Wade Bradley knows venture capital and loves independent film. So he combined the two in IndieVest Inc. -- an independent-film studio and financier that invites individual investors to go Hollywood with it.
"The similarities between building out a film and building up a startup are tremendous," Bradley says. "Only a film takes six weeks of preproduction, 30 to 40 days of shooting and then you say goodbye to everyone. Compare that to VC, where you're still paying and living with your partners for another seven years."
The return on investment is similarly compacted: between 24 and 30 months for the lion's share of returns from a film, vs. seven years to exit the standard VC deal.
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With movies, though, the perennial question is -- will there be any
return at all? Even Bradley admits the question is especially relevant
for indie projects, given that 95% of them never make it to the screen.
Here is how they typically go astray: Filmmakers get enough money to
obtain a script and shoot it. But they erroneously believe the movie
coming out of postproduction will be so irresistible that, Bradley
says, "somebody will put up the capital to distribute it."
This misguided field-of-dreams approach almost dissuaded Bradley
from entering the business. "I did a deep dive for six months and still
couldn't get comfortable with the level of risk," he says. Key problems
include: an unstructured development process; unbankable talent;
incomplete financing; and lack of distribution guarantees.
Bradley's efforts to resolve these problems gave birth to Los
Angeles-based IndieVest. Its studio, headed by Oscar-nominated "Water"
producer Mark Burton, purports to be a conveyor-belt operation
dedicated to identifying, developing, producing and distributing
quality independent films. Its finance division, headed by Bradley,
serves this studio much as the former venture capitalist's Empire Ventures Inc. served high-tech entrepreneurs for 10 years.
Key to the studio is IndieVest Pictures, a distribution arm that
guarantees 500 screens for all IndieVest releases and up to 1,500 for
those warranting wider release. It doesn't hurt that the studio also
has an advisory board of pros (to use Variety-speak) Don Cheadle, Liev
Schreiber, Mike Binder and Tim Blake Nelson.
"We identified these individuals and showed them what we were
doing," Bradley says. "The theme resonating from all them was 'It's
about time.' "
But films are about money, too, and here the IndieVest model could
change the ways movies are made. IndieVest looks to solicit investments
from the segment of the population that's not only passionate about
indie films but wealthy enough to absorb the risk of producing them.
For that reason, clients of IndieVest Securities Inc., the finance
division, must be "accredited investors" -- individuals with net worth
greater than $1 million or annual salaries greater than $200,000. Those
so qualified will be eligible to put together their own film-financing
slate, using any number of $50,000 units, from IndieVest's production
lineup.
Then, because IndieVest distributes its own product, these investors
start receiving returns from what Bradley calls the "first dollar of
gross." Additional returns from theatrical release and beyond continue
until the original investments are made whole. After that there's a 15%
preference payment and then a permanent split starts to govern the
repatriation of profits: 50% continues to accrue to investors, 40% goes
to talent and 10% stays with IndieVest.
That's the theory, anyway, and it proved sufficiently attractive for
IndieVest to raise some $3.8 million for its first communal effort in
just 105 days. Called "Saint John of Las Vegas," the indie features
Spike Lee as an executive producer, is directed by his protégé Hue
Rhodes and boasts a cast headed by Steve Buscemi. Principal photography
is just now ending.
Backed by $5.2 million for prints and advertising, the film is
fast-tracked for a March release. A DVD should arrive by September
2009, and investors should know where they stand by June 2010.
By then, IndieVest hopes to be churning out some 10 indies a year,
revealing one way or another whether there's a new way to make a small
fortune in the movie business. The traditional way, as many investors
know, was to start with a large fortune.
Richard Morgan covers media for The Deal.
