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Psychonauts 2 will get all the money its investors pledged

How an extended SEC review has challenged Fig to adapt

Charlie Hall is Polygon’s tabletop editor. In 10-plus years as a journalist & photographer, he has covered simulation, strategy, and spacefaring games, as well as public policy.

Psychonauts 2 is the first crowdfunded game project to offer equity investment to everyone, not just the rich. Its campaign, run through the Fig crowdfunding platform, concluded in January of this year with nearly $3.83 million raised. But neither Fig nor developer Double Fine Productions has been able to collect a portion of those investment dollars — specifically, money from non-accredited investors — because of an ongoing review by the U.S. Securities and Exchange Commission. That process ended last week, and today non-accredited investors are being asked to pay for the shares they reserved.

But even if Fig and Double Fine can reach those many hundreds, perhaps thousands of investors who reserved the right to purchase shares in the project, those individuals are under no obligation to actually pay up.

That’s why Fig has promised to provide that money itself, if need be.

"We have agreed to fund an amount to Psychonauts 2 regardless of collections," Fig founder and CEO Justin Bailey told Polygon during a telephone interview yesterday. It’s the same promise Fig has made to other teams, including the one behind Consortium: The Tower, which raised nearly $350,000 via Fig in May.

The bottom line is that Double Fine will receive every single one of the dollars due to it after its successful $3.83 million Fig campaign. Additionally, anyone who would like to purchase available, outstanding, non-accredited shares of the project can do so starting today.

That’s because, says Double Fine founder Tim Schafer, when the Psychonauts 2 campaign ended, a portion of the game’s potential revenue was reserved for X-number of non-accredited investors. If they don’t show up with the money, those shares are still up for sale at the original rate.

"For now, there is a chunk of shares reserved for these non-accredited investors so that they can purchase them," Schafer told Polygon. "We can leave that open, because we’re kind of selling a chunk of revenue of the game. ... We can leave that open as long as we want, really."

While the terms of the equity investment will be roughly the same as they were in January, Fig itself made a structural change. It’s a subtle shift, but in layman’s terms, instead of all the money going directly to Double Fine to support Psychonauts 2, investors are actually investing in Fig. The money received by Fig goes to its general fund, and Fig pays Double Fine based on a milestone schedule — certain developmental goals that are met as the project progresses. The financial return, should there be any, will then be distributed to investors by Fig according to the commercial success of Psychonauts 2.

Rob Rosenblum is a partner at the law firm Wilson Sonsini Goodrich & Rosati, and has been assisting with Fig’s SEC review throughout the year. He stressed that while the Psychonauts 2 campaign is more or less buttoned up, there will be additional SEC review periods for each successive campaign. Thanks to the work put in on Psychonauts 2, subsequent reviews may be much shorter going forward.

"Our hope and expectation is that as Fig does similar offerings in the future, we anticipate that the review time will be considerably less," Rosenblum said. "Kind of like how it takes $10 billion for a pharmaceutical company to develop a new drug, and all the others thereafter are essentially free to produce. Of course, it’s not quite the same thing.

"We’re still going to go through the review process [in the future]. Undoubtedly we’ll still get some comments [from the SEC], but we think that going forward we should be in much more of a regular way, with a much more predictable kind of review process. At least that’s how our expectations are."

Fig currently has two active campaigns, with a third to go live next week. That will mark the first time that the crowdfunding platform has had three projects running concurrently.

"I think there’s no question that we had a huge amount of momentum when we launched," said Fig CEO Justin Bailey. "And then with the SEC process, we purposefully had to slow things down. Since then I’ve received hundreds of game pitches, and I think you see now that as the SEC process is coming to a close we’re so ridiculously busy right now that it’s crazy."

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