Yesterday, I went to my first meeting of the Non-Multplex Cinema group in London. They started as a group of people who meet up, go and see a non-mainstream film and chat about it afterwards in a pub. Then they branched out into short film production. Now that their short is in post, they’re turning to sharing knowledge and networking.
Yesterday was about GLOMEX – The Global Movie Exchange. Steve Tyler came to explain what they’ll be offering.
One of the problems with film financing is the complexity of the funding deals that producers need to put together. There can be too many sources involved. They have differing priorities and expectations. Projects often fail when a small piece of the funding is pulled.
GLOMEX is a trading market where producers are put in touch with investors. Producers create a company whose total share value is equal the budget they want to raise to make their film. The shares in this company are offered on GLOMEX. Once the shares are fully subscribed, 100% of the budget has been raised. The bank associated then hands over the money to the producer as per the schedule promoted in the offering.
The producer pays $10,000 to the market for GLOMEX to do the financial diligence on the project. They make sure that the people involved have complied with the financial requirements of setting up the production – and they are likely to continue to keep investors informed on financial matters. Those providing the market do not assess the quality of the script, the artistic or technical abilities of the film makers. It is up to the producer to put the package together in such a way that investors are interested.
After the film’s budget is fully funded by the IPO, the shares can be traded on ther GLOMEX secondary market. Shares can be bought and sold, with the share price determining the total value of all shares in the film. Unless the film makers buy shares of their own, they don’t benefit for any rises in the value of the shares. This secondary market makes investors interested in making money from film finance. If they make money buying shares in films in this market, they’ll be around to
Initially, GLOMEX only want to deal with funding 100% of the production budget. This is a problem for producers whose skills lie in tapping into many different funding sources. This rule is to make it clear that each share gets an equal part of any film proceeds. This wouldn’t be possible if there was some funding coming from government bodies or other sources.
GLOMEX say they want to ‘Securitise an un-secured market.’ They think that many amateurs will want to take the chance to invest in the film business.
This was sold as being for audiovisual productions of all sizes: shorts, animations, radio, games and mainstream movies. The people who’ll make money for the market will be the advisors that producers will need to hire to prepare their IPO and the auditors who’ll need to keep the market informed on outgoings and income to the production.
Writing as someone who is in on the last rewrite (when the film is edited), the oddest condition for listing a production on GLOMEX is that the script needs to be final! I assume that it’ll be the producer’s responsibility to inform the shareholders about any significant changes that move the production away from the script included in the investor presentation.