Slated: Changing the Way We Think About Film Financing
Film financing is moving online and the new platform Slated might just be the main impetus for ushering in a new generation of film finance, professional social networking, and smart opportunities for investors and filmmakers. Slated launched this last at Sundance and has since 'aggregated film investors representing hundreds of millions of dollars' and has forged partnerships with some of the world's leading financing, sales, and film companies. Aided by precision design, comprehensive user verification, ease of use, and an emphasis on clarity, Slated provides a world-class website experience that really has something to say about the future of our industry. To discuss the platform and its function in the industry is Duncan Cork, CEO and co-founder of Slated and the man responsible for its initial vision. Read on to get the scoop.
"Financing a film is probably the most exciting and tactile investment you can make. So we're providing an investor access to that excitement or the feeling of investing in a film rather than stock, bonds and real estate. It's certainly a more giving experience."
NFS: Right off the bat, Slated gives the impression that this is really somewhere to be. Why do you think this is and how did you go about achieving that? What were the key factors for you in building such a high quality network?
Duncan: It has a lot to do with the relationships we have as a team. I've been working on this for 5 years now from the initial business plan. I took a very soft approach to asking questions and doing a lot of research. It came down to a significant amount of research and development that put us in a better position to launch a product that really understood the nuances of the film industry. So it's about learning those nuances and then transferring them into a technology product.
I also attribute a huge amount of our success to my Chief Operating Officer Jennifer Anderson and my head of Film Industry Relations Susan Wrubel, who have very deep relationships within the business, as well as my Editorial Director Colin Brown.
NFS: This whole industry is about relationships, so that makes sense.
Duncan: It's been a brick-by-brick process. We haven't rushed into this, we certainly don't want to have a website that would fall short of enticing a relatively technophobic industry onto a platform. The whole product experience is designed to alleviate those concerns. So that every step of the way, we're answering questions that they would have in their minds, as they're on-boarding a film, uploading a film, signing up, or interacting with members. The options, controls, restrictions, and permissions are very much designed around the existing practices within the offline film finance and dealmaking world. Slated is designed as something to augment your offline business efforts rather than replace them entirely.
From a more general zeitgeist perspective, it's very much about social proof. So the bricks we laid right in the beginning were really good bricks and we were able to build a solid foundation so that the company partners we have know us and respect us and we've got good relationships. Then, because Sundance is a partner, it's easier to get Tribeca as a partner, etc. People feel comfortable when they sign up to Slated because they see people that they already do business with every day already using it.
NFS: The site is beautiful and really intuitive and I'm very impressed. It was clearly built by people who are passionate about design. How does design play a role in your overall mission?
Duncan: Well I am from an Art Direction and Design background myself. It's mostly my doing that I've forced a mandate whereby the brand itself needs to reflect the values we want to impart on the company, which are: simplicity, transparency, and clarity. Other industry websites are inundated with ads or are complicated. I wanted to create an experience where somebody would come and feel like "Okay, this is a lot easier for me to understand, it's going to be a clean space and it's not going to be filled with advertising ever. It's going to be an internally controlled community of industry professionals that can interact with each other."
NFS: What is your background and when did you start seeing that Slated would play a role in today's shifting atmosphere? How did it all come together? Who else is involved?
Duncan: I was asked to be the Art Director on a British film, and they were looking for another million pounds on top of a three million pound budget. I said to the executive producer who'd been doing this for 40 years or so: "Why don't you go wider to a larger group of investors? Get them in for $100,000 each and you could find 10 guys." And he said "that opportunity doesn't really exist." So I literally had that lightbulb moment, I closed my consultancy and I said, "That is what I want to spend my time doing, because it's truly a value add to the world, and to the world of the entertainment industry as well."
So that was the genesis of me writing the first business plan and then shopping it around to find co-founders that were willing to come with us on the mission. Stephan Paternot, one of my other co-founders and chairman of the company, was looking for this kind of opportunity based on his experience at The Globe which was a very large social network in the nineties that had a billion dollar IPO. He then went into the film industry and was looking for a team that had an interesting angle on how to create an online marketplace for film finance and dealmaking. So when he saw my business plan, that was when he jumped on board. Since then, we raised our first round of financing and it's been history ever since.
My other two co-founders are Actor William Mapother, and ex-securities attorney Gavan Gravesen. Barry Silbert, CEO and founder of the alternative asset platform SecondMarket, was also one of first investors.
NFS: What are the parameters for joining? Can you talk about the vouch system?
Duncan: We designed it in order to ensure that the people who are signing up are the people they say they are. And using the very members themselves in order to police and control the people who come on was probably the best way that we could ensure trust and integrity within the community. We don't know everybody within the film business. We know a lot of people who are very influential and we are on-boarding them bit by bit, and individual by individual, by sending out invitations that come from the Slated team, but others have to rely on members to approve them. This is a result of having seen the number of people who are on the waitlist to get in which is over 6,000 people.
We're confident that the barrier of entry is actually working. There are some people that are signing up just to be curious, and there is information on there that is privileged information, so we don't want to open it to everybody because that's a concern a lot of filmmakers have within the business. So again, it does reflect the offline world, in terms of a controlled amount of information sent to the relative parties and the access to that information is privileged or restricted to those who can verify that they are who they say they are.
NFS: I saw the "I'm just curious" button on the site. What happens if you click that, does it just say 'Go away?'
Duncan: [Laughs] No, no. We review everyone that comes onto the site in terms of their background. We need to understand really why people are signing up and where they are coming from. So we created that particular barrier to assess exactly the percentage of people coming to our site. About 50% of the people who sign up want to raise money for their film. But about 10-20% of people are signing up to invest in films.
NFS: That's a pretty good percentage.
Duncan: Yeah it's a pretty good percentage. We obviously want more investors to be signing up. Coaxing investors into the film industry is a big part of our plan and we need to be tracking everybody that comes to the site. The other 30% are signing up because they are part of the industry and want to be represented within the professional marketplace.
NFS: For investors, what verification do they go through?
Duncan: Investors fill out a questionnaire where they declare they are "accredited" based on existing standards of accreditation. Very basically put: You need to have made $200k/year the last 2 years, your household income needs to be over $300,000, or your net worth needs to be over $1,000,000 excluding your primary residence. Those are three of the main litmus tests which basically determine an individual's ability to make investment decisions. Those are the rules determined by the SEC and we make sure those investors meet those requirements.
They tell us a little bit about their investing history in the film industry, and we build a profile for a film financier so that filmmakers can do a little background research on anybody who is potentially interested in working together.
NFS: Why invest in content? Why invest in film? What is your philosophy behind this endeavor to get films made?
Duncan: I know why people do invest in film, and it mostly comes down to 3 motivations:
1) They are a big supporter or patron of the arts. They may like the subject matter, the director, or someone's career.
2) They are the financiers who want to truly participate in the creation and the experience of financing a film. It's probably the most exciting and tactile investment you can make. So we're providing an investor access to that excitement or the feeling of investing in a film rather than stock, bonds and real estate. It's certainly a more giving experience to finance and participate in a film project.
3) They would like to purely make a profit.
We want to continue to support these motivations by offering them a large range of content. For me personally, I am from the creative industry, so I like to see the films that we've got on our site get made. I think it's important to continue a human dialogue of what is going on. Film is a fantastic medium for combining all creative endeavors and finding inspiring people that collaborate on films.
NFS: Is there a minimum budget for projects?
Duncan: We look at projects ranging from $500,000 to $15,000,000 and over. For documentaries, around $250,000-$1,000,000. That's mainly the target zone, it's relatively broad but it pretty much creates an opportunity for the majority of sub-studio films to fit into that niche. There are fewer and fewer films being made at the 20, 30, and 40 million dollar level that are independently financed. So the majority of films that we see are coming in sub-15 million.
NFS: How does Slated support itself?
Duncan: We're a pre-revenue startup tech business, so we're building the technology that can support this, let the marketplace play, then once we do find that piece of value that we are offering, we can then start charging for it. There are also financial regulations that require us to be a broker-dealer before we are allowed to take commissions off investments. That's in the works, but until then we're not allowed to take any kind of commission based revenue for the interactions that happen on our site.
NFS: Do you have any plans to get into crowd-equity once the Jobs Act regulations are approved?
Duncan: We are very cautious about the concept of crowd-equity. It comes down to a question of sophistication. A sophisticated investor that loses their money thinks "what did I miss?" An unsophisticated investor thinks "who can I blame?" Unsophisticated investors investing in films made by inexperienced filmmakers is a recipe for disaster. And we'll see many websites appear offering film investing into these films. This worries me. Film investing is very risky. It's the reason we've spent so long building Slated to stand for quality. Our goal is to only introduce viable film projects, by professional producers and directors, to investors that understand the risks.
Where I do see crowd-equity working is where filmmakers are allowed to tap their existing social networks and create financiers out of their friends and family. Friends and family have an inherent low expectation of a return, but the opportunity will be there...legally speaking. That's cool. That feels right. So as an intermediary, we're simply going to tread carefully and not be blinded by short-term trends in lieu of long-term business health.
NFS: What is one of your favorite stories of people finding each other on Slated?
Duncan: We've had a variety of exciting introductions. When we approved an Indian film called Sunrise, there was an investor in Mumbai who emailed somebody through Slated. They met in Mumbai that week, and they raised about $25,000 for their film just from a very quick introduction. They are currently shooting.
We also had one introduction occur that resulted in a $250,000 check being written. We knew we were onto something when that happened.
NFS: What is the major distinction between financing on Slated and using Kickstarter?
Duncan: We're an equity and debt based introductory service. They are a donation straight-to-fan crowdfunding service. Raising money from your friends, family, and fans is fantastic, and we've had many films who have done successful crowdfunding campaigns and have then come to us to raise the rest of the budget -- the other 90% of the budget.
A Kickstarter campagin would have an average donation let's say of $50. Our minimum-sized check that we've seen being written through Slated is $25,000. So there's a huge difference between the market that we're creating and their business. And I'm very proud of that.
NFS: Can you talk about your privacy protection? This is a huge one.
Duncan: We follow what is common practice offline. If you have actors that are confidential that are attached to your project, where no one would be able to see who is attached in the cast if that information is relatively sensitive. Confidentiality is a big deal. Our investor privacy is very important. We need to ensure that filmmakers cannot just email all the investors on the platform. We want to create an environment where investors feel much safer about admitting that they are film investors. Having hundreds of filmmakers inundate investors with pitches would be a terrible idea. We protect investors' interests strictly, as well as other high-profile individuals and celebrity members.
All of that stuff goes towards creating a safe and trusted environment in which people can interact so they can build a feeling of trust and security with the product.
Other privacy concerns are around the budgets for the films. Once a film has raised its money, then the budget is no longer visible, which is a very important point for filmmakers. And if you're not an approved, accredited investor, you cannot see the budget or any financial information. That's restricted to investors only.
NFS: Any tips for filmmakers when they post their projects?
Duncan: As in the real world, filmmakers must demonstrate momentum. Films take a long time to put together. It is our goal to shorten the time it takes using technology to connect the dots more efficiently. The more you have, and the more you can show, the more confidence others will have to jump onboard. Another important factor, is to keep your network updated. Contribute to the community by adding valuable content, insights, and updates. Keep adding to your profile page as they come onboard. Their network amplifies your networking ability.
And don't be afraid to invite your key participants to join too. Get your cast networking. If you have a celebrity willing to risk their reputation on the project, that is a big deal. Our members recognize that. An investor or sales agent may not know you...but they will know your bankable director or named actor. If they are active on Slated, people will want to know what they're up to and could therefore support your project with a check or valuable introduction. Investors are powerful allies too. They are taking the same risk that you are asking Slated investors to take. So get them to lend support by signing up.
Finally, manage your expectations. Slated helps increase exposure and augment your offline efforts, but don't expect to be fully financed the instant your film is published. Keep at it, keep active, and demonstrate momentum.
Duncan: Because we're pre-revenue, once we start charging for our services, we'll go more into a product-centered beta rather than an overall company beta. We're pretty close to launching our first 'paid-for' service, and that's going to happen over the next couple of months.
NFS: Can you talk about that?
Duncan: Not really, we're going to keep this one under wraps until it's all done. But there are a lot of options when you create a marketplace like this. There are different routes that we can go down and we're exploring a bunch of them, and we're quite excited about the first one that we're bringing out, which will be announced in probably about 6 weeks time.
NFS: Can you talk about your blog Filmonomics?
Duncan: We do a piece once every 2 weeks. It's long-form content about the economics of film and film finance. That's mostly as an educational effort on behalf of the investors so they can understand how the industry works. We're sort of riding the line of being generally helpful for a lot of things.
NFS: It makes me want to get anyone I know who is an investor to go to the site. It seems like it makes it easier to invest. So I think giving confidence to investors means more films will get made in cool ways, so it's a win-win.
Duncan: Our editorial director Colin Brown is a rock star. He used to be the editor and chief of Screen International for over 20 years. He is very well versed in film finance and is capable of writing extremely complex concepts and distilling them down into relatively simple logical thought processes, and writing them in a way that is extremely accessible and useful to everybody.
NFS: Where do you see something like Slated in 5 years? How do you envision the future of film finance?
Duncan: I believe the entire concept of entertainment is evolving rapidly, we are seeing opportunities for investors to get involved in all forms of content financing where you have an opportunity to make a return on your investments through the exciting new distribution channels that are becoming available. So as we are learning more about various forms of content financing, that's where the future lies. It becomes more about long form content, short form content, micro short form content, TV style episodic content financing... And if there is a demonstrated opportunity for an investor to make a return based on these distribution models, we're excited about the 5 year plan and moving Slated into the filmed content financing space.
I would be naive to think that long-form content is the only business line that we're going to be in. The larger the investment community we grow, the more viable the product we want to offer them. So it's about staying ahead of the curve, making sure that we fully understand and can educate investors about investing in different kinds of content, mostly due to the understanding how the content is going to be monetized. At the moment, we're very much a 'watch this space' situation.
We've got a ways to go, but I think the trends are heading in that direction.
NFS: Yeah, it's a crazy time for anyone in this sphere.
Duncan: I don't think the industry was ready to adopt technology before, but it certainly has to now. There's so much innovation going on in the space, and the generation of content creators who are out there now are certainly adopting these new tools into their arsenal to get the films done. It's very much a philosophical standpoint, but I want to see more 'must-see' content created. And that's important. It's also an important distinction from what's happening on Slated versus what could be happening on any other kind of website. We are looking for viable content to be created that has a demonstrated market, and we want the talent on the platform to be creating must see content that elicits a big response and gets very important messages out there.
What do you guys think? Will you join the waitlist of people to get into Slated? Do you think that online social networks like Slated have a place in the future of our industry? Join the discussion in the comments section below.