Film School Goes Bankrupt Despite Raising $410K on Kickstarter
Steve Giralt’s The Garage Learning film school raised over $410,000 on Kickstarter in 2020. But now, just under two years later, the business has filed for bankruptcy as the idea “did not work as planned.”
Giralt, a New York City-based director, visual engineer, and founder of production company The Garage, launched Garage Learning as a crowdfunding endeavor in the fall of 2022. The idea was to provide a mammoth amount of resources for filmmakers of all skill levels to allow them to create content to the level he and his team have been reaching for years.
While the company was going to provide multiple lessons at three skill level tiers, it differentiated itself from other education platforms by also planning to include the actual tools needed to coordinate the motion of objects with the camera called Learning Kits.
“The Learning Kits will bring technology and engineering skills to filmmaking, giving users a hands-on way of learning complicated mechanical and electrical systems normally not taught in any sort of art school,” Giralt said at the time.
Bankruptcy
But not everything went according to plan. On July 30, 2022, just shy of two years after the launch of the campaign, Giralt announced that Garage Learning, Inc. was filing for Chapter 7 Bankruptcy.
Giralt tells PetaPixel that Garage Learning has not had any employees since September of 2021 and says he hasn’t found a way to “breathe life back into the company” without employees dedicated to it.
“I learned a lot of very hard lessons over the last couple of years. Amongst many other challenges, the reality was that the market for this business was not large enough to sustain it as an ongoing business as planned. We set out to accomplish a lot, and in retrospect, we tried to do too much. If I could turn back the clock, I would absolutely do it differently,” Giralt says.
“The Bankruptcy Court will be liquidating any and all assets owned by The Garage Learning Inc and distributing them as they see fit amongst all documented debtors of the company. We sent a backers survey to all backers for you to give us your mailing address if you want to be part of the bankruptcy process,” he adds.
“I’m so very sorry about how this is ending. I apologize to all of you who didn’t get what we promised. The Garage Learning team and I did work very hard to try to make this a success, and every penny we made went to the team who wanted to make this a success.”
In a comment attached to this final update, Giralt included a link to Google drive where backers can download the videos once his website, which at the time of publication was still operational, shuts down. So how did a company that raised $410,000 collapse so quickly? In short, Giralt says expenses exceeded expectations.
Vast Expenses From the Get-Go
As mentioned, Garage Learning operated a Kickstarter that ran from October through November of 2020, raising $410,283.
“We had set $400,000 as our minimum target to be able to get this company off the ground. After failed backer payments, credit card fees, and Kickstarter fees, we actually received $369,382.83,” he explains.
“After paying the PR company who helped run the campaign and for the campaign expenses we were down to $324,882. Yes, this was a lot of money, but we had a lot to do with the money we raised.”
Giralt says that every penny they raised went back into the company and he says between 75% and 80% of it went to paying a team of at least 16 people: a Chief Academic Officer, Class Writer, Producer, Graphic and Web Designer, Marketing Manager, Cinematographer, Video Editor, On-Camera Talent, Industrial Designer and Engineer, a Chief Financial Officer, Bookkeeper, Accountant, Payroll and Human Resources, and “The Garage” team. Some of these positions were freelance, some were full time.
“The Garage Production Company did not charge The Garage Learning, Inc. a penny for rent for the studio and offices they used, for the cameras and computers they used, and for the editing room they occupied,” Giralt says, which would have increased the company’s costs even further.
Giralt says that by June of 2021, he switched some of the full-time positions to freelance and had to perform the first round of layoffs in July. The last employee of the company departed at the end of August.
“The final website launch and everything there-after has been managed by myself and freelance video editors in-between other commitments,” Giralt says.
COVID Delays
Giralt says that delays in the supply chain caused by the COVID-19 pandemic hurt his timeline and, eventually, his ability to deliver physical products.
“The plan was for The Garage Learning to start shooting classes in February [2021] as our new studio was supposed to be finished by February 1. The studio was delayed about a month which cost us some time. Then, building the team took longer than expected as we had some people quit for health reasons, people quit for better-paying jobs, and so much more,” he says.
This problem extended to the kits, which Giralt says made it challenging for them to deliver.
“Microchip shortages, dramatic part delays, cost of materials, shortages, etc. This is probably the worst time in history to start a business manufacturing hardware,” he says.
Post Campaign Finance Issues
Despite the massive success of the Kickstarter campaign, The Garage Learning still needed more in order to sustain itself. Giralt says he sought outside investment, adding that at no point did he think that the money raised on the crowdfunding campaign could run the company forever.
“The hope was that it would give enough runway to get the business off the ground where it was generating revenue and could sustain itself,” he says.
“We knew leaving the Kickstarter that the company needed to start making additional money ASAP with post-Kickstarter presales, workshops, and other sponsorships. Our expectation was that Dec and Jan sales would be pretty good post-Kickstarter and that we would have a drop in revenue in Jan / Feb as that faded out. The hope was that by March we could ramp it back up, and that is mostly what happened. April sales started improving, and May sales were great,” he continues.
“We expected with the June announcement of the new and improved slider with Flair 7 integration, that June sales would top May. This is where things went downhill. June sales were less than 1/2 of May (without the sale of a single slider after the announcement) and then July sales were a 1/3 of June. This is when we realized things were not going to work as planned. This is why in early August we announced that we had no other choice but to concentrate only on workshops and classes and kill off the kits for any hope that the company could continue on.”
Giralt says that the cost of making the kits, one of the major differentiators of The Garage Learning, was not sustainable.
“The cost of making them is more than the money we collected for them. As this reality came to light in late spring, the plan was to use future sales to offset this gap; but when sales plummeted we were out of options,” he says.
“The unfortunate failure of the kits has been very hard on me personally as I’m not the kind of person to break a promise to anyone, but in this case, I’m backed in a corner with no visible way out. I’ve lost many nights of sleep and feel like I’m carrying a huge weight on my shoulders every day, and I can’t go on like this,” he adds.
“It would cost more than $200,000 to refund in full all the kit backers from the Kickstarter and post Kickstarter sales. The reality is that It would cost even more than that to make the kits, ship them, and have customer support for them.”
Giralt told backers that he intended to offer partial refunds, but cannot due to the bankruptcy process.
“In August [2021], I personally emailed those who spent over $1,000 on kits to discuss options with them one-on-one. I have talked with a majority of these backers with a variety of responses. The biggest delay is that legally, I need to pay back those who purchased post-Kickstarter kits first as they did not back a Kickstarter and they bought items from our online store,” he says.
“It may take years for me to pay people back some of their kit backings, but I’m willing to put in that time and effort if you are all willing to be patient and wait. It’s 100% based on The Garage Learning getting more subscribers and having more people attend workshops. As explained, there is nothing I can do to speed this up, other than keep moving forward trying to get all the classes up on the website and keep promoting it to get more sales. We are very much open to other ways we can help you how we can given what we have to offer.”
Disgruntled Backers
Looking through comments left by Garage Learning’s backers, many indicate that they lost thousands of dollars supporting the education platform that never was able to deliver on its promises. Many of the comments go back over a year. Those who backed with lifetime memberships or invested in the physical hardware are particularly upset.
“I think this was a well-elaborated scam from the start, or this guy has no clue how to run a business. This makes me wonder how he can be in charge of a production company,” one backer writes.
“We’ve supported this campaign since the first day by pledging $3,000 for the complete set of learning kits which, as all of us know by now, never saw the light of day. We’ve been in contact with Steve Giralt, the founder of the company, to get full reimbursement of our pledge as he couldn’t provide any of the promised equipment. To this day, we didn’t receive any reimbursement; not even an idea of a possible reimbursement date,” another adds.
Giralt refutes the idea that Garage Learning was a scam and insists that he always had the best intentions for the project.
“Some of you may think I’m a millionaire with stacks of money in the bank, but that is not my reality. We are a very young production company that just spent a bunch of money and took out lots of debt to build a new facility and start a robot rental company. The Garage, The Garage Rentals, and The Garage Learning Inc are all independent entities. The Garage Learning Inc only has the money that The Garage Learning Inc makes from sales of its products. Being they are a startup nobody will lend us money either, as we explored that as a way to keep things going as promised,” he says.
Giralt’s experience as well as his many backers is, unfortunately, the reality that comes with some crowdfunding campaigns. In the end, Kickstarter and platforms like it do not act like pre-order marketplaces. Those who back campaigns always bear some element of risk, and in this case that risk did not pay off.
“If I could afford to refund people out of my own pocket, I would, as then I’d be able to sleep better at night and be less stressed out on a daily basis by angry emails from disgruntled backers. I don’t blame you for being disgruntled, but I’m asking for your understanding and extreme amounts of patience.”
Image credits: Garage Learning
