The first game on Fig is Outer Wilds, a trippy space exploration and, uh, camping game. It's pretty dope.

For the last few years, Kickstarter and other crowdfunding initiatives have begun to shake up the traditional funding model for game production. Games like FTL, Broken Age, and Shadowrun Returns proved that crowdfunding could work (though not without its fair share of bumps in the road). But Kickstarter has limits: Even though some campaigns have used rhetoric about fan "investment", fans backers can only ever donate to a project, never technically invest in the product or company.

Enter Fig, a new crowdfunding service that offers its users both Kickstarter-style donation options and the option of investing in a game, allowing users to receive a cut of the sales when it goes to market. Sort of. It's actually a lot more complicated than that, so let me try to break it down as best as I can.

Wait, why doesn't Kickstarter already do this?

A few big reasons, I think. First of all, Kickstarter is about generating a lot of money from many small donations: hundreds or thousands of backers give projects $15-$100. That's not nothing, but the actual payout on an investment that size isn't always meaningful.

Second, while anyone can invest in publicly traded companies, the laws around private investment are complicated and (until recently) haven't really been crowdfunding friendly. Much of private investment happens in what the Security and Exchange Commission calls Regulation D offerings. For companies looking for some cash, "Reg D" investments are cheaper and easier to set up than "going public," but there are also a lot of requirements that an investor needs to meet in order to be legally cleared to invest. In order for an individual to be an "accredited investor," they need to either have $1M in net worth (not including the value of their primary home), or to have reported an income of at least $200k over the previous two years (or a combined household income of $300k). Proving this is complicated, and Kickstarter has always been about quick, simple pledges. (A new, more accessible type of private offering has recently been allowed, though, and I'll get into that in a bit.)

Third, it's just less profitable to give backers financial stake in a project. Investors get paid, and that cuts into the bottom line. So if a company can raise the production cost of a game via what amounts to pre-orders, merchandise sales, and donations, that's simply preferable. Kickstarter campaigns just don't target investors looking for return, they target fans excited for remakes of classic games or intrigued by new, innovative titles.

Who can use Fig to invest into games?

As of right now? The same "accredited investors" that could privately invest in any other Regulation D investment. Fig just acts as sort of a project curator and clearing house for projects looking for investment. Fig does say, however, that "in the future everyone will be able to participate."

What? How?

In the last year, a new sort of investment opportunity was approved by the SEC, "Regulation A+". This is just an educated guess, but my suspicion is that fig will begin to utilize these Reg A+ offerings. This new regulation still has some restrictions regarding total investment amount, but it does open things up to interested people who aren't "accredited investors." That said, so far, not many companies have begun to specialize in these offerings.

Why?

Again, a few reasons. It's more expensive to set up a Reg A+ offering than a Reg D one. Plus there isn't really a big "culture" of this sort of investment yet, and there isn't a secondary market for these investments. (Which is to say, there isn't a place yet where I can take my Reg A+ investment and sell it or trade it to someone else.) Fig strikes me as a company that wants to reduce the overhead in using Reg A+ by specializing in that sort of offering. But again, that's total speculation.

What are "investors" on Fig actually investing in? The game? The developer?

Neither. Fig's Help page notes that "Investors will own an interest in a share of the game’s sales. Fig sets up a specific limited liability company, which investors will hold an interest in, per game to accomplish this." There's a minimum investment of $1,000, and Investors don't have any interest in the developers, and they don't own a piece of the game's IP. This means that they don't get a cut (say) of any sequel to the game. And I'd bet that it helps to shield developers from investor demands a bit, too.

Ahhh, there's nothing like camping at night. A roaring fire, a telescope, the breaching heat of massive sun a few hundred meters away. What a life.

So what's the use case here?

Right now, there are people who are accredited investors, but who might not have the contacts or expertise to invest in a game. Or maybe they have those things, but just don't know what game to put their money behind. Fig seems like it wants to get the attention of those folks.

There are also a lot of people who like games and have high income, but who still don't qualify as "accredited investors." Imagine you make $150k a year, and you see an independent game that you think is really going to take off. Right now, there's no easy way for you to privately invest in that game. Changing regulations (and Fig) seem to want to shake that up.

Oh, there are also regular crowdfunders who aren't looking to buy stake in the game's sales. They can use fig to "support" games they're interested, too.

So can I just list a game on Fig?

Nah. You can "pitch" them your project, though. There's an advisory board that will look over the pitches and choose one or two projects a month to list on the site. By the way, that board? Right now it's Tim Schafer, Feargus Urquhart, Brian Fargo, and Aaron Isaksen. Some pretty big names, each of which has had his own experience with crowdfunding.

So, like, what do you think?

Real talk? I don't know. I'm torn? I think I like it.

When Oculus Rift (which received $2.4 million from its Kickstarter campaign in 2013) was purchased by Facebook for $2 billion last summer, some early supporters voiced frustration that they wouldn't (and couldn't) get a cut. Lots of people rolled their eyes at those angry folks. Hey, they knew what they were getting into, right? And technically, that's not wrong. But that frustration only felt like the tip of the iceberg to me.

The deeper thing, the thing worth being upset about, was the fact that even though we now had technology which enabled lots of people spread all across the world to financially collaborate on pipe dreams and passion projects, that technology was only being used to sell us stuff. Crowdfunding services like Kickstarter have been a new method for companies to reduce their risk by offloading it in a big way onto consumers, and to do that without needing to reward that support when their bet paid off.

The "backer," the "crowdfunder." This was a new sort of consumer class. We were offered the initial excitement of investment without the long tail reward. And hey, we got some good games from it! But it never really sat well with me that "backing" was our only option to support these games. If we're figuring out how to combine our wealth to pursue cool new projects, I'd love for us to actually do that in a way that helps us to improve our own financial standing, too. You know, the way "accredited investors" can.

At the same time, I do understand the intention behind the SEC regulations around private investment. Most of us do not have a lot of money to play with, and we all can't withstand the blow of a big, failed investment. If that happened to a lot of folks all at once, well, that would be a bad look for the overall economy.

But as it stands, Kickstarter doesn't protect users from risk anyway: There is never full assurance that crowdfunders will get what they paid for, and it's up to those same backers to take action if they don't. When a Kickstarter project receives its funding but can't fulfill the promises made, the campaign creator must "make every reasonable effort to find another way of bringing the project to the best possible conclusion for backers." And if they don't do that, it's up to the backers to pursue legal action--which is a pretty expensive and time consuming process.

This stuff is complicated, and it's one more reminder that the game industry sits in a huge web of other factors and influences, many of which are hard to predict or understand. The development of Regulation A+ offerings meant that this day was coming one way or another; there's no putting the genie back in the bottle. And as far as a first entrant into this process goes, Fig seems alright. I like the service's focused design, and I think that a curated platform is a good test bed for this stuff. But I also know that a lot can go wrong when new ground is broken. And now that Fig's gone live, I have to imagine that other services will be rushing to offer similar services.

So let me turn it around on you: What do you think of all of this?