Fig’s latest update is an example of something I call ‘being economical with the truth’. To be clear, I hadn’t heard much about Fig until fairly recently, but it made my spider senses tingle. Fig is a relatively new crowdfunding website that markets itself as a place fans can invest in video games and get money back in return and that is the very reason I don’t trust it. See Fig has some problems, it’s an example of a nice concept that doesn’t really play out well in reality. While I frequently hear backers wishing they could get a cut of the profits not many understand the complexities of the investment process. If it were easy everyone would be doing it as a way to make money doing barely anything, but it isn’t easy. So I’m sure you can understand my confusion and suspicion when Fig released this simple Flowchart to help people understand their service a little better:
When Fig started out its major flaw was that the law prevented just anyone from investing. Only ‘Accredited Investors‘ were allowed to invest and that is legalese for someone with a minimum income of $200,000 or a net worth of $1 million. Not really your average video game fan is it? However, recent changes to the law have thrown caution to the wind in the form of the Jumpstart Our Business Start-ups Act. This allows anyone to invest on Fig as long as they have a minimum of $1000. I don’t think this is a good thing, Accredited Investor status was created to protect the investor. It basically said that you have enough money not to be hurt by a loss anyway, but now people who CAN get hurt can invest. They say the path to hell is paved with good intentions and I think Fig has actually created something that could go very badly for everyone involved. People will want to invest to receive dividends and gain money, but how much money does an indie game make? Arguably Psychonauts and Rock Band are two established brands, but what about the rest? Also, you have to remember you are investing in a single game, not a business, I don’t know how much people think they will earn back from a single game, but I sincerely doubt they’ll be rich from it.
Just one thing to keep in mind is that shares in Ubisoft are only about 30Euro right now and that is after about 5 years of the price increasing. Twitter stocks are under 20 dollars most of the time, and companies are always going to be a better investment that than a single product from a company. Just take a moment and think back to games you have backed on Kickstarter that once released have had mixed reception or downright bad reviews. As a backer it is disappointing, as an investor it is devastating. As far as investing in video games does, don’t. You are better off investing in established businesses that aren’t going to go bust any time soon.
Still there are things I like about Fig. It’s smaller and much more focused and regulated than Kickstarter for one. They appear to be starting off small working on just one project at a time (mostly), which I assume will increase over time. They have a team of educated people behind it and I think with time it could become something good. While researching this piece I noticed that many people had reservations about Tim Schafer’s involvement in the project after his behavior on Kickstarter. While I understand that, I doubt he would be able to do much harm on such a small team especially since they are a new business.
The one other thing that I had in the back of my mind is that while Fig is similar to Kickstarter in some ways it is also for an entirely different audience. Kickstarter is all about bringing unique projects to life, things that might not have mass appeal but we still want them. It’s a little cool and weird and slightly hipster in it’s own way, but Fig is something else. It has the focus on mass appeal, because when investors are involved a company has to do the best for them. In some respects they are from different ends of a spectrum and while there are things I like about it, I’m sticking with Kickstarter. For all it’s faults, it’s familiar and allows me to fund the quirky games I love even if they don’t appeal to the masses.
My advice to any inspiring investors out there would be to approach Fig with extreme caution. It may seem like a simple version of investing, but your money could be invested in much better and more profitable things. We love to support the games we care about, but we also need to be wise about it. That said, I won’t write Fig off completely just yet, I’ll give it some time to see how it goes. What are your thoughts about Fig? I’m a looking too deeply into the specifics to enjoy the concept? Comment down below!