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— Backstory —
"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.
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. |
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.
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