Film Finance Brief 001

What If We've Been Looking at Independent Films the Wrong Way?

Is independent film a viable alternative asset class?

I think that question deserves serious discussion.

So let's discuss it.

And let's start with the numbers.

Consider a micro-cap business.

An investor might be evaluating an opportunity involving $2 million, $5 million, $10 million, $20 million, or $30 million in capital.

Now consider an independent feature film.

We're working with many of the same numbers.

A $2 million film.

A $5 million film.

A $10 million film.

A $20 million film.

A $30 million film.

Those numbers aren't theoretical. That's the financial scale at which independent feature films can operate.

So if an investor is already comfortable evaluating businesses at that scale, why does the conversation change so dramatically when the business they're evaluating produces a movie?

I've always looked at an independent feature film as an individualized micro-cap business that happens to produce creative work.

Because structurally, that's exactly what they are.

It forms an operating company.

It builds a budget.

It assembles a capital stack.

It brings together management and specialized professionals.

It deploys capital.

It manages cash flow.

It executes against a plan.

It brings a product to market.

The product just happens to be a film.

And this is where independent film becomes particularly interesting.

It occupies a unique space between traditional finance and the studio system.

Independent filmmakers are not the studio system. We're independent businesses creating individual pieces of intellectual property. We can partner with studios, streamers, distributors, sales agents, and other industry players, but we don't necessarily need to begin there.

That independence creates optionality.

And it creates something else I think the investment community has largely overlooked:

An existing category of individualized businesses, operating at recognizable capital levels, that can be evaluated one opportunity at a time.

The structure is already here.

The businesses are already here.

The capital stacks are already here.

The intellectual property is already being created.

Perhaps what's missing isn't the asset class.

Perhaps what's missing is the lens through which we're evaluating it.

And Then There's the Fun Part

This is where film exists in an ecosystem unlike almost anything else in the investment world.

The financial analysis still matters.

Capital structure matters.

Risk matters.

Recoupment matters.

The path to market matters.

Potential return matters.

None of that disappears simply because the product happens to be creative.

But once those fundamentals have been evaluated, an investment in an independent film can offer something else alongside the economics:

An experience.

Maybe it's attending a premiere and walking the red carpet.

Maybe it's visiting the set and watching the project you've backed being made.

Maybe it's an Executive Producer credit.

Maybe it's becoming involved with a story about a subject that genuinely matters to you.

Maybe, if the right deal can be negotiated, your dog ends up with a cameo in the movie.

Try negotiating that into your next micro-cap acquisition.

That's part of what makes this space so fascinating to me.

An investor can approach an independent film with the same seriousness and financial rigor they would bring to another private-market opportunity while participating in something culturally tangible.

At the end of the process, there is something you can actually watch.

Something you can share.

Something that might make someone laugh, cry, think differently, or see the world through another person's eyes.

That's unusual.

And I don't think we need to diminish that part of the investment experience in order to take the economics seriously.

We can do both.

Independent film can be evaluated as a business.

It can be analyzed as an investment.

And it can still be incredibly fun.

That's a pretty unique proposition.

One Thing to Remember

An independent feature film can be understood as an individualized micro-cap business. The difference is that the product it brings to market is also intellectual property, a story, and potentially a piece of culture.

Maybe the opportunity has been sitting in front of us all along.

We just haven't been looking at it through the right lens.

Coming Next

Two weeks from now, we'll tackle another assumption about this industry:

Film Finance Brief 002 | Why the Biggest Challenge in Film Finance Isn't a Lack of Money

If the capital exists, why do so many promising independent films still struggle to get financed?

That's where we'll pick up next time.