The Chosen

A 20-minute YouTube 'ad' crowdfunded $11M from 17,000 investors

Angel ran The Chosen's short-film pilot as a full 20-minute YouTube ad that ended with a pitch to invest. 17,000 people put in $11 million, using about $800K of ad spend, and the show went on to reach about 200 million viewers.

“We could just take this same concept that we built for these 2, 3-minute ads and just go 20 minutes. Let's just do 20 minutes and see what happens, 'cause it's entertainment. And so, they watch 20 minutes, they're totally invested, and then we pitch 'em, come invest in this project, and let's make a TV series like the Game of Thrones for the New Testament. That's basically what it was at that time. And 17,000 people invested $11 million into The Chosen.”

Paying 8% in ads to raise money beats Wall Street's 8-12% fee

The Chosen's director was upset that about $800K of the $11M raise went to advertising. Harmon's view is that this is a normal cost of capital: Wall Street would charge 8-12% to raise the money, and the ad spend also built awareness for the show.

“And I was like, well, how do you think we built Poo-Pourri and Squatty Potty? We spent money. And if you had gone to Wall Street and asked them to raise you money, they would charge you 12%, right? They'd charge you 8 to 12%. So we're actually right in that world, but we're just having to buy ads, which is getting you awareness on your project.”

Steal thisJudge the ad spend on a crowdfund as cost of capital and compare it with what a bank or underwriter would charge.