europrix 2008 creative productions financing pelkonen

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Creative productions and financing:

Some thoughts and learnings

Tommi Pelkonen Business Consultant

Finpro HungaryNovember 28, 2008

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Finpro in brief • Global organisation of international business and consulting professionals (~350 experts in above 40 countries)

• Works to help Finnish companies to succeed wherever they are

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Finpro in brief

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• Global organisation of international business and consulting professionals (~350 experts in above 40 countries)


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Finpro in brief

PROCESS ORGANISATION

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Finpro in brief

PROCESS ORGANISATION

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Introduction: learnings from megaprojects

It is not about ROI (return on investment), it is about return OF investments!

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What are we talking about?

Project Finance: The financing of an asset where debt service and returns on equity are derived

from the cashflows generated by the asset

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Financing as structure

Sharing future revenues may a new source of financing also for digital media productions

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Reality: answering tough questions from financiers?

NOTE: Regardless of these, they may ALSO have personal interest towards your project!

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Reality: answering tough questions from financiers?• I’m afraid I can’t remember how this meeting was set up and I don’t

have any documents. Can you please remind me who referred you to me?


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• Please give me your personal backgrounds and tell me the story of how you know each other.


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• Do you really think you have the right experience to be the CEO of the company after this possible deal?


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• Please tell me about the technology/solution/product/service/production and the market you’re going after.


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• What segment of the market are you targeting and what is the competition doing in that market segment?


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• Can you describe the technology architecture / production process and whether any of your technology / solution / product could be considered proprietary? Have you looked at the intellectual property rights around your offerings?


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• How much capital do you need to get started? How will you plan to pay my/our money back?


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• How much capital do you need to get started? How will you plan to pay my/our money back?

• What valuation are you putting on the deal, and are you speaking with other finaciers?


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What’s on financier’s mind?

And you had a humble wish that they would be sinceraly interested about you and your production! :)

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Multimedia producer’s concerns and trends

• Companies are small and even smaller• Business is creative process driven• Producer mindset determining outcome• Finance is needed for development and implementation of creative

processes, productions and projects• Competence and content key issues in assessment and evaluation• Combining creative and other professional resources crucial

management challenge• Individual insight must in hit driven business• Messy business models• Lacking knowledge and expertise to fullfill investment criteria• Perceptions of the investors – lacking knowledge of creative

businesses• Tailored financial tools not available - project development funding

is needed

Financiers, at best, know these and want to see how you cope with them!

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Sources of finance for creative projects

Mandate: aim to understand each group’s motives and needs for security on investment

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Funding for digital media productions

Can you position your production into this chain and struture?

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Hint 2: Use financiers’ lingua = numbers!

• Profitability: Ability to generate earnings/savings.

• Liquidity: Measures shortterm cash flow ability.

• Solvency: Indicates longterm financial health and stability.

• Efficiency/Coverage: Suggests how well things are done.

• Balance Sheet• Income Statement• Statement of Cash Flows• Changes in Financial

Statements

Put some of that passion to digital media into basics of business language!

Express your ideas in form of: Show and know the number game_

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Hint 4: Convince them of you passion!

• Investors want to work with passionate entrepreneurs they can trust on:• Substance• Ambition• Managing productions / projects• Track record• Competitive edge• Team of multi-talents• Business-understanding

Show you passion - but keep science fiction out of the table :)

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SUMMARY: How to make your financier to believe in you?

• The availability of funds depends on the ability to convince providers of funds that the project is:• Lead and created by a team of trustworthy & talented

people• Technically feasible• Ability to perform & deliver• Economically viable and profitable (with right motive)

• You should talk their language - as much as they try to understand what you try to offer for them!

• Develop your edge - not only conceptually and artistically, but also in your business-orientation!

We know you can design excellent productions. BUT: can you design also you finance structure and approach?

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Questions, thoughts, comments...

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For more information

[email protected]+36 -20 - 250 10 77

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