Investing in Films

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    • #4368
      Cass23
      Participant

        One of my clients just made a nice bit of money investing in a film in the UK. I get pitch decks all the time but have always thought this was too high risk. Am I the only one?

      • #4602
        Gavin
        Participant

          you’re not wrong – film investment is tough to get right, although like any other business sector, luck can make more money than strategy, and there will always be occasional naive investors who get lucky. For every lucky film investor, though, there are probably hundreds who lose their investments. Risk is always best spread across a portfolio, so if you’re an investor in a single film, do it for fun, knowing you’ll probably lose your money!

        • #4772
          Cass23
          Participant

            Thanks Gavin. That is what I am advising my clients. The problem now is deal flow. Most of these producers have no clue what a company is or how to structure their businesses. If they spent half as much time on actually business planning as they do on dramatic effect there would be more deal flow. Frustrating.

          • #4842

            Gavin and Cass23, just joined the community and I’m struck by your conversation. Gavin, you’re comment “luck can make more money than strategy, and there will always be occasional naive investors who get lucky.” is pretty much the sentiment I set out in a founder’s statement.

            I’ve been looking at this issue for a while, I occasionally blog about aspects at medium.com/stelarator

            My focus is on ‘fixing’ the business side of film, both in investment finance supply chain management, and having that ‘improved’, more trackable, auditable and data-rich deal flow presented in a way to support better decision-making across direct investment and related financial services.

            While I’m always in ‘pitch’ mode, I’d love to get your thoughts if we’ve hit the friction points that concern you most as part of us refining our offering.

          • #4859
            Thomas Kingston
            Keymaster

              Vlad. I think you are right. In addition, Founders of tech companies learned to speak the same language as VCs. Media folks definitely haven’t figured that out en masse.

              I would like to see more media deals of all types recorded from a data perspective as deal flow. This would help professional investors to pay attention.

              Let’s make media the new tech!

            • #4862
              Cass23
              Participant

                I would like to see media deals being treated like any other venture deal. Tech deals are definitely more professional and tend to match what investors want to see. Producers could learn a lot.

                • #5004
                  Thomas Kingston
                  Keymaster

                    I agree with you Cass23. Most film finance pitches are by producers who really are not running a company. Rather they are trying to create a temporary project that they can be paid out of, like a consultant. The whole mentality of the production industry is freelance. But we see more producers going corporate, treating their films as product and building brand value in a company that investors would be interested in. More of those, please!

                • #4863
                  Gavin
                  Participant

                    Producers don’t need to learn to pitch to venture capital = the primary market for their product is sales agents, distributors, broadcasters/ streamers/ specialised film/ tv/ streaming finance companies, and specialised banks/ lenders. Production companies, on the other hand, might well benefit from learning to pitch to venture capital, however most are much too small to attract investment – unless they can build some kind of demonstrable volume, they tend to live from production fee to production fee. Many of the more successful prod co’s are backed / co-founded by UHNWs – access to capital is crucial, but as with any business, it’s hard to come by.

                    • #5003
                      Thomas Kingston
                      Keymaster

                        The marketing of their product is one thing, pitching to investors to build their business is another. I think they often get the two pitches confused. I agree that capital is hard to come by, but film producers can learn a lot from how tech entrepreneurs approach VCs.

                    • #4865

                      @Thomas Kingston I think we’re talking the same language – our start-up is designed to support the kind of data points that you allude to. I’d love to connect with you, or anyone else interested in what we are doing (if that’s allowed here) vlad@stelarator.com

                      @Cass I agree that there is scope within the industry for there to be better due diligence, data points that can be useful when raising finance. Tech decks more often sell the business proposition over product details, individual movie decks tend to push the creative vision and some due diligence (attached actors for example).

                      I personally tend to ‘code shift’ somewhat between talking to my media peers, versus with institutional finance partners.


                      @gavin
                      I guess I see the industry slightly differently, especially on the more indie side that I think you’re referencing. The industry is in flux, streamers especially seem to stride the more TV-centric world of commissioning for audiences, as opposed to the Theatrical world where the creative team have a product where they pitch to market. Then you add in issues like IP, I can see no down side to pitching projects to any potential partner with more data and market insight attached.

                    • #5002
                      Thomas Kingston
                      Keymaster

                        This is the type of engagement we want to see at the Media C-Suite. Thank you for taking the time to comment and reply.

                      • #5006
                        Gavin
                        Participant

                          @Vlad – as an experienced film financier, the items I need in a pitch are: 1 paragraph synopsis; management team bios (i.e. producer, director, sales agent); attached cast (if any); budget top sheet; detailed finance plan; detailed sales estimates. If these all look interesting, then I’ll read the script and take a meeting. I’m not looking for data and market insight – the talent involved (i.e. all those I’ve just mentioned) plus the sales estimates give me a good idea what the market is worth. Hope that helps!

                          • #5008

                            Surely ‘detailed sales estimates’ is exactly data and market insight.. its just a different name for the same thing. Sales Estimates vary a lot, and people often shop around for the best estimates for their project. Right now those estimates are often based on interpretations of data by experienced executives – much like old school actuaries. I believe there is room for improvement.

                        • #5028
                          Gavin
                          Participant

                            @vlad – yes, sales estimates are obviously based on market insight and data (ie their own private conversations with distributors / buyers), but i know most of the sales agents well enough to understand whose numbers to trust. My point stands – as an experienced content financier, i don’t want to see pitches filled with erroneous and unnecessary info about the size of the market etc.. It’s the sales agent’s job to analyse that, and it’s my job to analyse their estimates – if i have questions, i ask them rather than the producer, who – let’s face it – will say pretty much anything at all if they think it will get their film made…

                          • #5029
                            Gavin
                            Participant

                              @vlad – yes, sales estimates are obviously based on market insight and data (ie their own private conversations with distributors / buyers), but i know most of the sales agents well enough to understand whose numbers to trust. My point stands – as an experienced content financier, i don’t want to see pitches filled with erroneous and unnecessary info about the size of the market etc.. It’s the sales agent’s job to analyse that, and it’s my job to analyse their estimates – if i have questions, i ask them rather than the producer, who – let’s face it – will say pretty much anything at all if they think it will get their film made…

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