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By Colin Brown
In The Wall Street Journal, Slated was described as “Soho House for film financing, due to the requirement that you must be invited to be a member.” Another point of reference could just as easily have been AngelList. For those unfamiliar with this game-changing website, AngelList is a powerful funding vehicle that connects startups with a who’s who of early stage venture capitalists, high-net-worth individuals and angel investors. Simply put: AngelList is to Silicon Valley what Slated is to the film industry.
AngelList is a transformation-in-the-making that points the way forward for other long cloistered industries including entertainment. While the basic principles for investing in startups remains pretty much the same, the tactics have been evolving fast. You could say the same about film investing. Every few months, in fact, AngelList inspires a revised set of behavioural tips and conduct codes for successful fundraising, smarter investing and more effective profile-building in that particular sandbox. Here are links to five such lists:
- 9 Tips for Raising Startup Funds on AngelList
- Startups: How to Hustle with AngelList in 10 Steps
- Raising Money On AngelList: 21 Tips From Two Active Angels
- AngelList’s Big Four Benefits for Investors
- Hacking AngelList: 7 Tips for Raising Startup Capital
All these articles are worth reading for their own sake, if only to get a keener sense of how Silicon Valley thinks about the business of backing disruptive ideas. As you read, keep in mind too that today’s technology angels are likely to be tomorrow’s film investors – and that these are the investment rules and social metrics that they’ll choose to play by.
But for those in film who like to cut to the chase, I have synthesized these fifty-some observations and distilled them into seven core pointers that are of more immediate relevance to equity crowdfunding platforms such as Slated. In so many ways these tips are simply adaptations of what already works in the elaborate real world of film networking – only they have the potential to work much faster:
- BUILD YOUR DREAM TEAM: whether it’s a startup or a film project, seed investors will look for same basic elements – a strong team, meaningful milestones and a differentiated product in a clearly identified market. Success hinges on “social proof.” Surround yourself with a proven filmmaking team and, where possible, attracting an influential champion as anchor investor or company affiliation. Make sure that all your big-name supporters take the trouble to fill out their online profiles and then endorse you to their own followers. It sends out a strong credibility signal.
- BE ROCK SOLID FROM THE START: because first impressions count, it pays to spend time and energy getting it right. Putting in a half-baked effort has been described as a cardinal sin; film investors might say similarly about potential projects. Arrive as fully packaged as possible with verified talent, detailed financials and company affiliations, and with as much collateral material as you can muster. A website with a good URL, a killer video, a twitter presence, social media mentions and any metrics demonstrating film comparables, global book sales, YouTube hits, fan-base followings etc. can only help in conveying early traction and a pre-disposed audience. Doing this work upfront will make your profile pop.
- RESEARCH AND RIFLE TARGET: Advanced filters on Slated make it easy to find both accredited investors and all the films that have reached their financial targets. Before listing on the site, begin to reach out to those on Slated you already know so that your project is instantly embraced. Once on Slated, resist the scattergun approach. Spend time to target your ideal short-list of suitable investors and pinpoint strategic partners based on required elements besides just money. Knowing what you need is seen as a positive; but approaching investors who clearly wouldn’t invest in your kind of project is a telltale sign of a rookie.
- KEEP YOUR PROFILE ACTIVE AND GET PERSONAL: Slated is a momentum-driven platform where hot projects get hotter. You need to generate buzz through a constant communal hum. Personalized Introductions help enormously. Because syndicating funding rounds is a big part of what investors do, investor intros get opened far more than a generic profile. In addition, get your most influential supporters to promote you using the Track and Share buttons. Feed them sound bites if necessary – anything to keep your profile from growing stale through inactivity. “Game” the system by making constant updates to your profile, as such changes will show up in the weekly news feeds that get disseminated to members. While it certainly pays to keep Slated abreast of your entire production history at frequent and regular intervals, it is not in your long-term interest to overplay this card. In ensuring visibility for your project, make sure you are adding value to the group, not detracting from it.
- BE RESPONSIVE AND READY TO PITCH: fast responses have been shown to increase your chances of closing a deal. Fortunately, you have all the tools you need these days to pounce quickly. You can communicate with them visually via Skype, Gmail video chat, Go2meeting and so on, for which you should have your pitch documents always ready to hand. And services like Tout will allow you create what seems like a personalized email the moment an investor asks for that intro. The key is to follow up within hours. Some Silicon Valley investors believe there is a strong correlation between those that respond to late night emails and their entrepreneurial commitment.
- SPUR INVESTORS INTO ACTION: getting an investor to actually commit on the dotted line is a challenge facing all those in search of financing. While many other factors come into play, nothing quite beats fear and greed as investment catalysts. Investors afraid of missing out on an opportunity that is simply too good to pass up will tend to be the most motivated. Setting an artificial funding deadline only works if the prospective investor knows that the deal has a real chance of being taken off the table beyond that date. A more affective deadline might be a looming production date, an irreplaceable actor’s tight schedule, or a pre-emptive deal offer ahead of an industry event such as a film market. Best of all is the prospect of a bidding war that will lead to a skyrocketing valuation unless the investor jumps in now.
- TRACTION IS THE NAME OF THE GAME: while it is easy to obsess entirely on fundraising, it is worth keeping in mind that Slated offers other commercial pay-offs beyond just the quick hustle. Getting a great sales agent attached is worth its weight in distribution gold. So too is the sustained industry awareness that can be built around your project if you take the time to make measurable, meaningful progress with your Slated film. If nothing else, you will have a giant head start over other films of comparable quality when your project starts being shopped around at film markets. The perceived value of your project will rise commensurately. Given the sterling pedigree of Slated’s network of investors and industry players, there is surely no more cost-effective way of standing out from the noisy, global crowd.
And, finally, be aware that you are at the forefront of transformational change. As such, the rules of engagement will be in an inevitable state of flux, particularly in these early learning days.
Editorial Director of Slated
Check out “Kickstarter: Fan Empowerment … or Exploitation? “on Metro Magazine on why I think crowdfunding is so powerful – scroll to bottom here to find it: http://www.metromagazine.com.au/magazine/index.html
Join me, Rena Ronson, Brian Oliver, Paul Miller, & Andrew Eaton @ TIFF Financing & Packaging Panel Saturday Sept 7 1130A Hyatt Regency Hotel, Toronto. Sydney Levine moderates. This is going to be a good one, chock full of the information needed to get your movie made, and populated by a group of diverse perspectives.
“an intimate conversation on pulling it all together, either when working from an indie structure or when established resources are available”
But it should be FUN because I believe that virtually EVERYTHING that is considered “best practices” in terms of Indie “Financing & Packaging” is absolutely wrong — and I have a better way to offer!
By Colin Brown
Those that think Twilight, The Green Hornet, The Beach, The Abyss andBoston Shuffler are a bunch of movie titles are only partially correct. They are all nicknames for just a few of the algorithms used on Wall Street to give firms those precious milliseconds of trading advantage. Some two thousand physicists and mathematicians work in the financial sector cooking up these computational black boxes – and a handful are now applying such predictive modeling and risk evaluation skills to the film industry in order to determine why some movies click and many others don’t. With worldwide spending on filmed entertainment climbing towards an annual $100 billion and beyond,
the pay-off is self-evident.
Cinema historians will point out that movies have always been subject to generic modification in order to maximize their appeal across multiple markets and cultures. Studio distribution executives will tell you that older-female-targeted films tend to “over-perform” in Germany and Australia, while Latin America has an outsized soft spot for family fare. And Hollywood tailors its films accordingly.
But such factory-belt fine-tuning is nothing compared to the scientific wizardry being applied today. Consider the following:
- Netflix, awarded $1 million to the team that created the collaborative filtering algorithm known as Pragmatic Chaos that predicts user ratings for films based on previous ratings. According to TED speaker Kevin Slavin, in his memorable talk on how algorithms are shaping our world, this one piece of code accounts for 60% of the movies that end up getting rented.
- Studio marketers – and some trailblazing producers – are turning to neuroscience to do what test screenings and focus groups have been unable to do very reliably: pinpoint the levels of audience engagement. Using brain scans and other biometric data, firms such as MindSign,NeuroFocus and EmSense are not only evaluating trailers, but also individual scenes, characters and effects.”
- As mentioned in a previous Filmonomics blog, Epagogix uses artificial neural networks to analyze screenplays with a view to determining their probability of commercial success. Meanwhile, professors at NYU Sternand Pennsylvania’s Wharton School claimed to have a devised
a reliable screening method for choosing movie scripts based on “textual information” – including the use of specific words.
While different in their methodologies, these algorithmic approaches share a fundamental trust in data analysis as the best filtering system. For those who think that the creative vetting process is best left to humans, there is a contrasting set of computational tools that might be broadly termed social recommendation engines. These rely on the curatorial instincts of one’s peer-groups. These influential tribes could be your friends on Facebook banging the drum for the film they just saw at the multiplex or film festival. Or they could be the membership network of 300 movie professionals whose votes determine those as-yet-unproduced screenplays that deserve to be included on The Black List.
Conceived by Franklin Leonard, VP of Creative Affairs at Will Smith’sOverbrook Entertainment, The Black List is perhaps the nearest we get to an instant snapshot of Hollywood’s collective taste buds. And it’s persuasive too: more than 125 past Black List scripts have ended up getting produced and being released theatrically, generating $11 billion between them. Successes include four of the last eight Oscar-winning screenplays.
Building on its hit-making potential, The Black List announced last year the launch of an online members’ community that will make algorithmic screenplay recommendations based on individual tastes. Users can now explore real-time updated lists of Hollywood’s most liked scripts. By offering
a blend of human insight and artificial intelligence, The Black List is affirming the need for both sets of tools in order to decode the DNA of filmmaking success. As we are learning, each inspires the other. It’s a no-brainer.
“We all fear the ‘future script’ spit out by a robot. But we can take comfort in the fact that the human brain is its own vast data storage program. A serious artist does his or her own rigorous study of successful works to lodge the common elements and patterns into their unconscious and inform their artistic output,” notes Jennine Lanouette, a story consultant who lectures at both Lucasfilm and Pixar (and will soon be contributing periodic blog posts on screenwriting analysis for Slated).
“As I see it, there is room for both – the organic artistic process and the set of objective measurements. The best application I can imagine of these computer prediction methods is in determining the size of the budget for a given project, and discovering niche market or sales territory potentials. The danger, in our winner-take-all economy, is everyone wanting to compete for the same gold ring – the billion dollar box office take. This is when art loses out. A computer might be able to maximize return on investment, but it will never create art. You need a human soul to do that.”
Editorial Director of Slated
By Colin Brown
Summertime and the living ain’t easy if you are in acquisitions. Whether you operate in film or tech, the fish are now jumping and your scouting alerts are on high. Movie distributors have already been shadowing – and in some cases preemptively buying – films pegged as potential breakouts from an upcoming festival season that is anchored around those eleven September days in Toronto. Similarly, venture capital and angel groups are currently busy doing the rounds at various “Demo Days”, stalking promising startup ideas that have been incubated through TechStars, 500 Startups, Y Combinator and the myriad other mid-year accelerator programs that now include Warner Bros’ newly graduated Media Camp. No matter the season, it is clear that both film and tech remain fixated on landing The Next Big Thing. But how each world goes about that pursuit is a study in contrasting deal-flow mechanics.
Where they differ most markedly is in who it is that actually leads the early chase. In film, the gestational life cycle of even the biggest festival hit is typically spent banging on endless investor doors, submitting grant applications and combing through production incentive schemes, all the while trusting that the script will attract the level of talent that in turn attracts the right level of money. It is only once all that hard pitching, cajoling and juggling is over, and there is film footage to show, that most distributors then come waving their checkbooks. The solicitation onus, in other words, falls squarely on producers’ shoulders.
In tech, however, it’s the money itself that does much of that initial sweet-talking. Sure, startup entrepreneurs have to pound the Silicon Valley pavement in search of backers but they do so in an inviting ecosystem where investors are very much the driving force. VCs want to see absolutely every startup idea out there. And so, increasingly, do seed investors, which is why so many have aligned themselves into angel groups in the hope of leveraging an advance look-see at the hottest investments prospects.
Such is this tech obsession with “proprietary deal flow” that investors go to great lengths to steal a march on competitors and differentiate themselves in the marketplace for ideas. Referral grapevines are cultivated, industry events aggressively mined and positional think-pieces constantly offered up on websites all in the quest for an inside track. Early-stage tech investor Mark Suster says he first relied on lawyers as his own advance warning system, since they are the ones entrepreneurs turn to in order get their company registrations done. Today, he views blogging as his “best source of high-quality deal flow imaginable.” We know this because Suster blogged about it earlier this year.
Now compare tech’s open courtship displays with what happens in the movie business. Other than the occasional yacht party at Cannes, film investors are leery of even announcing themselves, far less tweeting about their financing strategies, for fear of being swamped with pitches. They just trust that the industry’s inner circles will beat a path towards them and deliver the goods.
Of course, a proactive investment stance does not necessarily translate into greater “deal velocity.” For all their come-hither attitudes, it is not unusual for VCs and angel groups firms to fund less than 1% of the hundreds of business plans they review in any given year. But by virtue of sheer volume, they can lay claim to ever-greater deal-making intelligence. Having sifted through a mountain of proposals, Silicon Valley players have developed an exquisite nose for what constitutes the real deals – and, just as crucially, a strong stomach for failure. The fact is Silicon Valley is way more crucible than it is cradle. More than 90 percent of start-ups flame out and yet setbacks are embraced here, not so much as friends, but as teachers.
Paradoxical as it might sound, investment history has tended to side with those who have made those bold, early leaps into the dark. Their secret sauce, at least according to the various VC general partners I have interviewed, has been based around “pattern recognition.” Certain characteristics are common to even the most life-altering, game-changing, mold-breaking ideas. Research backs this up. An often-cited 2006 study by Harvard Business School academics demonstrated how serial entrepreneurs who have made money once are the ones most likely to be money-making the next time around. Regression analysis also done by VCs investigating which entrepreneurial attributes are linked to repeated successes found that a team’s interpersonal dynamics as an operating unit hold the key. The ability to spot such salient tendencies is what gives tech investors the comfort to back even the most outlandishly disruptive propositions in their embryonic stages.
The same should also apply to film investing. This summer’s string of studio box office misfires is another reminder that audiences still like to be surprised. You can only force-feed so many facsimiles of yesterday’s spectacles before people clamor again for unexpected characters and stories told in unforeseen ways. The problem here is that financiers don’t like surprises – which is why it is so important that the most original ideas in cinema come wrapped in creative teams that signal success through their collective track record in making films that industry buyers crave. Just as with startups, these producer-led teams are the quantifiable elements – packages, if you will – worth banking on. And the more that investors learn to reach out and find them, the better they will all become at identifying the real deals well before those festivals and demo days start selling them off at handsome, auction prices.
Editorial Director of Slated