This interview was conducted by Intelligent Partnership as part of the first industry roundtable of some of the leading investment providers in the Media & Entertainment. The full transcript is available within the Media & Entertainment Sector Report 2017.
How have the last twelve months been for your business and have you noticed any changes from previous years?
The last twelve months have been an incredible journey for Goldfinch. We are now independent from our previous backers as I acquired their 50% just before Christmas and business-wise, we have literally gone from strength to strength. We are inundated with requests from people to be a Goldfinch company, to raise SEIS or EIS for them and we are equally inundated by investors on the platforms we are on; the Kuber platform for EIS and SEIS, and the Kin SEIS Fund. Both have seen a really strong reception this year and we nearly ran out of suitable product! I think that has attributed to us being three years old now and our unwavering stance that the commerciality of any project has to be at the core of any decisions to take it on as a ‘Goldfinch’. We feel that all our hard work is starting to come to fruition and we are starting to see results investment-wise with returns coming back, but also, on the project side, seeing film, TV and game releases. That has enabled us to make noise around those films, games, TV shows and their success; being able to switch on the TV or internet, or go to the cinema and see something we have invested in is real proof of concept for us. One recently, is called ‘Building Jerusalem’, which is a documentary that follows England in the run up to winning the World Cup. It had rave reviews. Another is ‘Le Mans 3D’ that Amazon picked up as a TV series and investors had their investment returned, plus a considerable amount.I was also at a screening last night for Sir John Hurt’s last film as a lead, called ‘That Good Night’ (due to be released later this year). Some of the investors were there and approached me afterwards saying they were so happy to have invested in such a wonderful film. One of our earlier films, ‘The Eichmann Show’, starring Martin Freeman was really good for the investors — the film was originally just for BBC and we managed to sell it to the Weinstein Company for distribution, so the investment was exceptionally safe and performed exceptionally well! Then there is our kids’ animation (and one of the early Goldfinch projects) ‘KidsCave Entertainment’. Their project, ‘Combatabots’, which is now called ‘Robozuna’, was commissioned by ITV Global and Netflix. The investors monies are therefore safe. Honestly, we could go on and on. We’ve got over 130 Goldfinches now — all separate entities. Looking to the future, those first EIS investors we had three years ago, we hope may be exiting in the coming months as well, which will be another major tick in our box and the reason why people will hopefully continue to be part of Goldfinch. We are very excited about the future.
What do you feel are the most important features of the investment case for media and entertainment?
Commercial projects with a commercial return; we get between 10-25 submissions of projects a week. They all go through a stringent due diligence procedure. We do an analysis of where the distribution/ monetisation of the project is — the distribution strategy is what we are most interested in. Once we’ve sorted out where we think it lies, then we go back to see whether that route to market is there. We look at the budget, we look at the underlying IP, we look at who owns what, the chain of title etc. We look at estimates from sales agents, we then take those apart and go out and test them with people that consult with us. We then speak to the commissioning agents, we find out what will work, we look at the merchandising angles. We look at everything that could potentially be a revenue stream and then try to get as much of that nailed on before we ever put the Goldfinch name on the front of a project. Goldfinch to us, is a mark of quality and quality to us means that it is going to be the best project it can possibly be and have the right distribution strategy, route to market, and in our mind’s eye, it should be commercially successful. That’s what we go for — a commercial return, I would say in excess of 115% of what is invested. We do know that people out there say, “oh well, as long as I return 70p in the pound back for an EIS, or 50p in the pound back for an SEIS, my investors are going to be happy”, but that doesn’t wash for us. We ignore the tax relief. That’s a bonus. Investors are relying on our due diligence industry expertise, especially on the distribution side of things, and on the ability of our producers or games developers. The tax has to be a given. That’s what they get for taking that risk.
We know that media and entertainment projects can qualify for various tax reliefs for investors – How important are they to the projects you invest in and and what benefits do they bring to the M&E Industry and wider economy?
The EIS or SEIS tax relief is almost like a gift we give to investors. It’s not part of the commercial rationale in any way, shape or form. Every single project we have, we will not have it ready for investment unless it’s got its Advance Assurance from HMRC. I think we’ve only taken on two projects where somebody else got the Advance Assurance for the project. We like to be in control of the whole of that process. We have a way of dealing with things that we know works and HMRC like and we don’t want that disrupted. We take complete control for the compliance side. Not all, but most of our projects will also qualify for the various Creative Industry Tax Reliefs that the Government brought in from 2007 onwards. Obviously we have a specialism there too as I’m a Chartered Tax Advisor and we have links with Specialist accountants. As I have also worked in the Industry as a Producer, my experience is on both production and investor sides, which can prove invaluable – in fact, the whole team has either industry or professional expertise, or both. I think the Government’s Creative Industry Tax Reliefs are huge for the UK. Personally, I think it’s been nothing but a positive benefit for the Media and Entertainment sector. It’s definitely a win-win. We can’t see it doing anything other than expanding even more. The fact that it’s been extended to games is a massive boost for games developers too. They were always eligible for the research and development credits but to have the tax credits as well is great and we’re very pleased to help them maximise their relief as well.
How important do you consider overseas markets to be? What involvement does you company / intend to have in them & where?
Film media and games are international businesses. We might be UK based but we deal internationally most days of the week. The digital film universe and the way the world works means that we can get lucrative sales everywhere else in the world. We actually get overseas companies asking us to help them set up a UK permanent establishment and all sorts of other interest from overseas. Also, the markets that we go to, to help distribute our projects, they’re international. We go to the Berlin Film Festival in February, we go to Cannes Film Festival in May, we go to Toronto in September and we go to the American Film Market in November. The games market is entirely different. It is very much European and UK-based but the publishing is international and the deals are done internationally as well. That said, we could quite happily not look outside the UK as it’s such a booming creative industry market. We are inundated with projects here in the UK but our aspiration is international, going forward and hence, we are looking more to North America, across the whole of Europe and into China and Asia.
In terms of the kinds of projects you are currently investing in, what are the most interesting and exciting areas at the moment?
I think that is quite difficult to answer. The more interesting ones for us are where Goldfinch family companies collaborate. The obvious one is between film producers and games developers, or TV producers and games developers. That to me has been a lovely byproduct to have our people working with other people. The other thing that I really like is having a project that is… and I hate this phrase, 360 degrees. One of the ones we have just received Advance Assurance on is a really cool documentary called, ‘Eating Our Way to Extinction’, which has the backing of Sir Richard Branson and Kate Winslet. It’s looking at our world and how we’re literally eating our way to extinction. It’s a very commercial project because of the people associated with it and the subject matter, and sometimes the project will be commercially successful purely on names. It’s not a precise science in that respect. It’s actually trying to make a difference by teaching us things and they’re looking to do cookbooks, and discuss the current trend for veganism.
What do you think is the outlook for media & entertainment? Do you see any clouds on the horizon and are there any emerging opportunities?
I think the outlook for media and entertainment in the UK is fabulous, but what worries me is the hangovers from the past. They are the elephant in the room, a lot of the time. My concerns are that people don’t consider their budget levels and their distribution strategy when they raise money to make something as big as a film. It’s a massive asset that you’re creating and it’s a lot of money that’s being spent, so the distribution strategy has to be acknowledged at the outset. Unfortunately, in media and entertainment, there are a lot of people who are so passionate about what they’ve created that they sometimes don’t see where they can make money from it. This is a truism and we should never forget it’s called “the entertainment industry”. It’s the show and the business that we have to acknowledge; the marriage of the two. However, the UK is still recognised as being the best for actors, producers, directors and the type of films we make. You’ve only got to look at the number of independent films being made in this country on an annual basis; it’s thriving and what we need to do, is to expand all of those opportunities and make sure they work, so they can do more of the same. With the games developers, it’s getting their games made more quickly, get them out there so they can monetise that and make more of the same. It’s just trying to keep each of the wheels of the factories going. That’s what Goldfinch would like to do.