With the banking system fragile and interest rates abnormally high across the world, an increasing number of filmmakers are seeking capital outside of traditional investment routes.
“Good luck trying to get a loan for anything from a bank right now, much less a film,” says Jon Gosier, founder and CEO of FilmHedge. “Filmmakers can still come to FilmHedge since our money and our interest rates are not tied to the banks. That is one of many benefits we offer to filmmakers and to financiers.”
Based in Atlanta, Georgia, the fintech firm has a major presence at Cannes this year, where it is sponsoring the International Film Finance Forum and the Producer Forum.
“These events comprise the top echelon of the entertainment industry,” Gosier says. “As a funder of films with budgets as high as $50m, globally, FilmHedge has an important seat at the table.”
Gosier understands the importance of not only attending Cannes but of contributing to the success of the critical financial landscape that can make or break a project.
“We are not matching borrowers to funders but we try to be of service to the filmmaker by educating them about the process of leveraging private credit for film and TV production, otherwise they risk being rejected,” he says.
FilmHedge offers a proprietary fintech platform providing short-term bridge and gap loans to complete media projects in the $3m to $50m budget range, lending up to 10% of the total budget.
By taking a debt financing approach, scripts and cast attachments are not decisive factors in the loan process. Instead, FilmHedge looks for security in distribution deals, tax credits, pre-sales, minimum guarantees and whether a film is bonded. It essentially cashflows those assets for its network of investors, which include hedge funds, private equity funds and family offices.
“We are advancing money to filmmakers based on receivables,” Gosier explains. “We know that the money is guaranteed to come into the production. This way we mitigate risk and it is easier for us to do this at scale than for any individual investment fund or family office.”
Need for speed
Gosier points out that producers working with institutional lenders can be frustrated by the length of time it takes to access short-term funds.
“If you need supplementary capital to pay your lead actor for another couple of days on set, you don’t have three to five months to close a deal — you need it now,” he says. “Filmmakers and funders that partner with FilmHedge understand that we are solving both halves of the equation.”
The prototype for FilmHedge’s model was the sci-fi action film Skylines in 2020, co-produced and directed by Liam O’Donnell, which was debt financed with a 15% interest rate.
In 2021, FilmHedge allocated more than $100m to more than 20 productions — including scripted series, docuseries and features — netting more than $13m in returns. Last year it closed a $100m credit facility and has just signed a $25m deal with a production company based in Georgia. “We are in the process of expanding our credit facility beyond the $100m mark,” says Gosier. “By end of year, we will be substantially bigger.” FilmHedge is also looking to establish offices in Europe.
The firm’s executive team is experienced in finance and film. Co-founder and chief growth officer Mickey Vetter is a former investment banker with expertise in short-term lending in construction finance. Fellow co-founder Josh Harris led the entertainment financing division at City National Bank and serves as FilmHedge CFO and COO. Harris is also a successful producer on titles including Blood For Dust, starring Kit Harington, and Land Of Bad, starring Russell Crowe.
“There are a lot of lenders offering debt finance for media but what we do differently is we are faster and more efficient because we adopt a tech-enabled onboarding and underwriting process,” says Gosier.
This includes providing real-time transaction reporting and analytics during the life of the loan, and an algorithm process for applicants that cuts the red tape associated with traditional film finance.
“All of this is led by our expert team using our proprietary platform to automate much of the process, such as collecting and reviewing all legal documentation, to speed up the greenlight of funds for filmmakers and deliver returns efficiently for investors,” Gosier concludes.
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