The Film and Television Investment Fund is a fund specially established for the development of film and television. Compared with other funds, the establishment process is different. Investors who want to purchase related funds must go through special channels. The film and television investment fund process is as follows:
1. R&D Fund
Through investment, concepts and outlines can be turned into mature scripts that can be used for filming; it is equivalent to the seeds and angels of film and television investment.
Operation process:
Early stage: Repeated communication - Determine the direction - Issue multiple outlines - Screen 1-2 outlines - Sign the contract and pay the deposit
Mid-stage: outline refinement - outline - episode outline - script - revision - multiple revisions to the final draft
Later stage: complete the final draft - pay the final payment
Advanced focus: Don’t just finish the script, but produce a package that includes at least one creative lead (e.g. producer, director, and one major actor). The value-added space of the script is limited, and there is even no premium for the price, and it is still far away from the production. Product packages can greatly increase the premium space and advance the project to the next step more smoothly.
Exit path: (1) Sell the product package and exit with expected annualized expected income. (2) Due to early entry, R&D funds generally can obtain dry shares in the production stage without investing again, but the proportion will be very small. During the production stage, this share premium was transferred and exited. (3) Exit after the IPO is released. Note: For promising projects, additional investment can be made during the production stage.
Advantages: (1) Low cost, script costs range from hundreds of thousands to three million. (2) The number of investments available is large. (3) Low risks caused by low cost and diversity. (4) Solve the problem of project source directly from the most upstream. (5) Can directly affect the content. (6) Can follow the entire process. (7) There is huge room for premium in the later period.
Disadvantages: (1) The shareholding is small, it takes time and effort but the return is not big. If there is no additional investment, you will not have much say in the later period. (2) Risks still exist. The first is the risk of upgrading the script to a product package, such as the integration of main ideas and ideas; the second is the risk of market sales; if you choose to continue to follow up, you will have to face the risks of other types of funds. (3) The cycle is long, 3-5 years is considered relatively smooth.
Difficulty: It looks good, but why isn’t it done much? First, the requirements for investors are too high – can you tell what a good script is? The GP of this type of fund must have strong knowledge and resources in screenwriting, production and film and television industries, and must also understand capital. There are too few such talents.
Secondly, R&D funds can easily develop into an incubation model, that is, everyone invests money and starts writing. It is even cheaper for children, just in case of a dark horse. However, the incubation of screenwriters and the incubation of start-up companies are two different things. Screenwriters grow up as a typical master leading an apprentice and practicing. Great screenwriters don’t need incubation, but small screenwriters need a lot of practice and guidance – can the investment money be used for children to practice? It must be a real sword and a real gun from the very beginning. After spending a year or two writing it, I found that it didn’t work, and it was too late to even stamp my feet.
2. Production fund
This is the most common operation method. It is entered during the production stage and usually exits through IPO.
Operation process:
Pre-production: It overlaps a lot with the post-development stage and is in the construction stage. The cost of this round is relatively low, and the subsequent premium space is high.
Mid-term production: confirming the start of filming and when it starts.
Post-production: temporary shortage before completion, or post-production stage after completion.
Exit path: (1) Enter in the early stage and exit at a premium later. (2) Exit after the IPO.
Advantages: (1) The risk is low because the script has been completed, and if the main creative team has been set up, the uncertainty of the start-up is reduced. (2) The share of investment can be higher than that of R&D funds, and the right to speak is higher. (3) If you enter the production industry in the early stage, there is room for a premium. (4) The research and development cycle is relatively short.
Disadvantages: (1) The risk is high due to the high investment cost. Large in size and high in risk, it is essentially a PE investment. (2) No control over content.
Difficulties: (1) Project sources, good projects cannot be squeezed in, and those that can be obtained cannot pass the test. (2) Only financial investment, no post-investment management, and no risk control. It is impossible to get rid of the embarrassing dilemma of film and television funds (click to read the original text to view "How to break the investment dilemma of film funds").
3. Publicity and Development Fund
Operation process: Investment for publicity and distribution funds will be made during the publicity and development stage after the film is completed. There are two situations: (1) Funds are only raised until the end of production, and additional financing is required for publicity and distribution. (2) Increase expenditures on the basis of the original publicity and distribution budget, and the excess will be financed separately.
Exit path: (1) Exit after the IPO.
Advantages: (1) The risk is low because the film has been basically completed and the product quality is watchable. (2) The cycle is short.
Disadvantages: (1) The price is very high at this time. (2) The proportion is relatively small, the voice is small, and the status is to fill a vacancy.
Difficulty: It may be a paradox. Generally speaking, publicity, especially distribution, will be determined in the early stage. And in the current market environment, the producer and producer may represent the publicity and distribution, such as Wanda Investment, which will actually handle the publicity and distribution themselves.
In addition, even if there is no publicity budget, if the work is good, the publicity company will advance the funds by itself, without the need for a financial company.
Based on the two points, if the announcement is blank, it may be a problem with the project itself, and then investment will not be possible.
4. Slate investment method
Everyone knows that the risks of a single film and television project are high. Diversification Diversification is the most basic way to optimize investing. If you are not looking for various projects on your own, the easiest way is to bind companies in the industry. The partners of the fund include: (1) Screenwriting companies/studios. This is the ideal target for the R&D phase. (2) Producer/Company/Studio. This was the case with the Disney Screen Fund in the 1980s, the Legendary Pictures acquired by Wanda, and the domestic Noah and Bona Film and Television Funds.
5. The core dilemma that film and television funds cannot escape
(1) Core resource control. In the final analysis, funds are outside players and can only provide capital value.
(2) Risk control. Because of the above, financial companies cannot access, supervise and control products and accounts. The management of fund raising, investment, management and exit is almost non-existent. Although there are rounds when exiting, you cannot find a successor like other financing. In addition, repayment after the IPO is another difficulty. If you invest successfully, when will you see the profit?
(3) Essence. The collapse of Relativity Media is a slap in the face to those who use data-only methods to solve risks. In addition, the medium cost means that the film will at least not be compensated, but the money earned is not enough to cover the interest on the payment. Low cost means high profit margins but the product risks are too high. Anyone can come across a dark horse.