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Slava Rubin (00:00)

Welcome everyone to the Reel Investment, capitalizing on the future of film. Thanks to everybody for joining. We've got some great panelists here. We've got a full room of investors and we're excited. Film is very exciting. It's evolving, it's growing. Today, we're gonna deep dive on a number of topics for investors getting oriented to this awesome asset class. My name's Eric Cantor. I'm your moderator. I'm the CEO here at Vincent.

We help individual investors get smarter about private markets. And we're gonna try to do that today. You can find us and a recording of this event at www.withvincent.com as in invest with Vincent. Let me give you a quick overview of what we're gonna do for the next 45. There's gonna be three sections of this discussion.

First, we'll introduce our awesome set of film finance leaders who are going to be teaching us and reviewing some interesting learnings and trends with us today. I'm going to review a bit of high-level data on the industry just to orient that conversation. Second, they're going to talk us through some of the opportunities, some of the risks, some things to watch out for if you're getting into film investing. And third and last, we're to take questions from the audience here. So please, whenever you're ready, now or later.

Drop a question in the Q &A and we'll prioritize and get to the ones we can get to. If we cannot get to them, as happened last time, we will follow up with an email with the best answers we can as soon as we can. Before we dig in, just a quick reminder that this discussion is not going to give you any financial advice. We are all operating on our own allocations, our own investment decisions, our own advisors. Nothing you're going to hear constitutes financial advice. You should make your own decision.

Now that we've got that under our belt, let's introduce you to our three panelists today. For each of you, why don't you give us a couple of minutes just telling us about yourself, your firm and your investment offerings. Let's start with Mark from Republic. Thanks so much, Eric, and to the fellow panelists and to the great Vincent community joining here. I'm Mark. My background is in traditional film financing, mostly equity financing, working with

high net worth investors around the world into five to $20 million films, which is considered sort of the independent mid-range category. And on the creative production side as well, developing and selling TV shows, documentaries to the major studios and streamers. And really what happened during COVID is I started to dive deep into the world of decentralized finance, blockchain, crypto, and try to figure out

how we can bridge the two worlds of film and obviously this movement that we see is in full throttle and essentially to create additional paths for film investing other than just the traditional angels and institutions or studio deals. And of course, we saw what happened with sort of Web3 in that boom with art assets, NFTs, art, music.

Film is a very particular industry and you get paid in dividends, which are essentially securities. And so it was essential to find a partner that had all the licenses, regulatory framework that could issue securities to accredited and unaccredited individuals, which is why I found Republic. And Republic has been around essentially since the 2014 Obama Jobs Act, which

allowed for certain securities exemptions to issue securities to unaccredited US investors, which is really an incredible moat that Republic has and is probably the most retail facing of these platforms with a community of 3 million users and a track record of having deployed 2.6 billion across tech startup, real estate, gaming. And obviously with this kind of traction, I said we got to apply this to the film and entertainment world.

So allowing the power of now allowing not just the high net worth or the angels and the studios to basically decide what gets invested in Greenlit in, also allowing filmmakers and projects and producers, directors, production companies, studios to access investment from their fans and audiences, which not only allows a creator to hold on to their financing journey,

with more leverage, but also to independently control their IP, to have more leverage in the deal making. And even when it comes to distribution, I would say drive the bottom line of that film because there's an entire community sitting behind the film telling all their friends and family to go see it. So we have been solidly building new revenue share securities instruments. A lot of the companies on Republic are.

equity instruments into startups, know, with evaluation for an exit, whereas in film you share in the revenue in perpetuity of the net profits and of certain revenue corridors as a film goes to market. And we just launched a development slate for Pressman Film. Pressman Film produced American Psycho, Wall Street, Bad Lieutenant, The Crow, Thank You for Smoking, Conan the Barbarian. Just all these epic independent films.

And the narrative there is let's make more movies like that again and not wait for just the studio development deals to green light those. And so they put up their campaign on republic.com slash pressman and they're currently close to two million dollars, which is development financing is significantly lower because you're just paying for your financing scripts and an IP and things like that. So there's clear traction in this space. And we have a couple of other upcoming projects in the development space, the production space and the distribution space, which

I'm sure we'll touch on later, but it's an exciting time. And that's sort of what we're bringing to market in the, what we call tokenized film financing space. Awesome. John from FilmHedge, you wanna introduce yourself? Hi, John here from FilmHedge. My background has primarily been in tech, building software companies around the world, having exited from two over the past 10 years.

And what's interesting is I took a lot of what I learned in the tech world and applied it to solving the problem of film finance. after an exit a couple of years ago, I started to put money into film and TV productions just as an individual investor. really the reason why was because film has always been a place that sort of fascinated me.

And, but it intimidated me in that everybody, I mean, I went to film school. They teach you everything in film school, except for how to finance a film. And so when I got out of school, I, and over the years, I was, it always nagged in the back of my mind. It's like, I've always wanted to make a movie, but I don't know where the money comes from. I don't know how the money behind the scenes works. How do I figure it out?

I happen to have a big windfall of cash from an exit. And so I started to finance movies and TV shows as an individual. And in doing so, I learned the sort of inefficiencies in the way of financing, specifically debt financing is applied to film and TV. And so after I did my first four movies and I had great returns, it was consistent, it was reliable.

And one thing you learn in the tech space is if there's inefficiencies in the market and there's a reliable, repeatable solution that leads to scale, that leads to being able to build products that address the problem at scale, which is what venture capitalists look for. And so FilmHedge is a venture-backed technology company that uses data, analytics, and technology to improve the way films are underwritten, analyzed, and that leads to better

financial decisions and outcomes for both large investors like the backers that we have who backed us with over $300 million as well as smaller individual investors who maybe only have a few thousand or tens of thousands of dollars and they want to participate in the space.

Awesome. Last but certainly not least, Jay, tell us about Slated.

Thanks very much, Eric. Slated is a film platform specifically for independent films. We have 80,000 members in the community. We've got 20,000 film producers. We have 2,300 investor companies. We are working on our 70th film as a team. We're done with 65 and...

We have an analytics platform that specifically rewards the creative and financial building that takes place before a shoot. So our script analysis is extremely successful in predicting whether a movie will be good. Our financial analysis dives into whether it is the right type of film with the right type of distribution, the right type of

government incentives in place. And we've used those tools effectively at this point. our last 16, 16 of our last 17 films are fresh by Rotten Tomatoes. During the COVID work stoppage, we built out some of our sales and distribution tools internally. And then during the strikes, actually

realized that it made more sense for us to just become a worldwide distributor. So we've now released six films and our seventh film, The Big Dog, is being released on transactional platforms tomorrow.

Congrats on that. Great. So you can see we have some really experienced investors, financiers, entrepreneurs here that are going to talk to us. Before we do that, let's just review a little bit of data about the industry just to situate ourselves. So first off, film is a big market. It's growing. It's also quite visible. I mean, it's not some arcane B2B software you've never heard of, right? It's films that you see. You see them on TV. You go to the theater.

quite similar to the sports investing discussion we had a couple of months ago, where we talked about investing in some of the soccer teams, you films are also things that you would like to get access to because you actually see them in your day to day. And that the story John told about, you know, being an entrepreneur, having some investable capital, going in that journey is definitely one we want to all emulate, or at least many of us. That's why we're here. I know I am. In terms of an asset class,

film really boasts some of the highest risk adjusted returns, right? It's similar to venture. Mark mentioned venture. Most of us here have experienced a venture one way or other. It's really a hits driven business. And you can see, you from this graph that as asset classes compare, film is going to be, you know, very high risk and very high returns. In fact, here they've got it second only to oil and gas, which of course are real hit or miss type businesses. Now, if you're looking at film,

you want to think about independent projects. Again, I'm going to use my venture hat since I'm still learning about film, but let's call this the seed round of getting into film or investing in micro budget opportunities where the amount of capital isn't overwhelming. It's not a $300 million studio picture. Just this year, we have three examples here of films that, know, one of them, 4x, one of them 30, if I do my math, 38x and so on. so,

Indie film is one of the best places to be positioned in this ecosystem. We can talk about other places you might be able to find your capital. Like venture, film also has a life cycle, right? So different investors, different managers are gonna be positioned at different stages of the production process, different, know, vintages and maturities of each product. We're gonna talk about that a lot today too. Like where you come in, what kind of capital you're using, is it debt, is it equity?

Are you taking that initial concept risk or are you taking something that's already been made and trying to bring it to festivals? Last, there are a few ways that as an individual, we can get access to films, right? You can go directly. Maybe you have a cousin who's making a film and you want to get involved. There's some crowd investing sites. think TrueMark's going to cover that. And there are other ways to get your capital in. Debt investing is also quite interesting. We're going to talk about that today. But there's a number of ways to get involved. And we'd like to get an understanding of

what those look like and how as an individual we can access that. So with that, why don't we start our discussion? I'm gonna ask a series of questions, give each panelist a couple of minutes to answer them. Let's start with Mark on the first one and let's talk about timing in the market. Here we are. Why is now a good time to get involved in film financing? And what's exciting about the asset class right now today? Thanks, Eric.

Well, it's inherently always an exciting asset class, not as you mentioned, not just for the venture sized returns that you can receive, but also for the perks that you have attending festivals and being part of bringing a creative project to life along the journey. there's different parts you can play along that journey as you specified from more seed capital style investing across a slate of projects in the development stage.

to debt financing at the end of the journey really into the distribution expenses of a film or even against government tax credits and things like that. Now, as you saw, it's a really interesting time right now sort of with a bit of the Marvel fatigue and the streamer fatigue that we are hearing all around us, yet the box office per film is increasing actually projected to increase 7 % already even next year.

And as you saw from those sort of lower budget to mid range films, horror is a celebrity agnostic with a dedicated fan base with low budget, low marketing needs and really high traction basically in the box office. And between sort of the resurgence of going to the theaters, of these dedicated experiences to these genre films, and also just the innovation of technology that I'm sure we'll address later.

that we're seeing happening in the marketplace, you're gonna get more efficiencies as well in the film production journey. And that really is an exciting time to sort of play and invest in projects that are probably gonna follow the lead of films like, Terrifier 3 franchise, smaller franchise driven IP, and Nora, is still gonna about to have its awards run. And so it's probably gonna increase that sort of that gross

revenue number and also just what Republic is doing as well, of just innovating this new pathway to invest and to diversify your portfolio into these uncorrelated asset classes. I think that's also gonna make a lot of buzz, a lot of headway, and it's also going to engage audiences in a new form of excitement and fan engagement in the film.

category that is also going to just spark innovation and make it really exciting time to innovate Hollywood. mean, if you look at the news cycle for Hollywood, it's been a tough year. were the strikes the year before that, but it feels like out of the depths kind of come light. And it's a really exciting time to end the year and start 2025. Right. Jay, what's your take on today's market? Yeah, I think

People love the movies. I love the movies. I got into the business because I was a fan of watching movies, both in cinemas and at home. And I think that it's always a good time to participate in the space. But where we differentiate ourselves is that we are really strongly against bad movies. We want our films to be particularly good.

What we've discovered over time is that if you're making movies that investors are proud of from a creative standpoint, it actually makes the process of recruitment, which is a three-year process typically, it makes that process a lot more palatable for the investors. If we're always working on movies that ultimately are enjoyable and, you know,

whether they're uplifting or scary or, they touch some part of the audience, you know, that that works for us, that that really is our core strength. I think that the perks in the space are, you know, look, it's a glamorous business. Our investors are welcome to go to the set. And also, you know, there are myriad opportunities for them to then later on.

know, participate in like a red carpet environment at film festivals. We've been in, we've had films premiere at every major festival in the world except for Telluride and Venice. So we have two left to check off, but we had both the Friday night movie and the Saturday night film at Cannes this year. And it's a, it's a great environment. And I think it's a, it's it's a perpetually exciting and creative and enjoyable space that can also be challenging.

So, you know, we've kind of feel like it's important to know what you want from the process.

Awesome, definite bucket list material right there. John, what's your take on where we're at in today's market? I think the market's really attractive right now because it's so volatile. What's interesting is you hear all the headlines about how Hollywood is in a slump and production is very much in a slump right now. It's slowed down a lot. But on our side of the business as financiers, particularly the type of financing we provide,

the market is really busy. And that's because there are still films being made somewhere in the world, not necessarily in Hollywood, not necessarily in the United States. We fund globally, we always have. And I would say right now the productions we're working on are probably 20 % international and 80 % domestic in only 20 % LA.

So the slowdown that you hear about that's hitting everybody in LA isn't necessarily happening everywhere else. And I think that's part of the story that we forget is that what used to be a concentrated market where everything happened is now dispersed throughout the country and world. And so there's still a lot of money to be made if you're an investor looking to get into this asset class, particularly on the debt side where we are following effectively

purchase orders that have already been placed for the material that's being produced. And so we don't have to worry about if there's a market for it. We're sort of targeting a captured market already and then just cash flowing it until it's released to the public and we make money either way. So for film hedge and debt financiers like us, I would say the market's actually pretty healthy right now.

Does that imply as an investor with you, I'm sort of less upside, less downside relative to writing my cousin a check for his new screenplay? Yeah, so one of the things about going direct when you're financing a movie directly is you're taking on all the risks of being a direct investor. And, you know, they always say, know your risk if you're an investor, but in the film space, what a lot of people forget is that there's so much more you need to know than whether or not

you you you cut the check, you signed the documents with somebody and they said they're going to make a movie. Have you solved for if the fact, you know, if they don't happen to make the movie for whatever reason, it may not be ill intent. They may just not complete the movie. What happens then? How are you protected if they do make the movie? What is the camera and the waterfall look like to ensure you get your money back? You always hear about, you know, quote unquote Hollywood accounting where

people put money into a movie that seems to be profitable, but they never get any money back. Well, it's probably because they're at the bottom of the camera. And we can get into stuff like that later. But there's ways that you can protect yourself. Film hedge exists because I recognize that the big problem to solve, I solving my own problem as an investor, is how do we make it safer for folks with capital to put it to work in the film and TV space?

And you, Eric, you captured one of the things we say every day. It's like we limit your downside risk, but that inherently means that your upside risk is also lower. And I would much rather be in that safe zone of like, you're not gonna lose a lot. You're gonna make a certain amount every time, but it's capped. Then to swing for the fences every single time and hope to have like a billion dollar movie that's gonna pay everybody back 20X.

Awesome. Appreciate that deep dive. So moving on, let's spin the camera around, so to speak, and think about from the investor perspective. We talked about the market, what's happening in the overall market. Let's talk now about the investors that are on your platform and your network yourselves. What are the opportunities and trends that investors are most excited about? And how are they reacting to the current kind of market conditions? Jay, you want to kick this one off? Sure.

I would say that our investor profile is very diverse because we have 2300 companies. So that's a fairly large like amphitheater level of companies. And so I think what people are really interested in and focused on right now is the opportunities in two different categories. like what was like John was saying, basically you have an incentive rich environment.

specifically in certain territories, it's very competitive because if a government provides that incentive to production, then more productions take place in that territory. So right now the UK went to solve a very specific problem, which was that London had a kind of knock on effect slump in production that followed from the strikes.

The production rate in London was very, very low. It kind of multi-year low. And so the government took action and they torqued up the incentive. And now everyone wants to shoot in the UK because the return for just going there is baked in. And so that's where as a debt investor, you're able to finance that in advance because you know that the government effectively, you have very little credit risk there. The government is going to be good for that incentive.

So we have those folks that are interested in building out a debt profile. It's a lot bigger number on kind of on a per show average. You know, if it's 40 % of the budget and the average budget is somewhere around $3 million, then you're looking at, know, that's, that's effectively like $1.2 million that you would need to lend in order to meet that incentive.

So it's harder to become a debt investor in the film space. Equity investors are really focused on, you know, kind of lower budget films. We know that horror films historically are the best genre to invest in, specifically for equity investors. When we use our financial analysis tools, literally if you input that the genre is horror, it causes all the levels to rise. And so I think that, you know,

What's really interesting in terms of how trends are moving right now is that you had an inflationary spike, so production costs are up. You also had a bit of a slump for transactional and then the rise of AVOD in terms of platforms. So the monetization cycle has been kind of going like this. What you have is films are harder to produce, but

they're not returning as much as often. But you have all of this change that just took place in a really short amount of time, and it's finally kind of leveled out. And so finally we have like a stable home video environment, which is that all the AVOD world is rising. There's, think, I think we're done in terms of like new studio platforms in the SVOD space and transactional is coming back. It's, it's, you know, a little lumpy.

And then the box office is kind of that last tent pole where basically box office really took a hit during the COVID era. And now, you know, we're starting to get closer and closer to those 2019 levels. You know, there was record turnout. There was record turnout in the Thanksgiving period for a couple of different movies that just came out.

You know, where we see the investors move is really wherever those trends sort of indicate, it's a little bit safer, it's a little friendlier. And then, you know, holistically, again, our whole goal is let's make good movies so that at least we can enjoy the ride.

We just double click on one point you made there just on a quick, quick hit. You said horror was the best performing genre. And I don't know that's in terms of dollars in to dollars out or some other metric. Can you just tell us the, and this ties into a couple of questions that are coming in from viewers. Can you tell us the top three categories? And then also mention if it didn't make the top three where documentary fits in that, in that ranking that you just gave? So, I mean, like the data breaks out.

in different ways because you have to look at like North America versus international. But that's the funny thing about the horror business is that that is the number one genre. Drama is actually considered to be the toughest genre right now. Drama, just a standard sort of, you know, people going about their business drama. That that was such a bad category.

that Screen International actually published after one of the markets, I think it was Berlin, that people were going around saying no drama, which is frankly insane, but it was just that hard out there. There were too many of them. It's the most produced genre and they weren't selling well internationally. Documentaries are really tough. There is a lot of reality content that overlaps in the documentary space.

Documentaries though just had a heyday as recently as I think it was 2019 when three, what was it, Three Perfect Strangers, RBG, and then there was another doc that really broke out. did nearly $20 million theatrically. Documentaries are tough, but they're easier from a technological standpoint. So you don't have to worry about paying SAG, you don't have to worry about paying the DGA.

as much. so ultimately, you know, documentaries are a tough category, but they can break out. We've seen it in the past. And I think that that's a space where A, there's a bit of a social importance to it. It's relevant always. B, you know, I think that people really have a love for documentaries and they feel like a passion for the category. It's very different from a dramatic film.

And then, you know, ultimately, I would say that like the number two genre is action, you know, like, like action movies are the thing that the market can't get enough of. It is harder to make them because you then have, you know, stunt days and stunt, you know, expenses. And so that's a really, that's a really interesting space right now. And I'll leave it at that for now.

Yeah, if I can add to what Jay said briefly, one strategy a lot of employ is to sort of, for that reason, for the reason that drama isn't so easy to sell right now is to blend the genres. So you do like an action thriller or a horror action movie or a horror thriller. There's a lot of genre crossing right now because it makes the projects easier to sell from a pure, know, there might be creative reasons for that, but there's also, you know, sort of

I can, you know, the finance strategy of it all that that might be driving some of that. And and I'd love to also go ahead there. No, it's just I just keep my scorecard here, so it's our action. And then then it's thriller. OK, great. It's really as a separate category from horror, meaning psychological thriller and.

I think what John said is particularly relevant. think that comedy works if there are action elements. So if you make a $30 million action comedy that's hilarious, that can be the best category of all. It's really tough to execute those kind of that. It's really hard to make a very funny movie and then also do a lot of stunt work. And the people that are specialists in those fields, they don't necessarily always cross over perfectly.

And so those are hard to execute. I think that it can be the most rewarding, but they're few and far between the successes. is interesting. to add on the documentary front, as having worked on documentaries for years as well, as Jay was saying, there was a heyday in 2019. There was a heyday actually during COVID where Tiger King was like 11 episodes.

And those were easy to make because you couldn't go out and film on sound stages. And so it was archival based, you know, post production work as opposed to live filming work. And those had a huge premium because they are so cheap to make and there's always a demand for them. And still the top performing categories on streamers are true crime and the latest, you know, you who did it murder type of true crime story. And those are those are documentaries. And, you know, I

aware that this audience might not know all the film, the entire film kind of a value chain and sales process. But if you're investing into a relatively cheap to make documentary and there is a social cause behind it, and if you imagine that documentary goes to a festival and gets a lot of buzz, there could very well still be a bidding war for that documentary. Or more likely, you're going to be feeding

the demand that these streamers still do have for true crime. So those are gonna be bought by a streamer. It might not have huge box office runaway upside, but it'll be bought at a premium and you will be in the black and with a healthy return. So it is all cyclical and I totally agree that those are the top performing categories in terms of a really interesting upside, but there's somehow still true crime still has a steady demand always. Awesome.

Let's turn up the heat a little bit, because we're in the weeds now, which is where we want to be. We got about 20 more minutes. We've got some questions floating in. So let's do the elevator question. I'm stuck with you in an elevator for 60 seconds. Pitch me, why is your product the best product to invest in film right now today? Mark, you want to kick this one off? Yeah, well, we are a platform that curates really premium

an extremely, you know, diligence content and premium film investing opportunities for retail audiences. And as you saw earlier on that chart, what we do is we're really curating offerings along the value chain. So development capital you can think of as seed capital into film ideas, such as scripts, IP optioning, sort of, you know, to spark the fire of a project. Production financing is when you're sitting as an equity slug.

in the production budget of a, let's say, yeah, five to $20 million film. And you're sharing in that backend in perpetuity. With development financing, you're getting actually recouped from revenue quarters out of the budget. as soon as it gets greenlit, you're getting paid back your premium, you're getting shares of the producer fee, and you're still getting some pieces of those backend points. Production financing, you're pro-rata basically as an owner in the...

the revenues, the backend of that film in perpetuity. And then there's distribution financing or debt financing, which I'm sure John will go into, which is, as John mentioned, of capped upside, but more steady and assured returns. And what we do is we finally enable access to that. And we're regulated by the SEC Republic. And we're sort of...

It's our priority to make sure that we're bringing quality deals and vetting them to the public. we've just seen a lot of audience excitement on that front so far. Skybound, the studio behind The Walking Dead and Invincible TV shows, they raised 18 million on our platform last year, allowing fans to invest in the studio that brought you this IP and the imperative to be an owner in the content that you ultimately consume.

There's no better fan engagement than that. Republic, it's, yeah, I know I've gone over 60 seconds, but it's just, we have a real specialty to provide a new access to this exciting asset class. And I think we're going all in. Thanks. Just to follow up on that with one viewer question, is crowd investing, is that synonymous with what Republic is doing or would you?

Do you do other types of investing? Someone asked about how crowd investing works. So maybe just a little. Yeah. And I will add one element to that. So Republic is a broker dealer platform. It's a merchant bank. There's a hedge fund division as well, a venture arm, and a blockchain crypto services kind of consulting arm as well. The larger idea, I mentioned the word tokenization early on is.

So Republic has all the licenses globally to allow for all types of investors to invest in these asset classes. In the US, particularly the Reg CF funding portal, which allows for unaccredited investors to invest into ventures or projects and receive backend as dividends or securities. That's obviously different from crowdfunding sites, which are simply donations that don't have those licenses.

So we are unique in that aspect. have the most number of licenses and the largest retail audience of all these, of a very small handful of these types of platforms. The other interesting element is the idea of tokenization that you can create liquidity and sell your share in a project on a secondary market. And that is kind of, you know, the driving, a big driving force happening in in the finance, in traditional finance world as well, just creating liquidity across all types of asset classes. And the idea is that you'll be able to,

sell your share in the next cult film. If you invest in the next American Psycho, that share in the equity would have gone up and you can trade that on or if you're investing in a studio, trade that on and yeah, send, know, cash out in that sense. So we provide that capability too. Let's get back on track with the pitches. So John, you're up next. Give us your elevator pitch.

Yeah, so if you think about the difference between being a retail investor or an individual accredited investor, angel investor, what have you, and institutional investors is the level of diligence and the level of risk that's been mitigated in every deal that's done. We bring institutional diligence to film and TV finance, and then we give access to our deals.

to individual angel accredited retail investors, as well as other institutional investors. So I always like to say we are a platform that makes film and TV financing safer for folks with money who want to participate in the space. And we can get into how and the why in the later discussion. But the other thing to remember is it's more than about.

just having access to the money, you need access to the deal flow. And so FilmHedge originates around $200 billion and potential lending opportunities annually. So applicants, not deals done. And that is from some of the best creators in Hollywood, some studio films, mostly independent films. And that's access that money quote unquote can't buy. And so by being a participant on our platform, in our network,

you get access to DealFlow and then you also get the risk mitigated significantly.

Right. Jay, give us the slated pitch.

We make good movies. I think that really is the pitch. But the reason that it's interesting is that the analytics when launched at the end of 2015 were lambasted by our investors. Our investors hated the financial analytics. They hated the script analysis. We got infected from the other end of the phone.

on a nearly a constant basis. When we had a number one movie open on four 20, 2018, everything flipped. The irony is that the financial analysis was an AI machine learning product. So, you know, we were, we just were a little bit ahead of the big data kind of cycle. And by the end of 2018, because we had a success, the whole

story flipped on its head and people started saying, doing what you're doing. And now obviously AI is a buzzword. It's a massive growing behemoth. And of course people would think about analytics when it comes to investing. So there's a bit of an irony there, but the fact is that we were field testing the whole time to make sure that the movies that we were making were good. And so we ended up with the number one film,

which was Super Troopers 2, which is a movie that I very much love. But we've also started the careers of young filmmakers. We have 80,000 people on the platform. We back first time directors, but we have, you know, basically a rules-based system. So they have to have really great scripts. We have a way to measure that. And then, you know, what ends up happening is that at the end, other end of the pipeline, you end up with movies that actually work creatively.

And so that's what's unique about us is that the data piece of it is something that we started early and people were very skeptical about. But now years on all of our movies are being received well. And it actually is a very functional sort of assembly line, but it's coming from 80,000 people. mean, it's a unique environment. And so that's what's kind of special about Slate at the Cloud.

Great. So I've heard all your pitches now and I'm excited. I want to start investing. So, and that probably goes for many of the people on this call. So think about a potential investor. How should she conduct diligence, do research, look deeply into these products and figure out exactly how I want to play. I'm going to lump another question that came in with this question just for time efficiency since we're running short here.

when I do that diligence, I want you to tell me how to do it, but also, should I be thinking about building a portfolio of films on my own? Should I think about finding a manager, such as one of you, to put me into a series of films? It's like, you know, in the public markets, I buy NVIDIA, but I also buy some index funds. Is it a hybrid approach like that, or is it something else? So how do I diligence, and how should I be thinking about this overall kind of portfolio that I'm allocating to here? Why don't we have John start off on this one?

Yeah, so that's a great question. to answer the first part of it, how do you diligence a film? I would say do your best to find a quality entertainment attorney. found so when I before I started FilmHedge, I found my first big movie was a $10 million movie. And I had maybe half a million dollars to invest. Not every day you get to put half a million dollars into a $10 million movie that's effectively already been made. But

my entertainment attorney found that deal for me because he was doing, he was representing the project. So in the way you can find quality entertainment attorneys, look up your favorite movie, see who the council was on IMDB and reach out to them. And they'll either take you as a client or they won't. If they don't take you, just find the next one. Someone will take you on if you're serious about doing deals. But to answer the second part of the question is what do you do next? Well, if you're interested in FilmHedge, we have,

really three tiers of investors who work with us. So one is the institutional folks. So these are hedge funds, family offices, billionaires and large groups that give us hundreds of millions of dollars at a time. Probably not most of the people in this audience, but if you are definitely give us a call. The other two though are gonna be people who are sort of

as we have described in this conversation thus far, retail investors or what I would call angel investors or accredited investors. And there's a slight difference between the two, which Mark could probably explain better than I can. But we mostly deal with like the angels of the world, people who have a hundred to, know, a couple hundred thousand dollars, maybe a couple million dollars to deploy. And they want to sit alongside FilmHedge

because they know that we're writing money drawing from these large institutional credit lines. So they get to bring, much like I did, six years ago, they get to bring half a million dollars to a $10 million conversation and not get laughed out of the room. That's really the sweet spot for what we call co-lenders on the FilmHedge platform. And then we are working on ways of opening this.

same opportunity to retail investors. And we're excited to talk about that early next year.

So talking about retail investors, why don't we jump to Mark who's facilitated quite a bit of that. And when you talk about, when you answer this question, I guess I'd like you to work on three levels. And number one is how does Republic vet the projects that are coming on? Somebody asked about that. Secondarily, how do I come in and looking what you've, what's past your filter, how do I research diligently to filter it? And then once something passes the filter, what should I be doing? Or how should I be thinking about my allocation to the asset class? Should I be building?

portfolio five or 10? Should I just say, anything that Mark approves, you know, I'm backing or how do you think, how should I be thinking about building my portfolio on top of your diligence? Yeah. As you can see behind me, it's sort of Republic is mostly comprised of lawyers and these engineers. And I'm the funky film guy over here. I'm very, very focused having just launched this sort of new film vertical.

on premium and quality deals from my experience in producing films such as Hotel Mumbai a couple of years ago, Dolly Land with Pressman Film and Ben Kingsley last year, and some of these genre films that have been at festivals and returned. And the first few on the platform, really, we want to be as premium and...

vet it as possible and obviously return, create a good asset class for investors. So I do my diligence on the producerial front and then the diligence team actually parallel tracks while I do marketing as soon as we sign somebody to go through all the obviously systems and background checks and KYC and all of those types of, yeah, diligence.

research that we would do on any issuer. then, know, most of these are names and projects you would have heard of in the mainstream anyways. I know that obviously Jay's platform also has ways of, you know, checking the quality of things. John is an expert in the debt financing space. So and what John was saying about, you know, doing your own legal, but really a big pro of the platform as well as we're talking to film festivals and different, you know, kind of even investor.

groups, philanthropic groups, or whatever it is, to even just deploy Republic as a standardized form because then you don't have to spend all that money on your own legal. It's one link with one securities instrument that goes out to everybody. That can actually save festivals and production companies a lot of, you know, like overhead and back-end work too. And then lastly, so that's sort of diligence process, UX advantages of Republic's platform.

The last thing is, as I mentioned, we are issuing offerings in all these categories. I encourage diversification, know, developments or slates, slate developments, opportunities where you're not just investing in development of one film, but a slate of five across Pressman or across renowned horror directors and action directors as well that we have coming up. And similarly, you can balance that with some production and debt financing or distribution financing opportunities that are a little bit more standard.

you know, standardized on the other end. So I encourage to have fun, but to mitigate with safer opportunities as well. Just to add to that, some, couple of people were asking about the tokenization. So do you want to say one more word about how does that work and are any of the films being tokenized today? All the film, all the film projects raises on Republic are tokenized. We, you know, we obviously put it through the REX CF platform so that accredited and unaccredited retail can invest.

And then think about your share in that film as basically, you know, backed up on a blockchain. We are blockchain agnostic. So we work with Avalanche, Solana, Ethereum, sorry, sorry, Polygon, you know, whole range of them, so we, and essentially you will have, know, what the blockchain enables us for these financial distributions to be paid out faster, efficiently, more cost effectively for transparency in the accounting process. And also that ability to trade your share on a secondary platform. We at Republic,

have bought over a ATS called INX where they'll be available for trading as well as on our dashboard. And you can see sort of one first tokenized equity project Republic Note where you basically we're tokenizing secondary liquidity for all the carry and all of the ventures that Republic has invested in. So we're definitely pioneering that space. Right. Jay last word on diligent thing and portfolio building.

Yeah, so we're a B2B model. So we're most interested in working with people that already have either a company that's based in the film world or an LLC that's for their own investments or their manager funds. And so we have an open platform, so it's free to sign up. We approve about one out of 10.

investor applications. And the reason is that film production is expensive. The risks in this space are incredibly high. It is a space that is fraught with peril. And so what we try to do is we try to take care of the investors in a number of different ways, but the key emphasis and the core emphasis is to work with accredited investors only.

to provide them with analytics that they can't get anywhere else in a of a comprehensive way. And then ultimately to tell them what the risks really are. Equity investors in film are looking at a space that where only one in five films typically recoup and it takes three years to recoup. The film investment model

If it had the closest analog would probably be real estate. There's a debt stack. There's maybe a gap or mezzanine piece of debt in the middle. And then there are equity investors on the bottom. What is incredibly risky and quite frankly foolish is to invest in a friend of a friend's movie that doesn't have distribution, that doesn't have well-known stars.

I think that one of the biggest mistakes that film investors make is that they believe producers who present to them, you know, decks where only the upside is featured. And I think that it is a much riskier space than most. And strangely, because everyone can watch movies at home, a lot of people think that they can just make a film and then release it and make money from it. And that's kind of like if you were, you know, a high school basketball player,

just assuming that you could play in the NBA. it's a space where there are a lot of ways to lose. So making really good films is just one piece of a broader strategy. It is a hits-driven business, and I think that that should be kind of the thing that's said over and over again. You need to make sure that you're in movies that are particularly good, that have a chance to break out, and then that will cover...

some of the others that maybe turn out to be ordinary. And ordinary films can get killed in the tough market.

Makes little sense. We've really gotten deep here and this has been a great discussion. have time for one more question. I'm gonna wrap a couple of the audience questions came in into it for each of you. So let's talk about what's gonna happen moving forward, right? Some different scenarios, a lot of moving parts, right? We have media's evolution, which continues the growing role of AI. A couple of people ask questions about overseas production. We've got a new rate cycle. We've got a new.

President coming in. So give us your crystal ball in the next three to five years, starting with Q1 2025. What do you expect to see that'll be exciting, interesting or different that people should keep their eyes open to? Why don't we start with John on this one.

Well, I think it's interesting. I think one thing that's good about the film and TV industry just generally is despite what a lot of people think about how sort of Hollywood leans one way or the other politically, the industry as a whole has had bipartisan support. And I'll give you an example. There's been a part of the tax code that allows for very healthy deductions.

related to film and TV investment for the past, I think since 2015 or maybe since 2011, which is called section 181. That means it's crossed multiple administrations and it's remained in the tax code. I'm hopeful that that continues to be the case. It's a very healthy and attractive way that equity investors

are incentivized to put money into films. And it allows them to sort of get two benefits. One would be the equity participation in the film, but the other benefit is tax deductions or write-offs for everybody else. And so that makes it a really attractive opportunity for them. It's more than just the money they will potentially make on a film. There's a solid, almost guaranteed return from just spending money making the film.

And so that is one thing that I'm hopeful continues. It's very similar to the state tax credits that exist around the country and the country tax credits that exist around the world, but just at the sort of federal level here in the United States only that program exists. Other things that I think will continue, I think the rise of private credit in debt financing and media is one to be studied.

We put out a research paper about a year ago that Variety circulated that talked all about the rise of private credit in media. And I think the reason for that is to use the same analogy Jay did. A private credit in financing film and TV is a lot like financing real estate deals. Same risk profile, very similar return profile. You just get the added benefits of the cool factor of being a part of.

feature films and going to red carpet premieres and being able to say, yeah, I backed this movie by my favorite director or my favorite actor or actress. And those are the things that we're excited to make available to the investors who are partnering with Filmhenge. Awesome. Jay, what's in your crystal ball? Well, I'm really excited that we're getting back to normal. You know, I think that we've had an unprecedented

amount of dislocation. To have every movie theater in the world threatened with closure in 2020 was something that was really, really challenging for everybody in the business. And the follow through of those revenues that then didn't blow through the system was a painful time.

And then we had all of the inflation and the COVID testing that you had to do when we got back to work and movies started being produced again. Then we had the labor stoppages. So I'm just happy that things have kind of finally settled down and that we're making roughly a movie a month. We've been making roughly a movie a month in a non-strike environment since April, 2021.

What I'm excited about is that I know who the big SVOD players are. know who the big AVOD players are. I see a kind of stabilization and just to add to what John was saying, the incentive climate has been more favorable and that has actually been moving forward. so that,

debt piece that, you know, I can finance my movie if I'm a producer on day one because there's a 30 % of my budget, like piece of the capital stack that I can get a loan for. That's a very exciting thing when it's a competitive environment. I think the governments around the world have understood that they don't want to have that production go away. And even California, after years of kind of struggling with

you know, some, some Exodus has amped up the incentive. So, you know, I think that, that it's a very exciting year, 2025, because we have a lot of opportunity. We have great movie stars that are working in the independent film space. And I just don't see as many of the dark clouds on the horizon as we've had in the last four years. Makes a ton of sense. And definitely every time you turn a corner and

the West side of Manhattan, you see one of those trailers and wonder what they're shooting. So good things ahead. Last comment of the day, we'll go to Mark. Mark, what are you looking forward to in next year and beyond? Yeah, I think I'll end it just on the thought that we're all here in the spirit of making great movies, better movies. We're all innovating with tech. think what Slated does is it creates, you know,

it standardized efficiencies in filmmaking for filmmakers. What John does is innovate a really exciting kind of investment opportunity. And what we do is expand access to invest outside of the major, major kind of even sometimes predatory studio and streamer controls, or just, you know, the idea that why should the person on the yacht only have the chance to green light what they want to see in this world? mean, films are amazing. We think about them all day in the shower.

with our friends, they inspire us. mean, like this, you know, by sort of redistributing green light control and opportunity to the audiences themselves, I think we can reinvigorate a new era of really exciting independent film. And I think everybody's noticed that that's been missing over the last few years. So I think just to reiterate, you know, what everyone said,

Diligence is important, track record is important, but there's really kind of exciting opportunity now for new blood. And I do think that actually technology, even AI will actually democratize more access and more origination of ideas and filmmakers and shake things up in a good way. Great way to close a great conversation. Thank you to everybody. This has been an inspiring conversation. Film is inspiring and got a lot to look forward to in this ecosystem.

Thanks to everybody who stuck with us through the time and happy holidays to all. We'll see you at our next event.

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