Inside ‘The Walking Dead,’ ‘Invincible’ Owns Skybound Entertainment’s $75 Million Public Equity Campaign

Skybound Entertainment is the company behind the most popular IP of the last 20 years, plus The Walking Dead, Invincible (both from the mind of co-creator Robert Kirkman) and the upcoming series Renfield. Like many start-up sports publishing companies, Skybound is seeking to further streamline the production and distribution of its content across all media types by increasing its internal capabilities. But unlike others who have sought venture capital or foreign investment, privately held Skybound LLC is going directly to its fans with unusual funding.

Today the company is announcing a new Regulation A+ campaign on the Republic platform to raise $75 million in crowdfunding, including the $11 million raised in the recently concluded quiet phase. [prospective investors, be sure to examine the company’s Form 1-A]

On Friday, I spoke with Skybound CEO Dave Alpert and co-Chairman Jon Goldman about the company’s strategy, what it’s offering, and what Skybound is trying to accomplish with the new infusion of capital. Our discussion has been edited for length and clarity.

Rob Salkowitz, FORBES Contributor: Can you briefly describe what Skybound is doing with this announcement?

Dave Alpert, CEO, Skybound. At Skybound we talk about the “Wheel of Awesome,” where we help creators sell their ideas in any medium they want, from digital to TV, comics to games. The purpose of Reg. To promote and bring fans into our environment, to be part of the company, to improve our success and to be connected with them.

RS: It looks like you are offering 150,000 “units” at $500 each, is that correct?

Jon Goldman, Co-Chairman, Skybound: The cap is $50 million and you’re allowed to go over $75 million, so we’ll see where that goes.

RS: Does this include the $11 million that was already raised during the quiet period?

JG: Yes.

RS: I see that in the Prospectus, it is said that the price of the shares has no relationship with the company’s value, cost or profit. What prices do you charge for the units?

JG: I think it’s probably legal. We arrived at the fair value of the market in consultation with the Republic platform and other research groups that looked at the property for us. We had a price tag of $330 million in post revenue, and this was before we had it again [post-The Walking Dead] beat, Invincible, which is an internationally recognized hit. I think because of the size, and the fact that we’re probably the second largest independent IP library that doesn’t have a large team, there’s value in that. And when you consider the number of video companies, which are a large part of our business, we feel that we made a smart purchase.

RS: So, ballpark, how much money do these contributions represent?

IS: We have a capital of $500 million, so it will be less than 10% in remittances [based on the baseline $50M target, not the extended goal of $75M].

RS: How will the new capital be used?

IS: If I could give you a little background first… For the first 9 years of the company it was a start-up. We returned all the money we were making to the company. We started touching consumers directly in comics, but in television we had to go to AMC and the studios and networks to sell our shows. In sports, it was a licensing business.

As we continue to improve our earnings and financial management, we have been able to increase our ability to select and prepare and pay for film and TV productions. We expanded our comic book business. On the video game side, we had in-house talent that could help oversee production.

As the company continued to grow, we realized that we were making too much money for other people, not too much for ourselves or our producers. We saw that there was a market opportunity and a position to take a little bit of real estate. Then, in 2012, we had the challenge of raising several million dollars in a short amount of time to save a video game project when a friend of ours went missing. This was difficult without access to foreign capital.

In the past, it took us a long time to get foreign partners to see the value of our IP. Now we can speed this up, by bringing more power in-house and not relying on other people to do things for us.

RS: You said that your goal is to create a relationship between fans, producers and the company. Are there any parts that have been given to manufacturers? Are they participating?

IS: We are giving manufacturers the opportunity to buy; instead of money, right? [The offering] it’s about raising money, so people want to participate in that way, we are ready to do that, and we encourage people to do that.

RS: Are the units being offered through a Reg A common stock with voting rights and distribution rights, or is it a separate entity?

JG: They have the same rights as common property, like Dave and Robert [Kirkman] and I did. As a minority shareholder, they cannot force the direction of the company, although they often speak wisely, and as we have seen on the campaign website, they are not shy to express their opinion, and that is fine.

RS: Are these units of water? Is there a secondary market for them where people can sell them?

[At this point, the Skybound PR rep joined in to clarify some points for the principals]

JG: It is not as liquid as a public company, although there are investment banks that sell secondary markets for private companies, especially in large markets. The limit for this offer is that one person can buy up to $2 million, so I think if we have big players like that, they will have the opportunity to sell in the future. It can be difficult to move individual units.

RS: Some may see this crowdfunding campaign and think that you are trying to raise money by appealing to people’s attention rather than their financial opinions, because people are interested in the product. What do you say to them?

JG: When you look at it this way, we are small and Tesla is very important (laughs). If you did a survey of companies that own IP around the world – for example, the ones that sold to Disney – I think it’s easy to say that there’s a lot of value added that our investors can get from the exit. You know, we can’t guarantee that; no business can. But the kinds of things we do are worth more than $500 million in time to come out.

IS: We had, and still have, a lot of opportunity to get more corporate funding, and we may in the future. The goal here was twofold: one to raise additional funds for our social media efforts, and the opportunity to engage with fans is something that we think is changing because many traditional media companies, and some disruptive ones, like Netflix
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, is still designed around one type of distribution, and we can change the logic. We think we’re the first media company built around, not just channel distribution, but connecting you with a 360-degree approach.

RS: Considering this big move you’re making in terms of media integration and direct access to customers, are you concerned about the storm we’re seeing in the media, entertainment and technology industries right now?

JG: No. Everyone is following that traditional way, but the idea of ​​putting our products together is that we don’t sell to the operator right away. To be able to sell the show we talked about in Africa, individually and regionally, I think, could be a very smart way. And, by the way, we’ve all been through ups and downs, and it turns out that people spend a lot of money on entertainment, because some people have a lot of time on their hands, and they spend a lot of money.

RS: One thing we’ve seen in the last year with investments and acquisitions in the comics space is that investors are becoming more impatient, and companies are finding themselves having to make tough decisions and eliminate jobs and processes. By going to people to make that kind of money, to people who can’t play as hard as you guys, do you think you’re going to have more room to get your way?

IS: It is about independence from outside forces. The whole point of this Reg A for us is that, if you buy a share in Skybound, we are in the same group. You are following us. We are following you. That’s the real thing: nothing, not Facebook, Netflix, Amazon
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or Apple
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, can remove it. That’s why this is a very powerful thing for us.