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Thread: INVESTING in a production company

  1. #1

    Exclamation INVESTING in a production company

    Hello,

    First, let me start with this - i understand that this is an online forum and i am taking it for what it's worth, but i feel that this place is a little bit more mature in general, so i figured i might give it a try here.
    You never know how life may surprise you.


    So - to the task at hand!


    For the better part of a year i have been building my own film production studio in Latvia (Europe) with the goal of creating a modern production company that would encompass various directions of our industry.
    Right now i have finished about 80% of the construction work for the actual 900 sqft (83 sqm) studio space. The studio will have 8 different video production sets, including an audio booth, a product photography set and a pro level video editing workstation.

    The company will have 2 main business models:
    1. Working with clients (commercial shoots, events, product photography, editing etc.) - direct sales.
    2. Building a strong online influencer brand through YouTube and Social Media - passive income via adsense, affiliate marketing, sponsor deals, stock-image, stock-video etc.

    Obviously a production studio means nothing without the proper gear, so to address this issue, 6 months ago, i applied for a EU funding project and my (200+ page business plan including gear spec pages) was received so well, that it got the highest possible marks and was accepted as the Nr.1 Project to support this year in my region.

    This EU funded project would allow me to buy professional gear for 32 000 EUR with a 70% refund from my government, meaning i will be able to buy said gear for only 10k.
    If your are interested in the actual gear i plan to buy, let me know - i will post a list (it's quite extensive - covering cameras, lenses,audio, lights, stands, post-production etc.)
    Obviously 32k is a relative number - i can get a truck load of gear for it or i could blow it all on 1 cine lens and it wouldn't even be enough to buy a RED weapon brain, so I chose to go the smartest (most balanced) route at the beginning which was to keep it light / mobile yet still professional enough to land bigger client projects and definitely more then enough for YouTube content.

    My plan is to acquire gear in 2 stages - this would be Stage 1 and in Stage 2 i plan to upgrade to a C200 mk2 or C300 m2 setup (or the equivalent of that) to up the production quality.


    NOW... here we come to the reason i am making this post - unforeseen life events.

    Obviously starting a new company and building a studio is not easy, it requires a great deal of time, energy, planing and funds. For more then 13 years i'v had my own business and i was always filming just on the side, but 1.5 years ago i transitioned in to full time filmmaking and left my business in the capable hands of my family members.
    So the plan was to finance the Production studio and the EU project from my other business and everything worked out as planned until one fatal day when my old business burned down. Yeah... the factory building actually catched fire and burned down destroying my income source.

    Who could have predicted that?!
    I guess the only positive thing i can take away from that is - now i have all the time i need to build the production studio.


    SO... Let's get to the actual point!

    Because of said unforeseen events i am looking for an investor or possibly a business partner who is willing to invest 32 000 EUR.

    • I would prefer the investor route with guaranteed return of 70% of the investment made within 3 months and the other 30% within 12 months. Obviously there would be all necessary security measures in place like shares of the company and contracts.
      • As an investor you would be granted shares of the company and guaranteed a profitable return of your investment, but after the investment + your interest is paid of the shares would transfer back to me.

    • I would partner up with someone who is already somewhat established as a filmmaker, but you would have to invest in the company either way.
      • As a partner however you would bring more to the table then just funds, so you would get a larger share of the company and we would work together on various projects. Obviously this would be a long term relationship and profits would be split accordingly.


    So with this being said - if you have read this post and you are interested in my proposal, then we can talk more specifically.

    Other then that, if there is no one on this forum who has the means or interest to do business, then at least i hope i provided you with entertaining material to read and maybe you even got a little glimpse in to the business world in case you ever want to start your own.


    Thanks for your time either way.

    With Regards,
    RL_Sensei

  2. #2

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    Hey that sounds a lot like my own long term plans I'm sorry to hear about the fire though. Why didn't the insurance pay up? You could've used that as a bootstrap :/

    Sadly I've no capital to invest in anything because I really like the sound of your Latvian adventure. Which EU funding project did you apply for?
    The cats are watching us...

  3. #3

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    Quote Originally Posted by Grapes View Post
    Hey that sounds a lot like my own long term plans I'm sorry to hear about the fire though. Why didn't the insurance pay up? You could've used that as a bootstrap :/

    Sadly I've no capital to invest in anything because I really like the sound of your Latvian adventure. Which EU funding project did you apply for?
    Hey Grapes,
    Nice to hear that you have similar plans in mind. If you have the opportunity to realize something like that - go for it. I meet way too many people these days who have big plans, but never actually do something because of fear or other excuses.

    Insurance was not an option for many reasons. About 85% of similar businesses in my country don't have insurance because it's almost impossible to afford it or to even get it. We have some of the worst insurance policies in Europe when it comes to manufacturing work spaces in the wood industry.
    The nature of the work done there put it in a high risk / low payout category, meaning i would have had to pay huge sums each month while getting not even a 50% payout if something happens.
    It was somewhat of a seasonal business, so that made things worse as well.
    The insurance companies requirements to even get the insurance meant a roughly 15 000 EUR investment up from to "live up to their standards".
    There are many other reasons as well, but you get the point. I did a rough calculation and even if i would have had insurance over the 12 years i did business there, i would have payed them 8 times what they would have payed me out after the fire.To me and most others, that's not acceptable.

    The EU funding is through a Latvian government institution who's objective is to stimulate the local economy by funding various project. It only applies to Latvian companies, but i am sure your country has something similar available. They usually have very limited amounts of funds for each round (year) of funding. I think my round had 300 000 EUR available and people applied for more then 1.2 million EUR in projects. Meaning there was very high competition to get a project passed. Luckily i managed to get the first place among all the project and that means that my funds are guaranteed. For example the project that got accepted in last place - he's at risk that the funds might run out if projects above him overspend.

  4. #4

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    Quote Originally Posted by RL_Sensei View Post
    Hey Grapes,
    Nice to hear that you have similar plans in mind. If you have the opportunity to realize something like that - go for it. I meet way too many people these days who have big plans, but never actually do something because of fear or other excuses.

    Insurance was not an option for many reasons. About 85% of similar businesses in my country don't have insurance because it's almost impossible to afford it or to even get it. We have some of the worst insurance policies in Europe when it comes to manufacturing work spaces in the wood industry.
    The nature of the work done there put it in a high risk / low payout category, meaning i would have had to pay huge sums each month while getting not even a 50% payout if something happens.
    It was somewhat of a seasonal business, so that made things worse as well.
    The insurance companies requirements to even get the insurance meant a roughly 15 000 EUR investment up from to "live up to their standards".
    There are many other reasons as well, but you get the point. I did a rough calculation and even if i would have had insurance over the 12 years i did business there, i would have payed them 8 times what they would have payed me out after the fire.To me and most others, that's not acceptable.

    The EU funding is through a Latvian government institution who's objective is to stimulate the local economy by funding various project. It only applies to Latvian companies, but i am sure your country has something similar available. They usually have very limited amounts of funds for each round (year) of funding. I think my round had 300 000 EUR available and people applied for more then 1.2 million EUR in projects. Meaning there was very high competition to get a project passed. Luckily i managed to get the first place among all the project and that means that my funds are guaranteed. For example the project that got accepted in last place - he's at risk that the funds might run out if projects above him overspend.
    Oh right, I didn't realise you're from Latvia yourself. For the situation you describe it sounds sensible not to have that insurance policy. Over here I sometimes think everyone is insured for everything (they aren't though but it really feels like it).
    I've looked at EU funding a few years ago but there's so much different funds and some have such high requirements that I didn't even bother to apply. I might give it another look in a few years though, who knows.

    If I do get the opportunity at some point to set up a studio I most certainly will, thanks for the advice though .
    The cats are watching us...

  5. #5

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    Some ideas meant as feedback:

    I run a full service web dev shop, and we do some photo and video for our web clients. My brother runs a commercial video production company that does high-end TV spots (like commercials for airlines, big beer brands, etc). So I have some experience to share in regards to the business aspect of things.

    A few ideas:
    1. You probably don’t need (or want) to invest in gear asap. For instance, my brother rents all his camera gear. So he shoots with Alexas and such anytime he wants, and the client pays for it, so no investment upfront. He keeps a Canon 5D for photo stuff and low-end video, but they don’t really reach for it much as they look at it as inferior stuff because they are used to the high-end gear.

    2. Outside of renting good equipment, a good investment could be video production DSLRs like the full frame Sony stuff or the Panasonic GH5. The cost will be much lower and you can use these cameras for most easy-going productions (web, small events) without having to invest too much upfront.

    3. Keep in mind that whatever camera body you buy now will be on its way to obsolete in 5 years or so. I would not put a significant amount of my budget into camera bodies.

    4. Seems like an ambitious plan to fit all those production spaces into a 900sqft place, and to try to build it out at the same time. I would recommend that you go easy on the photo/video studio aspect of it until the rest is built out (office area, settled on some gear, started making money). We used to have some studio space but moved out and now I don’t have any place to record under my roof. But that doesn’t stop my company from producing, we do shoots and video on location (you can rent or figure something out) and we also record great audio without a booth which is not hard at all if you get organized.

    5. My overarching point is that it might take you a year just to get organized with this stuff and to build out your space. It might take all your resources to build out the space before you can get production going at an efficient rate. My recommendation is to focus on starting production, and draw a milestone map to acquire gear as you need it over time to get production going. An audio booth is nice but not needed. A multi-set photo studio is nice but not needed. Owning high-end cameras is nice but not needed.

    I wish you the best of luck in this new venture.

  6. #6

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    Hey jochicago,

    Thanks for the info, you have some valid points. In what country are you based though?

    The thing is, i have been doing this for years now and i pretty much know the ins and outs of the industry - at least to the level where i am at right now. Obviously there is a huge amount to learn and grow still and i am the type of guy who is obsessed with learning, but as i mentioned in my first post - i have been a business man for more then 13 years and building a new business is nothing new to me.
    There are calculated and well thought reasons for everything i plan to do with the studio and the gear i want to buy in stage 1 of my project.

    1. In my country it's almost impossible to make a profit with rented camera gear unless you get a big budget production and that does not happen too often (small country and all...). Obviously - "big budged" is relative.
    Something like a Sony a7s II is being rented for 80 EUR a day without a lens. Add 1-2 lenses and that's almost all of the budged for your average couple hour shoot. There is literary only 1 place in the entire country where i can rent a Alexa. I could buy a DSLR for the rent money they ask...
    Even wealthy institutions here (like banks) think that a commercial should cost $400 I had a discussion even today with a potential client (financial institution) and they told me that their idea of a budged was $ 350, for a full blown commercial I would rather go shoot a wedding for a $1000 then film a commercial for them if that's their idea of a budged

    2. I am a step ahead there - when it comes to camera brands... that's a messy topic, every one has their favorites and everyone defends their brand. In stage 1 of the project my gear is built around Canon Lenses with the Canon 1 DX mark II body.
    Yeah, Sony is destroying Canon right now in terms or camera bodies, but Canon glass is still much more superior. Bodies come and go, lenses stay.
    The Canon 1 DX mk II checks all the boxes i want in a camera and the cons are something i can live with. It was a tough decision though - Sony A7R III ( possibly A7s III after release) vs 1 DX mk II, but the superior 120 fps, color science and auto focus wins vs what Sony offers. At least for my needs.
    GH5 is out simply because of the worlds worst auto focus and i hate the jello IBIS in the corners.

    3. Sure, that's true for every body, but at the end of the day... how much better will cameras get? At some point it does not matter anymore. Having a 1 DX mk II and possibly a C200 mk II down the line would check every box for my production company in terms of production quality. Getting a RED or Alexa for literary 1-2 clients a year with that kind of budged is a waste of money and i definitely won't shoot YouTube content with those. And back when i was shooting for a production company - they had a RED and it's just a hassle with that thing. Not to mention how unreliable it was... that stupid proprietary ssd storage bullsh*t they came up with... was failing more then actually working.

    4. That's all relative. Most of those sets are for YouTube content. I don't plan to do much client work in the studio apart from product photography. It also does not require much space the way i have built the sets. The photo and video aspect of the studio is exactly what i need to go in heavy at the start, as i have already photographers lined up who will rent the sets during off hours for their shoots and the YouTube sets are required to start content creation. That's easy and fast money from the get go. The sound booth is already finished and will be used for voice overs, in house sound design work and i'v even had interest from local musicians to use it for recordings. Don't know if i want to use it for that though.

    5. You are right about the running out of resources while building out the studio though, hence the looking for an investor part, but that's again just because of unforeseen natural disasters. Which happen, obviously, and now i have to adept to the situation.
    Here is my counter part to the "nice but not needed" argument. That can be said for almost anything. Nothing is really needed, until its actually needed!
    Having a knife is nice, but not needed, unless you need to cut something.

    Sure, i could have not built the audio booth, but the layout of the studio was sort of inviting the idea and for the money i spent on building it (literary like $500 in materials, i got the best deal ever on acoustic material from a company that was doing a out of business sale) - it sure opens up some nice future possibilities when it comes to sound design.

    Anyway - thanks for the good wishes, your feedback is definitely appreciated

  7. #7

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    Hey man have you thought about crowd funding it? Maybe even just within your personal network of friends and family?
    The cats are watching us...

  8. #8

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    Quote Originally Posted by Grapes View Post
    Hey man have you thought about crowd funding it? Maybe even just within your personal network of friends and family?
    I am working on that right now, and also on the possibility to include some of my previous and potential new clients. Sort of - "help me build the production studio with an investment now and i will work it off in future projects with you" type of scenario.

  9. #9

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    Quote Originally Posted by RL_Sensei View Post
    I am working on that right now, and also on the possibility to include some of my previous and potential new clients. Sort of - "help me build the production studio with an investment now and i will work it off in future projects with you" type of scenario.
    Oh nice, I really hope it'll work out. Keep us posted on the project I'm sure I'm not the only one eager to hear how it'll go.
    The cats are watching us...

  10. #10

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    Quote Originally Posted by RL_Sensei View Post
    I am working on that right now, and also on the possibility to include some of my previous and potential new clients. Sort of - "help me build the production studio with an investment now and i will work it off in future projects with you" type of scenario.

    Hey man, since this post was raised from the dead by some marketing bot anyway I'll ride the bump. How is your production company going? Did you get it off the ground? Are you still looking for additional funding/investors/partners?
    The cats are watching us...

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