Well after months and months of paperwork, business plans, modeling, etc., I am starting a 3(c)7 film fund, which will partner in with the film and television production company I currently work for. Raising $250M equity to help finance the next 5 years slate of films. Think Legendary Pictures but not quite as large obviously but essentially the same deal. Will have distribution deal through a studio which cannot be named yet. Wish me luck!
Would be happy to address any questions or comments...
good luck, wow! no idea how one even gets started in something like this...
can you describe a bit of the process of signing up investors? is it CV mostly or persistence/persuasion or both?
MichaelHutchens-
Its not as hard as one would think to start a fund! Hardest part is raising money, obviously. It also helps that I hate when people tell me I cannot do something and just fuels me to accomplish whatever I want. Don't ever be afraid to venture out and do something the majority are afraid to do either because they are scared or don't know how too. I would think the majority, if not all of us on this forum enjoy working our asses off to some degree... If not, we wouldn't be in finance.
research, research, research, taking meetings, more research, taking more meetings, then more research was basically my life for the past two years just trying to soak up as much information as I could.
Now to answer your other question....
Signing up Investors:
In short, both. I know people at Canyon Partners over here in Los Angeles along with Ares Management who is a floor above them and once all paperwork and legal is finished I will be meeting with both companies to discuss possible investment. At the least, some of the executives might put up some money.... Also, meeting with some companies in New York to discuss possible investment...
It also helps that we already have some committed equity.
The fund is very "investor relations friendly" so to speak and hopefully individual investors notice this when contemplating their decision to invest or not. The way the fund is allocating equity into each film decreases risk and potential loss much more than many funds currently do such as Melrose Partners, Legendary, Weinstein Co etc. Nothing against these funds, they are huge, powerful and an inspriation to me however the marketplace also needs a fund such as the one I am creating.
Not able to get into the nitty gritty details because this is where we have our competitive edge but when I can say more I will.
Excuse spelling errors please if any wrote this in a rush...hope this helps and will continue to let everyone know the status of the fund as we continue forward.
This is Spartaaa!!
Dude...this is exactly, and I mean EXACTLY, what I planned on doing in a few years. I'd love to hear any and everything you might have to say on this.
Any way to keep in contact with you?
Mez-
yes I will keep posting updates and I will send you my email once I can state the company I work for and the name of the fund.
Congrats and good luck!
Whats your background (school, etc..) ? I know you mentioned finance, but which area exactly? How many years of exp do you have?
What was your main motivation for starting something like this?
Another question. What kind of research went into this?
A lot of research. One summer, back when I was fairly young, probably around 17/18, Im only 24 now which I must say is a huge drawback and advantage at the same time (if that makes sense), I did an internship at Tejas Securities in Austin Texas (have an Uncle who works there so thats how I got into everything at such a young age). I noticed how much research they did on deals and so from an early age i realized how important information and knowledge of a deal or business is.
At our company, we analyzed every single film fund possible with a fine tooth comb..., how it was set up, how it operated, the key managers, where the money came from, how it came back into the fund, at what point in their career did the managers raise the money, what types of films the fund produces, production deals with studios, what type of hedge fund backed the fund, what type of investor backed the fund, profits, losses.....point is anything you can think of, we looked at and honestly thats what has to be done because there is no way you can talk to someone about this, especially when asking a person or a company for money and not know and fully understand every little detail. Unfortunately, the majority of people in Hollywood are complete retarded crooks so the few intelligent, ethical people such as myself have to fight twice as hard to accomplish anything...
ill reply when i have some spare time, been very busy, give me a day or two...
Bump.
edit: nvm, ddin't realize how old this thread was. oh well.
I also find this extremely interesting... if you don't mind Leonidus, would you mind posting the answers to Mez's questions when you get a chance?
Everyone - My apologies in my delayed response. I ended up producing a film the past few months and have been busy with that along with other projects.
Now, back to the film fund. We decided, reluctantly, to place the fund on hold for another 6 months. Raising capital in this market proved to be... difficult, ha. However, we noticed there is a need for a separate type of film fund which we are in the works of developing. "Debt Opportunity Fund 1" as we are calling it will provided financing of up to 70% of an independent features budget. We are providing a lower rate than banks or individual investors are willing to provide but because of the sheer quantity of films we will be financing, it balances out our lower fees. Also, I wouldn't even call our rate low, we are just not greedy I guess... we are looking to charge 15-20% on our money.
The same legal team is forming this fund for us while I have been working diligently to find a HF or PE firm to partner with us. I have a close friend who works at Apollo and a friend who works at Black Canyon but to implement our idea at each, we would have to bring about 100MM worth of business a quarter, which is possible, just hard to prove to their team as neither really delve into the film arena. As some of you may know Ares, who just happens to be one floor above Canyon Partners, is developing a 1B film fund this year however I do not know the specifics on that fund yet...
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