Adventures of the Indie Film Investor

With the percentage of profitable films so low, and the transparency of revenues so limited, how can you entice people to invest in Independent Films?

Last year I set up my own development and production company, New View Entertainment, to produce two screenplays that I had written and many others in the treatment stage.

My background is in real estate and finance. I have founded or co-founded a mortgage banking company, a title insurance agency, and numerous real estate investment and development ventures. I believe that I can use my entrepreneurial experience to produce my own films, rather than wait for someone to give me a chance in an industry in which I have few connections. I have raised money for real estate and mortgage investments, but knew going in that film is a different type of investment. My typical investors would be reluctant, because they could not see a clear path to making money. Some have already lost money investing in independent films and thought of it as a glamour investment. Based on their stories, it seems that these projects were either not well conceived, or not managed very well.

I set out on building a plan to raise capital, just as I did when I first started any venture, by reading everything of value that I could find, and taking courses and webinars to educate myself in the film production and distributions business. I also needed to identify the typical indie film investor and find out what motivates them to invest so that I could develop my pitch. I believe that listening to an investor's story and learning about what drives them in their investment process, is key to developing long-term relationships that work. Through the years, I have read many books on real estate and stock investing written by or about people who were avid investors. While I did find books from independent film producers that talked about raising money and their experiences with investors, I could not find any book written by the investors. Some of the books that I read provided some valuable advice, but I wanted a book that was directly from the indie film investors themselves, but I could not find one. So I decided to write one, called "Adventures of the Indie Film Investor". I sought out indie film investors to interview for my book, and while most did not respond, as I expected, others were willing to speak in anonymity either because they didn't want to be hounded by other filmmakers seeking money, or their experiences weren't good and they didn't want that out there either. So I began to understand why no such book exists, but I continued my quest.

In the interim, I did come across two investment funds that were different than the typical investor, and I had interesting conversations with managers of both. Interestingly enough, though located in very different places, they shared a similar vision on how to effectively invest in independent films and media. Rather than invest in individual films on a one-by-one basis, they raised funds to invest in a slate of projects, limiting their investment in any particular project. They also had specific criteria on how to select their projects, and partnered with experienced film producers and distributors that had expertise in areas that they lacked. Both considered these partnerships to be essential to their selection process and development.

Timo Argillander is a co-founder and managing partner of IPR.VC, a Nordic venture investment fund based in Helsinki, Finland and London, UK. He says that they "invest in people", meaning that their relationships with the people that they partner with in producing and distributing their films and content are as important as the projects that they select. Timo launched his first fund with his partners and co-founder Tanu-Matti Tuominen and Jarko Virtanen in 2015, raising €20 million to fund a slate of investments in media and the entertainment industry in Northern Europe. It was invested in films, television programs, games, and music. In 2019, they set up a second fund to raise €50 million to focus on film and entertainment content with a wider audience. They believe that investing in a slate of content mitigates the risk of their investment, and provides a greater opportunity for success. They partnered with XYZ Films of Los Angeles, California to form a $100 million fund that will be utilized to fund a slate of 15-20 independent feature films. According to Timo, "Leveraging XYZ's bold vision and expertise makes them the perfect the perfect partner for IPR.VC's second fund. We look forward to our continued collaboration with XYZ's outstanding team to create another successful venture for our investors."

Whit Blakeley, managing member and CEO of Georgia based RoadShow Equity Partners LLC, established a $30 million investment platform for Georgia based independent film and entertainment productions. Their approach is to take advantage of the tremendous demand for high quality content, using a Silicon Valley type analysis model to develop a process to mitigate the risk of their investments. They put together an experienced, award-winning production team, with a management team with a broad base of financial and managerial experience. Using industry- leading analytics, they have decided to focus on investments between $500k to $2 million per project. They will co-partner with other Producers on projects up to $8 million. Focusing on pre-defined genres and demographic targets, they use 7-8 key steps to evaluate the benefits and risks of each project before greenlighting it. Whit believes their "Investor first" approach gives them greater credibility and opportunity for success for their investors.

The Hollywood studios' thought process is that conformity brings more predictability. While this may be true for many of Hollywood's tent-pole franchises, going beyond that as William Goldman once wrote, "Nobody Knows Anything". While the method of selecting new projects and material to produce will continue to be debated, Hollywood uses the slate model to spread their risk over a greater multitude of projects as well. They look for their blockbusters to offset the losses on their films that don't make money, and hopefully it all comes out right in the accounting.

As I look at this business, it seems to me that the key to success is who owns the best quality content with the longest shelf life. For the independent filmmaker, that means after the quality of the film, it is the distribution deal and who owns the content in the end that matters most. That gives the studios and streamers a tremendous advantage in those negotiations, as they control the distribution platforms. Hopefully, just as some have come up with creative ways to mitigate the risk of investing in independent film, new ideas or distribution models can be developed for the benefit of all.

Michael Wallace is the CEO and writer/producer for New View Entertainment, a New York based Production Company.