The British Film Institute has reached out to the private sector to launch a new independent equity finance initiative aimed at funding high-end productions.
Calculus Capital and screen finance outfit Stargrove Pictures have been selected to manage the fund, which aims to exploit the global surge in demand for premium content fuelled by streamers such as Amazon a Netflix.
The new fund hopes to raise £20m ($25.3m) in its first year from a range of UK investors.
The partners are looking to raise that amount to sink into 6-10 film and TV production companies, and will take advantage of the UK government’s reworked Enterprise Investment Scheme (EIS), which offers tax breaks of up to 30% to encourage investment in high-risk companies.
The funds are for emerging producers with a track record, but which are seeking to grow their slates. Producers give up a minority equity stake in their businesses in return for a capital investment of between £1m-£3m. The government caps investment at £5m a year.
Previously, the EIS mechanism had been used in the UK to back individual projects, such as The Suffragette and Selma, but that is no longer allowed under revised guidelines drawn up by UK chancellor Phil Hammond.
Investments using the new scheme must now be in growth companies. In film and TV, investment can be used for acquiring IP, paying writers and development execs, and for overheads.
“This is a new breed of EIS fund in this sector. It will focus not on project finance, but on building and growing companies involved in a broad variety of popular productions, across a range of platforms,” explains John Glencross, chief executive and co-founder of Calculus Capital.
The launch of the fund comes a few months after the BFI warned that the UK’s creative industries risked missing out on supplying Netflix and Amazon with large orders, because of the way the industry is structured in the UK.
The BFI’s outgoing chief executive Amanda Neville — who will leave the organisation next year — said she was excited about new opportunities that the fund would present for investors wanting to get involved in the UK’s £8bn creative industries.
It is the first time that Calculus Capital has been involved in the content industry, although Stargrove Pictures has previously backed UK TV series The Fall.
Stargrove chief executive Stephen Fuss said: “We will use our expertise to identify exciting new talent, and our experience and contacts to help investee companies to grow, innovate and succeed. The Fund will unleash investment in the UK’s creative industries and enable independent UK screen content companies to retain a greater financial interest in the intellectual property they create so they can capitalise on their projects and talent and grow their businesses further.”
The fund is targeting £2 ($2.54) return for every £1 ($1.27) invested, over a target 4-6 year investment period, with minimum investment set at £10,000. All investments will have received advance assurance from HMRC before Calculus engages capital.