| A lot of investors who are actively seeking to invest | | | | private investment in Hollywood comes down to |
| in shares of high yield investment opportunities, | | | | numerous factors that keep evolving every week at |
| undervalued small cap stocks, offshore funds and | | | | the box office. |
| hedge funds, or even pre-IPO private equity | | | | There are plenty of affluent investors, wealthy |
| investment opportunities follow a crowd mentality of | | | | families, hedge funds or private equity groups that |
| deal sourcing that doesn't always net them the | | | | come into the film business and leave just as quick. |
| return or value their financial investment was | | | | Mainly because the partnerships weren't based on |
| allocated for. | | | | precise risk minimization strategies. There are not too |
| And in most instances, even well capitalized affluent | | | | many investment right now aside from film that can |
| investors, private equity groups, hedge funds, | | | | offer a guaranteed rate of return before profits, |
| venture capitalists, family offices, sovereign wealth | | | | especially if hedged not on a one hit wonder, but |
| funds, pensions, & endowments can't possibly be in | | | | spread among 10,20, 50 films where there is a also a |
| an inner VIP network of ground floor investments | | | | control of theatrical distribution. |
| that are only accessible to a few. So they are forced | | | | A a lot of wealth advisers, portfolio managers, |
| to park their internal equity into pre-IPO companies, | | | | financial planners, and accredited high net worth |
| small cap stocks, or portfolio managers hoping for a | | | | affluent investors and family offices are open to be |
| different result which doesn't always materialize. | | | | educated about film as an asset class. A lot of |
| A better option is not to follow the crowd mentality | | | | former real estate developers, oil & gas speculators, |
| and think outside the box in allocating to overall | | | | hedge fund managers, and successful Silicon Valley |
| investment portfolios that are not always traditional | | | | investors seem to understand the model. |
| in scope. With a specific risk strategy and multiple | | | | Investors are starting to have a reality check that |
| exits of of profits not directly related to economic | | | | they can go online, have a recommendation from |
| conditions, investing in film may just offer that kind | | | | their financial adviser or research the next hot |
| of opportunity for both smaller affluent investors as | | | | investment opportunities in internet, technology, |
| well as hedge funds, private equity groups, family | | | | biotech, oil & gas, or even alternative energy and see |
| offices, financial and wealth advisers, fund of funds, | | | | that there is a lot of capital chasing deals with only a |
| and others. | | | | handful of investors that ultimately have an exclusive |
| Historically investment in film was either structured | | | | windows into wither private investment opportunities |
| without any risk minimization or the junior equity was | | | | or a handful of fund managers than can really have a |
| crushed by the repayment of mezzanine & senior | | | | consistent ROI. |
| debt in large studio film slates. Investors thought that | | | | So now investors need to think outside their box and |
| just by having their investment allocated with too | | | | re-educate themselves on other alternative |
| many other tranches or based on fantasy mote carlo | | | | investments, especially media & entertainment, which |
| simulation models, there would a higher propensity for | | | | seems to be immune to economic factors as well as |
| success. Unfortunately the superior returns in film | | | | movies still being the number one export of the |
| finance and film investing were only successful | | | | United States. Plus there is really no longer an |
| withing film funds or film production and distribution | | | | absolute need for movie stars to headline indie films |
| companies that had a grasp of structured film | | | | as the films themselves seem to be star, especially |
| finance, the commercial viability of a story, as well as | | | | with niche social media and marketing of films where |
| international distribution. | | | | the upside in revenues from theatrical, DVD, Video |
| While films such as "Paranormal Activity", "Hurt | | | | On Demand, Cable, mobile, and Internet VOD only |
| Locker" and even "Avatar" were primarily financed | | | | increases the potential revenue streams. |
| with private equity, the upside in revenues for any | | | | |