The Speakeasy Becomes First Theatre Project in U.S. to Offer Equity Crowdfunding
Yesterday, under the production umbrella of Sam Lee Laundry LLC, The Speakeasy became the first theater project in the country to use the new SEC equity crowdfunding rules when it launched its Series B investment offering on the WeFunder platform.
May 16 was the date that the new SEC Crowdfunding Regulation took effect, allowing non-accredited investors to fund American startup businesses for the first time. The project's status as the first theatrical production to utilize the new rules was confirmed by a review of SEC filings in the EDGAR database.
The Speakeasy had previously raised almost $1 million in equity to fund its new production, scheduled to begin performances August 12, through a private placement as allowed by SEC Regulation D. Private placements are geared primarily towards accredited investors, wealthy individuals who meet certain income and asset tests. Commercial theater projects are traditionally funded through private placements. The new equity crowdfunding rules will allow anyone to invest in a commercial theater project, and realize a return on their investment if the show is a hit.
"The new equity crowdfunding rules are going to transform a lot of industries, but the potential impact on commercial theater is truly profound," said David Gluck, producer and general manager of The Speakeasy. "Imagine going to a musical theater festival or a fringe festival anywhere in the world, and falling in love with a project in its very earliest stages of development. If they're using the Crowdfunding Regulation, you could become an investor in that project and be along for the ride, wherever it may lead. One day, maybe all the way to Broadway."
The new rules may create some unintended consequences. Gluck theorized that nonprofit theaters may be affected. "Nonprofits can't pay returns to investors, so none of the major regional theaters can use equity crowdfunding," he said. "It is possible that some theater lovers may shift their giving from nonprofits to commercial ventures where they have the possibility of a financial return." At this point it is too early to estimate the extent of the threat that equity crowdfunding may play on nonprofit philanthropy.
For The Speakeasy, the Crowdfunding Regulation campaign is the last piece of a fundraising effort that has generated a total of $2.4 million toward the $3 million project budget. "This will get us across the finish line," said Gluck. "There's a group of passionate fans who love our show and who are looking for an opportunity to support the project and share in its success. The new SEC rules will let them do that."
The Speakeasy is an immersive theater production that premiered in 2014 in San Francisco. Audience members were free to roam from room to room in a recreation of a 1923 speakeasy, while a cast of 35 performers portrayed a slice-of-life from the Prohibition era. The production sold out 75 consecutive performances before closing in connection with the sale of the building that housed the venue. The production is being revived in a new, larger location, with a ribbon-cutting ceremony scheduled for August 8 and the first preview on August 12. Presale tickets for previews become available on June 9. The press opening is scheduled for mid-October.