Game Trader: Fig - How It Works

Asif Khan sat down with the CEO of Fig Co, Justin Bailey, to find out more about the crowd-funding company that tries to get backers a return on their investment.


Fig Co is a crowdfunding firm with an innovative investment component. Unlike Kickstarter, Patreon or Indiegogo, Fig backers have an opportunity to invest in the revenue stream of a game. This means that once the game launches, the backer who owns "game shares" will start receiving payments based on the sales of the product. This wasn't possible until the Jumpstart Our Business Startups (JOBS) Act was signed into law by President Obama on April 5, 2012. Article II of the JOBS Act opened the door for Fig Co to create revenue shares without the burdensome rules and regulations of being a broker dealer. Fig Co is still required to make filings with the Securities and Exchange Commission, and the JOBS Act also opened the door for non-accredited investors to invest in smaller companies.

This company is definitely trailblazing into new territory for investors and small businesses alike. I sat down with Justin Bailey, CEO of Fig Co, at their headquarters in San Francisco to have a chat about how it all works and the challenges the company faces in a maturing crowdfunding market.

For more videos, including gameplay and interviews, visit the Shacknews and YouTube channels.

Transcript of the interview follows.

Can you talk about the regulatory changes that lead to Fig being created?

The JOBS Act came about a few years ago and it actually allows for non-accredited people to participate in private companies. It allows us to actually solicit securities to these non-accredited investors. The form of the JOBS Act is more about investing in those specific companies and buying shares, which meant that investors would normally only get paid on terminal value when the company gets acquired. For video games companies, that is 1-2% and it usually takes 7-10 years when people decide to do that. I don’t think that is a very advisable route, so we looked at it like, “Hey what if people could actually invest in the revenue stream of these games?” So the way it ends up working is that you would back a project, buy a security that is actually tied to the revenue stream of the game, and when that game comes out you would actually start to get receipts from that game. We thought that was the way that the JOBS Act could be used in games and kind of fix what I think is wrong with crowdfunding. 

It is interesting that you mention revenue. It seems like a common misconception that Fig creates a shareholder base that allows for a participation in the earnings of the company. What you are saying is that it is actually based on sales, correct?

That’s right. You invest in revenue stream. You don’t invest in a game. That’s the first thing we always have to clear up. We got to get out there and communicate that this is a new model and we’re a small company. We’re kind of pioneering in new territory. The potential is really exciting that opens up because crowdfunding before was a way for creators to get money from their fans. I think that is one reason why it wasn’t very repeatable and why it has been declining year over year, because there was never this mechanism for fans to get money from the creators. Now, with game shares, which we registered with the SEC, there is that chance to invest in the revenue streams of the games that people are passionate about. 

I think a lot of people who don’t really understand your platform want to know how can you guarantee that the companies will act in a fiduciary role to the Fig backers? I think that allowing it to be revenue-based addresses that somewhat. My main concern was that a company can manipulate their income statement to always run at a loss or zero earnings, so they don’t have to distribute earnings. I think what Fig has figured out is that having companies distribute a X amount of sales is a better way. I guess my question is, if I company isn’t profitable while generating revenue, do they still have to distribute payments to the Fig backers?

Yes, because it is tied to revenue. It is not profit. It is a revenue share. The way it works with us is that developers sign a licensing agreement with us which gives us a right to a certain amount of revenue. We have no IP ownership, no creative control, but when that revenue comes in we have the right to that and we collect that revenue and then pay it out to our investors. 

Very Cool. I am sure that a lot of game companies are looking at you more than Indiegogo and Kickstarter these days. How would an indie developer go about pitching to you? What is your process for looking at various campaigns to judge if it is worth doing or not?

We look at ourselves as a label. I don’t really see Fig as competing with Indiegogo and Kickstarter. We get a lot of comparisons, but we couldn’t take all of the projects even if we wanted to. I don’t think all the projects having this investment component would make sense. People can go to You go there, and there are some main things that we are looking at. Are people capable enough to deliver and do they plan to deliver on what they are saying? It’s more about that. It’s about competency and not scamming. It is hard to get around that. Because we are doing investment and we are taking that investment on, we want to make sure everything is on the up and up. So there’s a huge amount of trust in the system, and that exists especially with taking on this investment money. We don’t make money off of running crowdfunding campaigns, which is why I don’t think of us as a crowdfunding platform. All of our upside is basically based on the title performing well. When the developer and investors are seeing receipts and returns, that is when we see returns. All of our upside is based off of that. 

Is there any kind of recourse for the investors who do revenue-share backing? Let’s say you put $1000 in and there was some kind of dubious activity that lead to the company not getting to market or maybe in a way where the game failed. At Kickstarter, there is no recourse. You back something and it doesn’t get to market, tough. Is it similar in this sense?

It’s probably helpful to say too that we are a de factor public company. I’m a de facto public CEO, because we have that SEC registered security. We do have a whole list of risk factors that could potentially happen in our SEC filing. For us, that’s why when we get pitches in that it’s more on the front end that we try to keep bad actors from basically getting on the platform than it is trying to do something after the fact. Because we don’t have creative control, because we don’t rigid milestone structure which I think is wrong with some of parts of publishing. Sometimes developers spend up to 40% of the money they’ve raised or even the money they are getting from the publishers to manage the publisher. We don’t have that, we want that to go towards the game, towards their creative vision, and delivering on what they want to do. What that also means is that we don’t have much control over the process, so it’s even more important that the people we work with are people we trust and people who have a proven track record. 

It’s definitely a case by case basis for these campaigns. Do you work with the company to decide what percent revenue share is going to be done? Is it really rigid or does each campaign offer a different kind of revenue share?

Yeah, it’s campaign by campaign. There’s a lot of stuff we use that informs us on what we think might be fair for investors. In a way, investors come, they see the terms, and they make the decision on whether they want to participate or not.  And I use investors very broadly here. This is fans and accredited investors alike. 

One thing we look at is budget. What’s the total budget that is being funded by crowdfunding? What’s the commercial potential of this? How far along are they in development? Is it new IP? These are all factors that go into informing that process. As we do more and more, we start to get some consistency on where we think the terms should be. Even doing the campaigns we are doing right now, we are getting better at it as we go. There’s an iterative process to it.

This is a very new field that you guys are trailblazing.

That’s very true.

You know, a lot of companies have revenues. Are you thinking about branching out into other industries outside of gaming?

No, right now we’re not because all the experience of the team is in games. Our passion is in games. My background is with that. It is interesting though if you look at the security. We’re the only SEC registered security that is actually tied to the revenue stream of a consumer product. That’s a whole mouthful of words, but it’s pretty exciting. One thing we’ve seen so far is that there is a lot of appetite and a lot of interest in participating in the investment side of things, but as much as we are pioneering, the people that are with us right now we can tell they are early adopters, Which is interesting, because if you look at the results we have had with early adopters and once we start making returns to people, I’m looking forward to announcing something along those lines very soon. I think you’ll see it stop being just early adopters and you’ll start getting more mass adoption of this model in video games.

Branching off your comments on mass adoption, one of our video producers, Greg Burke, was trying to back a campaign and he was taken back by the sign up process on your website. Is there something that you can do to help educate your users and potential users to make them less wary? It seems that a lot of our readers, after seeing the tech bubble and the housing bubble, are more risk averse than they had been in the past and you’re a brand new platform. We’ve seen failed Kickstarter and Indiegogo campaigns. Is there a way to help your potential mass market be less skeptical?

There’s a lot there. We are just a small startup of ten people. We do need to do a better job communicating. One thing, we’re getting out here on camera, and getting active on the forums. We don’t even have a full-time community manager, yet. We actually have a job posting. If anybody wants to apply, please do.

Hey, a job!

Yeah, we’re expanding. So there’s a lot new that we’re doing. There’s a lot of communication that we need to do and we need to do it over and over and over again. The process that (the user) is going through is meant to have some friction in it. It’s meant to be a little bit scary because you are investing in the amounts that are being entrusted with us right now. We want people to think twice before about it and to really think, “Hey this is a serious transaction that you’re making.” If you want to just go and buy an early copy of the game, comment on it, and give feedback to the developer, that’s the rewards side and that’s totally cool. A lot of people right now want to support it through that, and are not comfortable yet with the investment. And we totally understand because it is new and some people just want to see the whole thing play out. I don’t fault anyone for that, and I would actually encourage people who are hesitant to go that route for now. 

We’ve mentioned Indiegogo and Kickstarter, but another crowdfunding platform is Patreon. That’s not necessarily gaming, it’s more gaming personalities and websites like the Kinda Funny guys and stuff like that. Are you interested at all in helping the games media raise funding through revenue shares?

I haven’t really thought about that. That’s a new one.

Well, it’s free. You can have our idea for free and then maybe Shacknews will use the platform to raise some funds.

The interesting thing about game shares is you get the opportunity to tie a share to a revenue share of a product. The ways that that could be used are very interesting for us. Say, artists or animators working on a project could get game shares. They get their salary, but they also know that years from now they’ll also be getting a check coming in. That’s very interesting. Other applications of it, we’re thinking through the whole way that could change how people approach making games. 

I tend to group Patreon, Indiegogo, and Kickstarter in the same basket. Do you view yourselves as an evolution of them or something completely different and new?

Totally different. I think that crowdfunding is pretty much synonymous with Kickstarter. It should be because its really the earliest instance of that. We look at ourselves as community publishing. That whole idea that we’re not making money off of doing crowdfunding campaigns. We’re not doing a thousand crowdfunding campaigns. That’s not where we’re at. Where we are at is getting communities involved in helping select games, having an ability to financially participate, be able to get feedback which is happening, but also help promote once the game launches. We’re actually going to solicit fans to help us promote and get the word out, and now it’s in their financial best interests as well. 

The thing that is really important to talk about is why people are doing this. One of the reasons is they want this game to exist first and foremost and they’re passionate about it, but they’re happy that there is an opportunity now to get a return. What’s been happening to crowdfunding, and it’s down about 60%  if you look at that, is about a third of the people are just saying, “Hey, I am going to wait, it’s a long process, we’re just going to wait for the games to come out,” and that is totally cool. But another big portion of that are the $500 and up tiers and I think some confusion existed when crowdfunding was taking off and whether that was investment. It absolutely is not. It is a donation, it’s charity. So people who used to participate at those high levels aren’t anymore, however those people are willing to do investment. So now they have an opportunity to get their money back on it, like hey they’re passionate about this, they can come in at the levels that they were actually doing during the heyday from 2012-2015.

I think the poster-child of what you’re talking about was the Oculus campaign and how everyone felt burnt when they got acquired for $2 billion (which ended up being closer to $3 billion). 

Yeah, right. Now some of that is going back. so…

Oh yeah, now it is going to ZeniMax of all places. Sorry, Oculus. We have a question from Nick DiMucci, independent developer of the game Demons with Shotguns. “I’d be interested in the marketing services for indie devs specifically average ROI for a two day launch campaign. Fig’s site only lists the ROI for two very popular games which probably isn’t the normal return.” How do you guys pitch your service to people and do you have much data to show?

I do have a lot of data and I can tell you some of the data. We do marketing during campaigns and we also do marketing when the game is launched. Now, none of our games have launched yet, so helping out some that had used crowdfunding before: Hyperlight Drifter and Duskers. Basically what that was, we did a tracking pixel on Steam and we wanted to see if we go all the way down to purchase, what’s our ROI using the marketing data that we’re gathering. This is all a part of the community publishing piece. By doing these campaigns, we get more attention for these titles but we also get more marketing data that we can actually use to help the titles sell better when they come out. That is in our interest, that’s how we make money right? So what we did is we saw some very good early returns. 700% ROI for Hyperlight Drifter and 300% ROI on Duskers. I sat down with my board and I said, “this could be a separate company, as a matter of fact we could just do this.” The decision was that it was taking us away from the core opportunity, so we actually put a halt on doing our external marketing for right now, but what I can tell you is that we have data from the campaigns and most recently we had 700% ROI on the ad dollars we spent on the Psychonauts 2 campaign. Pillars of Eternity 2 actually outperformed it. The campaign did 800% ROI.

This is unheard of in advertising and marketing.

One of the people who is a contractor for us used to be one of the head people at Indiegogo for marketing and the previous high that she had seen was 300% ROI. So, yeah it’s insane. 

These are insane numbers and it highlights the value of your platform.

We looked at what was happening to crowdfunding. Communities come in and they go out and that’s because they’re doing a whole bunch of things from video games, they’re doing interpretive dance, or taxidermy. Seriously. There is nothing unifying in that. What we have been seeing is that we have a newsletter and every single campaign we do it grows, but our engagement on the newsletter is incredibly high because it is just video games. So people signing up for it are already interested and have expressed interest in it. Beside that, every time we do a campaign, we get more marketing data. This is stuff, marketing data, that if you were running an Indiegogo or Kickstarter [may not be captured]. So it’s one offs, everything is a one off. We’re growing that marketing data. Then even more important, we have this investor community. We have 6000 investor signups and those range from your average Jane or Joe all the way up to CEOs of multinational corporations and people in very key places in the game industry. Who we keep confidential, because that’s a confidential list. But it’s people that you would actually want to have associated with your game. I think that hits fundamentally on the JOBS Act and why I am excited about it. In general, investing in a company the thing you don’t want is to have a huge amount of people investing small amounts of money, but with entertainment properties (specifically video games) that’s exactly what you want. You want a lot of people who are very passionate with an opportunity to get their money back who might actually help to get the word out when the game launches. I think it is the perfect application of the JOBS Act.

When you’re invested in a company or in a revenue stream of a company, you are going to be an evangelist for that product.

Yeah. We’re not as organized yet as we’d like to get, but at some point in time we would like to put a press kit together, right? This is another example like the community publishing. When we go out with a press kit, we want to go to the press, but we also want to send that press kit out to the investors and a be like, “hey help us get the word out.”

I want to switch gears to talk about Fig as a business. Your revenue model. I know you have certain things you can’t talk about. Are you profitable?

We’re a private company ourselves that raises money from venture capitalists for Loose Tooth which is the parent company of Fig. Our operations are funded mostly by that, right now. Because it is a long cycle to get stand up, but we do have forecasts for when we’re going to start to become self-sufficient. And that’s exciting. We’ve already actually raised enough money that if we stay on the track we’re on now that we actually don’t need to raise anymore money. These models do take awhile, because you take money in, the games have to be developed and the games have to come out. The way it works, which is kind of interesting, we sign a licensing agreement so we can work with any developer in the world. Then when the game actually launches, we’re making our money off of [the game’s performance]. We actually, ourselves, have an opportunity to invest sometimes on the same terms that investors invest in.

So Fig can actually invest in some of the campaigns alongside the other investors?

We can do that. Yep.

itsjames, from the Chatty community, asked a question. It’s kind of silly, but are you guys in this for the long haul, you’re already a subsidiary of a company, are you looking to get bought out or is this something that you want to do for the next 5 to 10 years and see where it goes?

Yeah, I think this could fundamentally change how entertainment is published. I think having the community at the center of something is where things need to go. You and I were talking before, Disney makes some amazing properties. Not to pick on any of the major publishers, but there is a lot of “sequelitis” going on. There is a lot of rehashing of properties and I think the creative risk-taking like something like this allows people to find the exact kind of entertainment they want to find and for the people who create it to make it more meaningful and relate to people. I am excited about that part because I think if you go to the top end and you see these $100s of million budget things that’s pretty much taken care of. But these more meaningful, more impactful experiences, there’s not much of that that exists right now.

It seems that Indiegogo and Kickstarter that they really play into that nostalgia factor more than I have seen with your games. Pillars of Eternity, that’s a game where it came out a few years ago, but it’s not rehashing or a reboot of some game that came out in 1985. I think that these are companies that could have tried to go to private markets to raise funding, but I think that you ended up giving them was a better way to raise funds. I think Pillars of Eternity is a great example because their campaign did way better than expected right?

They did a lot better. An interesting thing for us is describing how we make money. The reward money goes straight to the developer, we don’t even take a cut of that. We are seeing about two to three times the potential of what you could make on Indiegogo or Kickstarter because we have the investment component as well. Which is interesting. If anyone is raising more than a million dollars with crowdfunding, I would almost want them to be required to sell one [revenue share]. Because by selling one share, they made a commitment to transparency and accountability that they would never have if their just taking reward dollars.

Continuing with the topic of transparency. A lot of these developers are not publicly traded companies, what kind of reporting standards exist for these companies? Clearly it is going to be revenue-based. As an investor, are you going to receive a monthly sales report? Is it quarterly? How is that going to work?

In addition to giving updates on the game’s progress, we do ask that our creators give more of a window into what is happening on the budget and the timeline of things. But it does go back also to choosing who we work with up front, and people who have demonstrated a capacity to deliver. Obsidian is a great example of that. By all measures, we have probably the most commercially successful crowdfunding game to date. It’s just done amazing. Very highly rated. Having them on the platform, trusting them seems like a no-brainer for us, but it is another reason why we don’t see ourselves as a competitor of Indiegogo or Kickstarter. Because, hey guess what? We can’t have everybody on our platform. There are going to be games that don’t have a commercially viable component to them that will make sense elsewhere. Since we are a label, everything is a highlight for us. We don’t just cherry pick one or two and so because of that we aren’t going to be able to take every single project.

It really seems that the challenge for you is going to be curating who you choose to work with. That really comes down to you and your team vetting people, and I think that’s going to be your biggest challenge going forward unless someone sneaks past that process.

We’ll talk about that a little bit. What I don’t want other than finding out is quality bar and can people actually achieve this, I don’t want myself or any one person on our team or even a gathering of us figuring out what are the things that are most interesting. That is going back to the closed door of a publisher. Now, what we would like to do we’re putting things in motion that we aren’t going to talk about just yet. We’d like the community more involved in the actual selection process of the projects that are going to be on our site. 

That’s probably why you’re hiring a community manager.

Yeah, probably multiple community managers actually.

I appreciate your time, Justin. Good luck going forward, I think Fig is onto something and I look forward to seeing how this platform evolves. It looks like you guys are really focused right now, but I do think that maybe opening it up to influencers or websites in the game industry might be that first little step outside of what you’re currently doing. I think you have a long runway because there are a lot of consumer products that you could do this with. 

Yeah, that’s true, but definitely just focused on video games for now. 



Earnings are the amount of profit that a company produces during a specific period, which is usually defined as a quarter (three calendar months) or a year. Every quarter, analysts wait for the earnings of the companies they follow to be released


The securities track an interest in potential future sales receipts from that game, which are received by Fig pursuant to a license agreement with the game's developer. 


An investor who does not meet the net worth requirements for an accredited investor under the Securities & Exchange Commission's Regulation D. A non-accredited individual investor is one who has a net worth of less than $1 million (including spouse) and who earned less than $200,000 annually ($300,000 with spouse) in the last two years.


Revenue is the amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income.

Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold.


The U.S. Securities and Exchange Commission (SEC) is an independent, federal government agency responsible for protecting investors, maintaining fair and orderly functioning of securities markets, and facilitating capital formation. It was created by Congress in 1934 as the first federal regulator of securities markets


An act signed into law on April 5, 2012 by President Obama that allays the regulations instituted by the Securities And Exchange Commission on small businesses. The Jumpstart Our Business Startups Act, or JOBS Act, loosens restrictions on capital raising for small businesses, such as allowing them to go public with less than $1 billion in annual gross revenue and giving more legitimacy to the practice of crowd-funding (where firms can solicit publicly for investments.)


Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. For startups without access to capital markets, venture capital is an essential source of money. Risk is typically high for investors, but the downside for the startup is that these venture capitalists usually get a say in company decisions.


For more information regarding how Fig works check out Fig Co's official website.

If you found any of the terms in the video confusing, please check out Investopedia for much more educational information.


Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.

From The Chatty
Hello, Meet Lola