Three new ways to finance European productions explored at Cannes NEXT
- CANNES 2021: During one of this year’s Cannes NEXT panels, experts discussed the virtues of NFTs, venture capital and MEDIA Invest
The Cannes NEXT panel “Where’s the Money? New Currents in (European) Financing: NFTs, Venture Capital and MEDIA Invest”, held on 12 July during this year’s Marché du Film (6-15 July), focused on three new avenues to revitalise Europe's film financing scene: NFTs (non-fungible tokens), venture capital and MEDIA Invest.
The talk, moderated by AC Coppens and organised in partnership with the European Commission, comes after a challenging year owing to the pandemic, and at a moment when there is a pressing need to find new resources in order to resume production and distribution as well as to boost innovation. The debate saw the participation of European Investment Fund head of Mandate and Product Development Tomasz Kozlowski (who attended virtually), Haste Media CEO Uri Levanon and Tallifornia Productions founder Rain Rannu.
After a brief introduction, economist and InvestEU team leader Agnieszka Skonieczna expressed confidence in these new financing tools and a startup-style equity model applied to the film industry. Next, the floor was given to Levanon, who spoke about NFTs. At first, he provided a definition of what an NFT is: “A unique asset on the blockchain that’s not interchangeable,” which “creates an infrastructure for a digital economy based on items”. He said that we are currently experiencing a “gold rush to NFTs” and there are “unstoppable meta talks” on platforms. He highlighted how NFTs 2.0 will be entirely programmable and interactive, and discussed a potential market for them as “high-end art”. Speaking about the impact of NFTs on cinema, Levanon explained how Cinerare is set to become a marketplace for collections built around the world of films, especially festival titles, and how cinematic applications of NFTs would increase the “discoverability” of every single component of the movie (for example, the locations, score and costumes).
Rannu spoke about his early career as an entrepreneur and how, at one point, he felt unhappy as his company grew bigger but he couldn’t “create the product” any more. Eight or nine years ago, he attended a filmmaking course, and then decided to dedicate the rest of his career to the film industry. Besides his filmmaking work, he developed a parallel interest in film investments. “Venture capital is a pretty new way of funding companies [...], but these days, all major firms benefit from it – Google, Apple, Amazon, even Netflix. In the start-up world, it really works. [...] Usually, investors take very big risks on companies with no metrics, in their earlier stages,” Rannu said, adding that this system obviously implies potential huge gains or losses. However, venture capital works differently, as one can invest in a portfolio of companies, and onesingle, big winner can be sufficient to minimise risks. Finally, Rannu argued that we need public funding, but this needs to be accompanied by other instruments such as tax credits, gap financing and equity financing. In his opinion, the European film industry is moving in the same direction as start-ups, albeit perhaps a bit more slowly, and the best outcome would be seeing government grants as just one small part of a wider ecosystem rich in funding opportunities.
During the last ten minutes of the session, Kozlowski explained that his team is financed by the European Commission and is working as a non-profit entity across the 27 member states. They seek to help SMEs through investment and co-sharing risks, as well as through equities and guarantees. “We’re partnering people [for investors and companies in need of them]; we don’t invest ourselves,” said Kozlowski. In parallel, the team kicked off a guarantee facility for the creative sector, “initially with a modest budget”. Later, 24 partners helped to finance “€2.5 billion of firepower”, and 60% of this amount directly benefited audiovisual companies. Meanwhile, the new MEDIA Invest initiative will be a dedicated equity investment to foster European production and distribution strategies, and its target is to leverage investments of €400 million over a seven-year period. The first call for expressions of interest is planned for the last quarter of 2021.
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