Legion M, a fan-owned entertainment company, gives viewers a say for $7 a share
Leesha Davis, a part-time actress and stuntwoman, has worked around movie sets for years. But she never felt she had a stake in the film business — until now. The 38-year-old Oregon resident recently became an investor in Legion M, a Silicon Valley start-up that bills itself as Hollywood’s first fan-owned entertainment company.
Shareholders like Davis get to pitch ideas for films or television series and help determine which projects get approved. They also go behind the scenes with Hollywood creators via live streams and online hangouts with directors and cast members and participate in shareholder events and meetings.
“In traditional companies you’re just a shareholder,” Davis said. “Give them their money and in a year they tell you how it’s going. Here I get to say, ‘That’s my movie, come see my movie.’ How many people are going to be able to say that?”
Until recently, only wealthy individuals — those with incomes of $200,000 or more — could become accredited investors in companies like Legion M. But that has changed thanks to a federal law — the Jumpstart Our Business Startups Act — that has allowed people like Davis to become equity investors in new businesses.
Crowdfunding isn’t new to entertainment. A number of filmmakers have used sites such as Kickstarter and Indiegogo to finance movies. In return, fans might get T-shirts or DVDs of the film. With Legion M, however, fans can buy a stake in the company’s success — or failure — for $7 a share.
The Emeryville, Calif., company was recently launched by Jeff Annison and Paul Scanlan, both Emmy winners with years of experience in the entertainment business. They previously worked at MobiTV, which supplies video to mobile devices, and New York Rock Exchange, a service that allows consumers to co-own music with artists.
If we can nurture [investors] and create this close community of people that are ready and activated to get behind projects, that’s where our superpower comes from.
— Paul Scanlan
They see themselves as forging a new way to make movies and TV shows.
“If we can nurture [investors] and create this close community of people that are ready and activated to get behind projects, that’s where our superpower comes from,” Scanlan said. “[Consumers] are not investing and waiting to see what happens. They’re engaged, designing T-shirts, asking for marketing materials and literally overnight we have hundreds of people volunteering.”
To be sure, projects are still in the early stages of development. Executives say they plan to develop and distribute a variety of films, shorts and VR content through partnerships with such companies as Austin, Texas-based theater chain Alamo Drafthouse and Burbank-based Stoopid Buddy Stoodios, the Emmy-winning studio responsible for snarky comedy series “Robot Chicken.”
“I genuinely had a great interaction with [Annison and Scanlan], who get the fanbase and think like we do,” said Matthew Senreich, Stoopid Buddy Stoodios co-founder. “That’s where all great partnerships begin. It’s the new frontier of being able to do this kind of business, there’s a lot of potential.”
Another partner is Marvel Comics legend Stan Lee, who is participating in an interactive virtual reality project. Titled “Icons: Face to Face,” it will include a series of interviews featuring Lee and other high-profile figures talking about their work.
“Everybody loves movies and the idea of setting up a company that can do movies and will be financed and owned by the fans -- I think that is a wonderful idea,” Lee said in an interview.
Legion M will create the project with 8i, a virtual reality software start-up that opened a public studio in Culver City last year. Annison credits Legion M’s entertainment-savvy investors as a unique selling point to Lee and others.
“We’re not coming to [Lee] as some corporation or media conglomerate,” Annison said. “We’re literally coming to him saying we are thousands of fans and we want to create this project with you.”
Though Legion M has yet to release a single project, it has already recruited some 2,100 investors. Shareholders are required to buy a minimum of $100 in stock. Under SEC rules, individuals can invest an annual maximum of $2,000, depending on their net worth or income.
Although Legion M is not a publicly traded company, anyone can buy shares in the company. Once purchased, an investor’s shares are legally locked for a year, after which they can be freely sold. The shares are expected be traded on a formal exchange like other stocks though a central trading platform has yet to be established.
Some industry analysts are skeptical of Legion M’s viability. Most successful Hollywood businesses are backed by investors with hefty resources and connections, said Larry Gerbrandt, a longtime media analyst in Los Angeles. He noted that a crowdfunded company’s executives, not its investors, would have the biggest impact on its success.
“If you look at independent companies that have been successful, they’ve almost always been founded by people with a Hollywood track record,” Gerbrandt said. “The fact that [Legion M] is fan-funded doesn’t have any impact on the quality or the kind of programming that is made.”
Though aware of the risks that Legion M faces, Annison and Scanlan are no strangers to the industry and have vigorously campaigned for their company at major entertainment events.
Since Legion M’s launch in March, the company has raised more than $830,000 toward its $1-million goal. The funds will be used to finance a range of low-budget films and TV shows, which the company’s fans-turned-investors help to pitch.
Legion M recruited investors at Comic Con events in Silicon Valley and Phoenix. Shareholder word of mouth and social media advertising resulted in a steady increase of attention and support. The company, which has five full-time employees, recently opened an office in Los Angeles.
Like Davis, fellow Legion M investor and full-time Reed City, Mich., university student Daniel Parker was drawn to the fan-focused nature of the company.
“I really feel like Legion M is paving the way for the future of businesses,” said Parker, 35. “It opens up the market to people that are shut out from it. For anybody that’s interested in television, movies or any type of media, I think Legion M is going to be the next generation of Apple or Google.”
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