As I mentioned last week, if you have half a brain and STILL want to invest in the film business, you know you need access to quality projects. But generally speaking there are a few other things you want too. I think this post subject (TASIC) can become a regular weekly column. Today we will explore the phrase that should be on every potential film investor’s lips: a portfolio approach to investment.
Knowledgeable Investors are not going to bet the horse or house on one trick pony. Wise players want to diversify their commitments. They want to spread out their capital across a varied group. But this is not yet accepted as best practices in the film business. I think it is common sense.
Evidently most film investors get out, win or lose, after just one or two films. What’s the logic in that? Why have we trained our money to behave in such irrational ways? Until very recently all film investment was capital intensive. Further there were only a few select people who were truly interested in investing in film. The infrastructure developed in such a way that people were incentivized to make big bets. Sourcing, closing, maintaining the relationship with money, was such a laborious process you can understand why the film biz favored the model of a whale. But just because something tastes good, doesn’t mean you should eat it. If San Francisco can ban foie gras, could the Indie Film Biz get over the bias of the big bet?
To get a wide range of projects, both wanna-be investors & established ones generally have to turn to 3rd parties — sometimes hires, sometime commissioned agents, sometimes consultants — to hunt for what they are looking for. Portfolio investing in film is difficult to do wisely because often the project suckers have specific tastes and although they may source multiple quality opportunities they are also slaves to their own tastes. Some at good at find action films, others Sundancey Indies. But the subject is only one part of the picture of a beautiful portfolio.
I have always learned a great deal by being budget agnostic in my producing. Projects for me have ranged from budgets of $200,000 or so to about $32 million. Problems change and the solutions you find are often applicable, albeit it in a new iteration, to the current challenges you face. The portfolio-based film investor often struggles to find projects across the budget range as well as the subject range. Agencies are not in the business of offering micro-budget opportunities and when they are, they are often unprepared to exploit them in the best revenue generating way. As a result the film investor who is dependent on an agency for deal flow general is stuck in a specific budget range for their choices. Can we come up with a way to offer investors the full range of good opportunities out there? I think so and I will be proposing a plan in the weeks ahead.
A truly diversified film slate would require not just work of different genre, but also work of different stages. Ideally the investor with a diverse portfolio has projects at all different stages. She would have films in development, packaging, production, post, in need of delivery, and those that need funding for release. That’s five stages, right? But this is a difficult things these days because without institutionalized staged financing, it isn’t wise to go forward without all your money in place (yet of course, 99% of indie filmmakers go forward without any marketing money in place; go figure).
Can we improve this situation for investors? Yes we can. Can we come up with a way that they have access to a variety of projects of a variety of budgets in a variety of stages? Yes we can! And can we compliment it with a variety of non-film project specific opportunities in the film/media space? You betcha!
Read:
Towards A Sustainable Investor Class For Film Culture And Business
Staged Financing MUST Become Film BIz’s Immediate Goal
Towards A Sustainable Investor Class: Accessing Quality Projects
