
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Mustawd

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Your mom hasn't been posted yet.
 

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