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hi - I have a question regarding raising private investment on a show by show basis.

We are now at a critical point of fundraising for our upcoming show in 2018. The idea being as we are now newly formed as a CIC we can mix NPO funding with private investment.  We are hoping to raise circa £10,000 in donations. £15,000 in Arts Council money and £30,000 private investment. We want to use the 35% profit split to pay returns to investors and bonuses to performers.

are we able to sell investment blocks in the performance? The only legal term I can see is a ‘performance related loan’ - this isn’t how Theatre investment is usually structured.

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Comment by John Mulkerrin on January 30, 2018 at 11:37

In addition to what is normally explained when receiving advice, point your advisers to Article 52 of the Financial Promotion Order.

The key points are for the potential investor to be 'known' to you before they receive any details or offer, and that clear information on the risks etc are fully disclosed.

Please show your advisers the first document link I gave you, its a little wordy but covers all the regulations you need to consider. Not the most difficult thing to do but it must be done in the correct process, and must clearly express how high risk it is. You should NOT be making offers to the general public, you need to register them and then you can send details of the investment. What you describe sounds like a short term Bond.

We can help deliver it if you need, but more than happy to simply confirm your questions here.

Best of luck

Comment by Alexander Neal on January 29, 2018 at 19:58

Hi John,

Thanks - yes took a look at Big Lemon link. In the long term we will be looking at SEIs, possible bond options and other government backed long term investment opportunities - incentive schemes etc.

I contacted the CIC regulator and said what I was hoping to do and they've said there was no regulation against what I was hoping to do - which was interesting.

At the present we are hoping to offer 'units of the production' - and the profit will be split in accordance with CIC legislation. 65/35 split.  

We will be offering investment in the 'production' and not the 'company' at this stage. 

We are talking to lawyers and financial people to make sure we are legally safe to do this.

Alex

Comment by John Mulkerrin on January 28, 2018 at 19:35

It cannot be described as an equity investment as you are a CIC Limited by Guarantee, so you'll have to describe it as a bond or similar.

What are you offering the investors if the production does well? You really need to look at the Big Lemon link

John

Comment by Alexander Neal on January 23, 2018 at 15:19

Hi John - again huge thanks for communicating all this.

As as far as I can word it - it’s an equity investment but I cannot offer shares as my CIC is not able to do that. Would it be phrased another way? We are going to offer between 60 and 90 £500 blocks to investors to capitalise the show (the lesser 60 blocks required is a successful Arts Council Applicatiojngoes through - 90 if not). 

In theatre investment it’s understood that if the production doesn’t do well the investors lose their money. 

The investors would be engaging in the production that runs in June/July this year - not the overall company.

again I hope this makes sense.

best,

alex

Comment by John Mulkerrin on January 23, 2018 at 14:00

Hi A

An investment will be either debt or equity, obviously terms and conditions can vary widely. Here's a good example of a CIC Community Bond Scheme https://thebiglemon.com/offer/

You can get tax relief at 30% on this as an investment.

If it isnt repayable then it isnt an investment, more a donation. Happy to help if you give more detail of any planned offer

Best regards

John

Comment by Alexander Neal on January 23, 2018 at 12:52

Hi John, Thanks for coming back so quickly. Dilated Theatre Co CIC is limited by guarantee. So I can’t offer shares in the company - I thought it would be difficult at this stage to keep a track of shares by numerous people in multiple productions. So I just wanted to get investors to engage on a show by show basis. But I also don’t want to do ‘performance related loans’ as a loan is repayable. And also Theatre investors are always aware its a high risk venture. Loan based investment is not applicable to Theatre.

Am I still able to just offer a ‘block investment scheme - £500 per block’ on a show by show basis? Obviously taking note of your previous comment - yes our investors Pack and agreeement have been looked at by a lawyer. And we are approaching people we know and keeping it under 150 people.

i hope this makes sense. Very much look forward to Heath what you have to say.

best,

alex

Comment by John Mulkerrin on January 23, 2018 at 12:00

Hi A

yes you can, you have to make sure you either comply tot he FCA rules on investments or make sure you comply to the process using existing exemptions.

Basic premise is everything must be clear, fair and not doesnt misrepresent the truth. You cannot just send info to anyone as that would be regarded as an offer to the public, but you can make offers to people already known to and verified as appropriate by you.

Your documents need to be a certain standard too. Please have a look at this briefing document, it wont all be relevant but it shows how it can be done, both as equity or debt.

http://cicassoc.ning.com/group/cicshareissues/forum/topics/raising-...

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