Lack of investment channels, U.S. producers have strong demand for cross-border film crowdfunding

The stock market has been sluggish, but the box office of film and television is very hot, so some entrepreneurs see the opportunity, although it is not a new idea, but if we can combine film and television with crowdfunding, from the time of film and TV series project launch with funds to participate in it, similar to the form of equity investment, and in the later stage to participate in box office distribution, may have a great impact on investment and film market development.

Original title: Movie crowdfunding wants fire? Silicon Valley platforms are already targeting China's fat meat

, and the risks may be the same, but if the same 10,000 yuan or 100,000 yuan were given a choice between investing in the stock market and investing in Stephen Chow's upcoming movie, how would you choose?

Judging from the current situation, even when the stock market was sluggish, the popularity of film and television box office has not stopped. Therefore, this allows some entrepreneurs to see opportunities. Although it is not a groundbreaking new idea, if film and television projects can be combined with crowdfunding, they can participate with funds from the time they are launched, similar to equity investment, and participate in the box office division in the later stage, which may have a considerable impact on investment and the development of the film and television market.

In fact, this idea is being practiced in both China and Silicon Valley, but with a slightly different model.

The

most typical case in China is "Return of the Great Sage"-a carefully created domestic cartoon that almost aborted due to lack of financial support. Fortunately, its publisher received crowdfunding support from 89 private investors after "asking for help" through circles of friends and private channels. These 89 investors not only finally enjoyed the treatment of "being on the end of the movie", but also from public box office data,"Return of the Great Sage", which invested a total of 7.8 million yuan, allowed their investors to receive a principal and interest of 30 million yuan. Investment income, 250,000 yuan per capita.

If movies such as "Return of the Great Sage" are regarded as startups, then from crowdfunding to dividends, it can be regarded as a standard equity crowdfunding process. The only difference is that film production, distribution and release are much simpler than company creation, financing development, refinancing development... until IPO. In this comparison, it is not difficult to find that film and television have many natural advantages in terms of time period, involved links and standardized processes that allow for equity crowdfunding-after all, film and television have already achieved industrial production.

However, the shortcomings of crowdfunding in "Return of the Great Sage" are also obvious: there is no standardized platform to ensure the entire process. This is more like a story of asking relatives to borrow money and starting a business after the reform and opening up, rather than the prototype of the "Everyone's Angel" model touted by many equity investment platforms.

In China, affected by the industrialization of film and television production and restrictions on equity crowdfunding, although film and television equity crowdfunding is widely optimistic and considered to be a general trend, it is still in the stage of investment in financial products such as private equity and entertainment treasure.

However, in Silicon Valley, some entrepreneurs have begun to combine direct investment in Hollywood films and television with equity crowdfunding platforms to try to create a movie version of AngelList, which is currently one of the most well-known equity crowdfunding platforms for entrepreneurial projects in Silicon Valley.

A Silicon Valley model that can be referred to is a Silicon

Valley movie crowdfunding platform DreamGGs

. A Silicon Valley company called DreamGGs is hoping to build a platform to connect high-quality movies and individual investors in Hollywood who need financing, so that ordinary people can also Participate in the film investment and crowdfunding market.

Its founder Lorelei Tong explained the entry point of Dream Egg as follows: Dream Egg platform gathers the latest high-quality Hollywood blockbuster resources, and individual investors from China and the United States can invest in their favorite movies on our platform and share the global benefits of Hollywood movies.

The Chinese founder, who has always hoped to use technology and data models to change the current process of film and television, told Sina Technology: "Film producers can use our platform to achieve cross-border crowdfunding, and realize fan training, pre-sale and distribution of movie tickets, IP authorization, etc."

In fact, in order to verify the entrepreneurial idea, Dream Egg also tried to launch its first movie crowdfunding project-"What Happened Last Night", which was snapped up by individual investors in China and the United States in just a week. This undoubtedly let the team see the feasibility of the model.

Although the goal is to create a film and television version of AngelList, in terms of specific business models, Dream Egg is still different as a film and television crowdfunding platform.

The difference is that Dream Egg is not just a crowdfunding platform. Because of the characteristics of movies and film derivative economies, after crowdfunding, subsequent commercial content such as pre-sales and distribution, IP agency will also be carried out. There are a series of derivatives in terms of business models.

Differences in models in vertical areas are also the main reason for investors to invest. Zhang Lu, founding partner of NewGen Capital, the main investor in the Dream Egg Seed Round, said: "At present, the value of IP and high-quality content is constantly increasing, especially the advantageous Hollywood resources. Dream Egg helps high-quality independent films expand their financing channels and also win them the possibility of diversification and relatively lasting profits."

In addition, combined with the characteristics of film and television production and distribution, Dream Egg has also formulated corresponding crowdfunding rules, especially when it involves transnational investment. It has formulated clear participation rules for domestic individual investors, domestic institutional investors and foreign individual investors. and its own profit methods.

Take the crowdfunding project of the first three films to be launched in China as an example. Each film accepts 200 individual crowdfunding users to participate, with a subscription share of 10,000 yuan, and each person can subscribe for multiple copies. For domestic individual crowdfunding users, when the box office reaches a certain amount, the platform will return a certain proportion of the profits and principal to the individual investors in accordance with the agreed rules, and the remaining profits will be the platform's profits. For domestic institutional investors and individual U.S. investors, the subscription threshold is RMB 1 million and US$10,000 respectively. These investment institutions/people can participate in the global income sharing of the film, and the platform will collect profits. 20% of the portion is used as company income.

Market demand and trends in China and the United States

finally won the Oscar for "The Wilderness Hunter". The biggest beneficiary investor is actually China company Aofei Entertainment.

Different from other entrepreneurial fields, movie crowdfunding platform projects such as Dream Egg have locked their market scope to the "world market" represented by China and the United States since their inception. If it is a previous entrepreneurial project, the usual method may be to first verify the model to develop and grow in Silicon Valley, and then wait for an opportunity to enter the China market with more people and more money.

However, Lorelei Tong believes that in film and investment-related fields, market demand does not allow for "small steps and fast" advancement, and slowness means losing the first-mover advantage."Currently, more and more individual investors have seen this opportunity. Whether it is individual investors in China and the United States, as well as Hollywood film producers, there is a strong demand for cross-border film crowdfunding."

Lorelei Tong said that on the one hand, a common problem faced by individual investors in China and the United States is the lack of investment channels. "Interest rates in the United States have been zero for a long time, and many individual investors in the middle class and above lack investment channels; this situation also applies to individual investors in China. The fluctuations in interest rates and the few domestic investment channels all make them have investment needs in US dollars. In this case, compared with more professional investments such as venture capital and futures, movie crowdfunding is more popular. In addition to financial returns, investing in movies has many added values, such as putting personal names on the big screen, supporting favorite stars, having a sense of interaction and participation, etc."

On the other hand, American film producers also have a strong need to raise funds. Generally speaking, a well-made American movie costs hundreds of millions of dollars, and the United States produces more than 600 movies every year. Therefore, there is a strong demand for investment in movies. "Going to China to raise funds is a two-pronged move for Hollywood film producers. On the one hand, they can raise money, and on the other hand, they can also cultivate the first batch of fans and prepare various preparations for subsequent commercialization in the China market." Lorelei Tong told Sina Technology.

In fact, the news that "the wind is coming" has also been captured by entrepreneurs in China. At the 2016 Boao Forum for Asia Annual Conference, Luo Mingxiong, president of Beijing-North Crowdfunding, publicly stated many times: "The film and television crowdfunding conference will become completely popular in 2016." He believes that reward-based product crowdfunding completed the promotion of the concept of crowdfunding last year. As awareness becomes higher and the model becomes more mature, film and television crowdfunding with small amount per person, hot market, and high returns will be achieved in 2016. A real explosion will be achieved.

However, before the strong wind blew, the market's initiative was still in the hands of the first wave of investors, which is what Lorelei Tong was worried about. She believed that the three Hollywood films brought to China had enough "product strength", but as to whether the market would buy it, the founder, who has eight years of work in Hollywood and China's film industry, said: I can only wait for feedback after it goes online in April.

Editor: Tsai