How Fans Can Help Fund the Next Big Indie Film with Marc Iserlis

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Welcome to a special episode of On Production celebrating the innovative intersections of today, film and investment. I'm joined by Marc Iserlis, the head of film at Republic, which is a platform that's revolutionizing, I think, how we think about film financing and financing of all different types of upstarts. At Republic, they're not just crowdfunding, they're crowd investing, which allows everyone to have a stake in the entertainment that they love. Marc, extensive background in film production and his current role make him a really interesting figure in this shift. Marc, it's fantastic to have you here with me on on production and dive into the future of film financing with you.

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1:05  

Thanks so much for having me Cameron, and congratulations to you and the whole Wrapbook team on the essential platform and service you're providing to an industry that is really going through change right now.

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1:16  

Yeah, it really is. I mean, would you mind starting by telling me about your journey to becoming the head of film at Republic. What drew you to this approach to film financing? So

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1:29  

I started out kind of in traditional and still we do traditional film financing equity working with equity financiers, high net worth individuals, sometimes in institutions or funds, putting them into independent film five to 20 million. So I worked with financiers on films like hotel Mumbai with Dev Patel, last year's Dali land with Ben Kingsley, a couple of genre films that have premiered at the festivals. So got to know sort of the independent film financing structure, which, of course, is I don't have to probably tell this audience different from the studio financing structure and the TV development and sales structure. And then I also have been on the creative development side. My producing partner, he ran CAA China for many years, and together we developed a IP universe around, kind of like true crime, cross cultural, Asian Narcos. And that got me understanding the sales process to the streamers, the studios on the documentary side and on the scripted development side. So we have a couple of those projects going. And then COVID hit, and I sort of swapped LA for Miami for a little bit, just to see what was going on down here. And it was kind of this giant melting pot of, you know, VC tax refugees. There was the whole crypto moment here, for better and for worse, but there was a lot of innovation and a lot of talk about doing things differently, especially on decentralized financing and things like that. And I thought, how can we apply this to film and entertainment? I kind of went in with the logic, you know, pretty much in the independent film world, from my experience, the two primary ways to finance content is either going to high net worth individuals asking individual angels to invest equity into films. On the equity side, at least not talking about debt necessarily, or obviously, pre selling your film to a big studio and kind of getting bought out from your IP studio or streamer. There was, there was people here with decentralized financing, with the NFT train, kind of talking about, you know, how can use NFTs to give people ownership of something. A lot of that action ended up being perceived as illegal securities. You were you were offering, you know, a chance for unaccredited US investors to buy some kind of token or something, to invest and get a dividend. If that's not done in the right way, that's legal in the States. That's why crowdfunding platforms are all donations driven. And and then I met the guys who Republic two years ago. And Ken is a securities genius. He was born out of AngelList. And Republic is one of those rare companies out there that has all of those securities licenses and regulations to allow for unaccredited investors in the US to invest into private market assets. So Republic, AngelList had this. You know, they were the leaders in democratizing venture investing on a platform so you can kind of click and get into, get into venture deals or startups. Republic is doing that, but also allowing for people who are not millionaires or on those yachts to get in on tech startup, real estate, gaming. And when I saw they could do this, there are 3 million users on the platform who have raised over $2.6 billion into all these industries. I said, we have to do this for film. And so I set about building out Republic's film vertical that basically, you know, the mission is to create this new channel and avenue to allow everyday fans, investors, US around the world. The real innovation here is that we can do it for unaccredited us. Investors to invest in the films or content or projects or studios that they love at any point in the value chain, development, production or distribution, or even equity into a production house, and crucially, share in that upside, that financial upside, that's really

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5:14  

awesome. Marc so at the recent Toronto International Film Festival, Republic launched its film financing vertical that you're just describing. Can you share more about what this entails and the kind of impact you foresee in the film industry, given that you've seen this done the classic ways, and now here's this new path for unaccredited investors to have a piece of equity in a slate of films or a film

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5:41  

absolutely so at Toronto Film Festival, we kind of unveiled what it, what is its own kind of vertical for a film and entertainment. We do do music and sports as well. So most, most things on Republic are venture startups. You know, you go in a certain valuation level. You know, equity, when it exits. You know, you will, you will hopefully profit. And films, of course, are revenue share deals where you sort of sit in the waterfall and you share in the revenues along the way. We'd had great traction in the entertainment space already. Last year, the studio sky bound, which produced the Walking Dead, raised 18 million in equity from from fans, you know, from people, investors and fans of The Walking Dead, of invincible to own a piece of the studio Watford, the football team in the UK, also groundbreaking moment allowed fans to own, finally, a piece of their team, own equity in their team. They raised 5.5 million. What we chose to launch with a TIFF was the Pressman film slate. Pressman films, of course, the producers behind American Psycho Wall Street, the crow, Badlands, Bad Lieutenant, thank You for Smoking those judge, Dread Street Fighter movies like an incredible array of independent films. And you know, I think then every, every, every launch we does, has to have a narrative. And the one of this one is, let's make movies like these again. And yes, it's development into a slate of films, but you get to be there on the ground floor as a fan of those films, and hopefully make these kind of daring, bold films, again, that are maybe different from some of the Marvel fatigue or streamer algorithm or fatigue that we're hearing and so, you know, republic.com/pressman was launched. It was a 75 day raise period to launch 1.5 million from retail investors. Could be fans, could be accredited, could be institutions, retail investors to develop a slate of six new Pressman films, some of them remake IPs, some of them new IPs. And the terms are there on the page, the sizzle videos, kind of, we're kind of doing God's work explaining development financing to retail audience. It's not, it's not simple, but Sam Pressman, CEO does a great job. So the Pressman film was, wanting to raise 1.5 million to develop six films by the first week of Toronto Film Festival. We we hit the 500k mark minimum by a month after launch. We hit the $1.5 million target, and we closed over the weekend at $1.85 million obviously, the more money you raise, the more films Pressman can develop. And you know, the the next raises that we have coming up are we have similar development slates from people like Robert Rodriguez. We have a top horror director. And then the narrative there is, let's make the next Blumhouse type of studio together. We have a top Indian Bollywood studio, Eros film who and the narrative there is that let's allow fans to invest into the sequels of their favorite Bollywood franchise films. We've got Snoop Dogg's son, Cordell broad is doing an animated series pilot about Inglewood, but allowing the Inglewood community to invest into the production, rather than pre sell it to Netflix and have them or whatever, have them own the upside. So again, every kind of launch has its narrative, and I'm really hoping that from the success of the Pressman rays, from the interesting projects that we have coming out next, from development to production financing to to even distribution and debt financing, this sort of opens up the doors for new ways of financing films. Thus, you know, the logic is, the more you can allow your fan community to invest through this portal Republic now legally invest, then you build up an audience, you know, without having to ban on somebody else to green light, you have your own built in equity, and it helps you on the distribution front as well. When you go to premier your film or content and you tell the distributor, hey, cool it on your PNA bonds as well. We've got an audience of 10,000 investors here. We're going to promote their film to all their friends and family. So again, I'm hoping that it also leads for films to become more profitable as there's a built in audience and a buzz just inherently from doing things differently.

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9:40  

That was great. I actually wanted to sort of dial in on on this point. So can you explain, like, how Republic's model, in more detail, not only funds the project, but also then builds a dedicated audience that contributes to a project success? I mean, you've mentioned that Republic, you know, is a equity financing tool for unaccredited. Or accredited investors instead of crowdfunding, it's like crowd equity funding. But then, you know, entertainment's interesting, because we can also watch these things. Be fans of them. How is it really working out? What's that dichotomy like? I think you were talking about a little bit, but yeah, how does it build the dedicated audience that contributes to project success?

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10:19  

So very key point that you're mentioning now we're getting a little bit from like what what Republic is and can do to to what I have to also really be careful with in terms of the right projects that are right for this platform and and marketing together. So first of all, Republic is a regulated broker dealer, funding portal, and we cannot, you know, Republic is designed to be a neutral Marketplace, a neutral platform. As a result, we cannot favorably Market one securities offering over another. So really, the onus is on the issuer, the project, the producer, the filmmaker, the talent to Market to their community. Republic has a standard. We obviously, we have a large community of 3 million. When a project launches, we'll do a launch email. We will have a standardized, maybe three to four posts per project, raise life cycle, a podcast included. But usually Republic investors, we could say can count from between 20 to 40% of a raised volume, sometimes higher. Of course, if it's SpaceX that has been on Republic, it's much higher. But this is a new asset class, and we want to make sure for the success of both what goes on our platform and for the issuer raising money that you have, it might be the best deal in the world, but you have to have an X a megaphone to a community to get them interested in the deal. So in Cordell brought us in the Inglewood community and Snoop Dogg's kind of community, a hip hop the horror community is extremely active. Pressman and Robert Rodriguez are kind of these cult filmmakers. The Indian Bollywood diaspora is just massive around the world, and especially getting talent. The last aspect of this is as a filmmaker on this you know who is going to use this service? Does it fit the paradigm and the narrative of your key talent with their key audience? It's not. Again, we're trying to change the paradigm here from this is not crowdfunding. Please give me money. This is Crowdfunding. I'm inviting you to come and invest with me and make a film together and share in the upside. And these are, again, kind of drawing on earlier. These aren't weird cryptos or anything like that. These are legal securities that can pay dividends. Very

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12:27  

helpful. So you you've mentioned this a moment ago, but there's been some successful raises already on the athleticism side. The Watford Football Club, which raised, I think, was $5.5 million but then you've also done sky bound. How much did sky bound raise?

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12:46  

Sky bound raised 17 point 9 million. Wow, yeah, as equity shares into the company. And then this year, they actually released another raise to develop a video game based on the invincible TV show, IP, and they raised their $700,000 basically in a few weeks from a lot of repeat investors. I mean, you've seen

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13:07  

both sort of, quote, unquote, traditional funding for films and entertainment. Now you're leading the way here at Republic. Like, what does this tell you about the appetite for investing in entertainment, in sports right now? Like, is it? Why is this to you? Just so clearly, the future

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13:24  

with sports I love the anecdote that like sports fans, the way I see it, at least, they kind of have the rawest deal. They spend all their money on sports fandom. They get in trouble with their wives for getting too drunk at the games. They get into fights. They and what do they have to show for it? They don't own any part of their fan kind of, you know, investment stake. So, you know, with these platforms like Republic, can finally allow fans to come in. What better fan engagement is there than to own a piece of your favorite franchise or your favorite team or IP or equity? I mean, even in the Indian Bollywood, example, they're a studio, but a lot of this is just fan engagement to allow fans to get in on owning a piece of their favorite movies. I just think it can change the game from a necessary new capital raising perspective, from a fan engagement and Marketing perspective, it can be an additional PR story driving the buzz of your film coming out throughout the process, doing things differently, engaging fans and the audience before it comes out, which will hopefully boost theatrical attendance, theatrical Marketing and upside. That's for the film front, on the sports front, similarly, fan engagement less of a revenue share model, for example, in the Watford example, Watford football club in the UK, just a step below the Premier League, they allowed fans to buy in and own equity, really passionate fans. Elton John himself has been a lifelong fan of the club, but you also have certain perks that come with your equity investment. You get to go to special beer stands in the stadium. You get to have special seats and access to team events and things like that. So that's really meaningful.

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14:57  

That's awesome. So you know the name of this podcast? Is On Production. Our audience are producers. Every producer out there is always interested to learn, you know, new things about how you can finance a site of films or a project. Can you dig in for us, the sort of mechanics of what this looks like for a filmmaker looking to leverage Republic for funding, like, what advice would you offer them to make their project stand out. What is the workflow for sort of engaging with Republic, if other filmmakers actually want to bring their type of projects to the platform for fundraising,

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15:30  

as I mentioned, kind of together. It's about finding, I love to hear, of course, you know, different ideas. What is the right film or project at this moment that can engage, you know, a passionate and sizable community that will effectively, like, you know, raise equity investment on the platform. Together, we sort of figure out the narrative, as I was mentioning earlier, for that project, and, of course, figure out the investment terms that retail investors are going to get as well treat Republic. Republic does sit as just one item on your cap table. We do all the financial distributions to all those hundreds or 1000s of investors that come in. So I would just treat us, give us the same terms you would give to one high net worth individual, and we allow the retail investor base to basically pro rata play at those terms as well. So I encourage industry or favorable standards to your retail fan investors. So together, we decide on the narrative, we decide on what those terms are, and then we do we onboard basically your project onto the platform, and then we have a project management team. And what that entails is doing the due diligence part of it, which is essentially filing the paperwork to the SEC to allow for unaccredited retail fans to invest. That involves a kind of a very simple financial audit, working with your lawyer, or we have lawyers that can help guide through the securities kind of forms that need to be filed. And on the other side, we of course, do the Marketing building the page. What? What are, you know, explaining, really, in human terms, what are fans getting into? What is the project? A sizzle reel, explaining, again, simply how film financing works and what investors are getting into. And then we determine, sort of a launch period, how long is this live for? And we really develop, again, how to get that promotional, how to broadcast this deal to the widest audience. Is it influencers? Is it owned? Social media challenge from a from a talent, is it kind of a social cause driven documentary where you can tap, you know, different influential groups or organizations to talk about why this needs to be made. We kind of come up with all that together and and, yeah, and do groundbreaking stuff that's

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17:36  

super awesome. Marc so I've had a lot of awesome guests on this show, both professors of film finance, people that like, deal with the studios representing their clientele related to IP rights. You know, I It's been wonderful to chat with some of those people. I am really curious, though, and you know, in speaking with them, they have dug in, you know, around things with waterfall or like how the equity gets distributed after the fact. Do you have any like sort of way to articulate how that would work with with Republic, you mentioned that like Republic acts as like the entity on the cap table. What does that? What does that flow look like operationally? If a filmmaker goes ahead and is able to raise from the crowd this way for their films, absolutely,

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18:17  

really great points. So we, obviously, we also advise on what the best way to structure these deals are like, you know, is it into the parent company? Is it obviously opening a new SPV for a film or a development vehicle, and then Republic sits as a broker dealer. They take a cash commission, of course, on on the raise, Mount raised, and then the rest of the funds, kind of, you know, flow back flow into whatever vehicle the film sits in or the project sits in. So we figure out how to structure that. We guide you through the securities requirements of it being a US company, if you're tapping the US, unaccredited audience, things like that. And then in terms of, again, the Marketing and the explanation of how film works to retail audiences. Different structures are different development financing, of course, you know is you can get your principal and premium back upon principal photography, and then you get a slice of a producer's fee, a slice of a rights fee, slice the net profits. That's at least kind of the model we used for the Pressman film slate across multiple films. When it comes to production financing, I encourage you know the industry standard principle and premium from the waterfall with a pro rata share of the net profits, that kind of thing. When it comes to distribution financing at P&A, it's, it's often debt, maybe an equity kicker to really get, you, know, invigorate your sort of, your audience who wants to be part of the film coming out that they want to see out in the world. What is that valuation for, you know, equity for your for your production company or studio that you're building? Debt financing. I mean, it's interesting. You know, debt financing is there are credit facilities already existing to finance tax credits and things like increase. Sales. But Republic also offers a way to to basically syndicate some of that investment to a retail audience, or allow a retail audience to also participate in those debt deals, which, again, is just great kind of audience activation and creating this new class of or this new channel for for for credit. So it's all about again, explaining what I I just did as simply as possible to a retail audience. Film financing is notoriously complex, and I feel like a huge joint mission of Republic is to just sort of break down those barriers and demystify a lot of what's holding the film industry back today, which are these gate kept ways of doing things?

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20:37  

Super fascinating. Marc that's awesome. So looking ahead, I'm curious, you know, what are some of the exciting developments or projects that are happening at Republic and that aspiring, not even aspiring, but filmmakers and investors, should be on the lookout for.

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20:52  

Thanks. And before we go into that, I will say, obviously, a key piece that for the film community here is we are not talking about fractionalizing IP, of course, right? We want to keep chain of title clean. Another thing we explain, of course, is that we are basically sharing the economic rights, or the revenue rights, with with everybody and so on. Those types of deals, the revenue share deals. We have a development slate deal in the works from Robert Rodriguez. And we have, we have the Bollywood studio. We have an animation pilot, as I described. We have a horror director of many different horror franchises. And the play there is kind of, let's build the next, you know, horror studio, Blumhouse together. I do do events together, things like that. We do have a debt deal, which allows for, finally, retail to buy into those, you know, sort of IRRs of 16% those guaranteed IRRs, I don't want to almost give away too many names, because they'll hope there'll hopefully be a whole press release and Audience Activation structure in the ways that I was describing earlier. You know, teasers, getting influencers going on Reddit, like, getting the buzz going. So, yeah, I hope you will reach out. And I encourage you to follow the space, which is on republic.com/film,

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22:08  

that's interesting. One thing, I mean, you just mentioned it, Marc is IP. And IP is, like, a really important thing for many filmmakers as they like, are pursuing a career, especially as the industry has changed so much. Like, is there a world where IP ownership fractionally is available for retail investors via Republic? I mean, obviously some filmmakers really want to weigh the trade offs there. But if you're trying to bootstrap some sort of IP ecosystem, maybe there's a path here. I

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22:38  

agree, and this is where we kind of bleed back into that blue sky, nebulous territory of like the blockchain and and what people were trying to do with nfts until it breached securities laws. And this is something we were talking about earlier. Cameron, how I feel. There's, there's so much innovation happening in the film space. There's, there's Wrapbook, which is innovating production execution and accounting tools. There's new forms of, you know, direct distribution filling in the gaps of, you know, big theatrical releases and even, like kind of streamer releases, Republic has this kind of moat around it because we have those securities licenses. So we're clearly innovating additional ways of capital raising and financing film and, of course, perks that come with being an investor in a film. Obviously, you've invested certain amounts, you get access, you get credits, you get behind the scenes and things like that. But when it comes to fractionalizing IP, I mean, why don't we fractionalize IP? It's obviously so that you can easily, quickly sell your film and chain of title, so that your buyer doesn't have to deal with 100 contracts. But what blockchain technology and smart contract technology aims to do is basically automate all of that and put it on a on a, you know, clear and digital ledger. If you start to have the ability to do that efficiently, I think then you can allow there's that example that the you know, Blockchain people love to use, which is, you know, if only you could, like, take a Storm Trooper from Star Wars and then create your own film about his backstory, but you're still kind of, you know, in the correct in tow with the larger IP and residuals or payments or licensing deals and things like that. As blockchain can start to automate that there can be you can enable your fans to engage with your IP in super interesting ways. But I feel like those you know, those steps are cool perks and cool future additions that will come as we sort of figure out the technology behind all of this.

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24:32  

That's awesome. So what are the next best steps for our audience of filmmakers, in terms of, like, I think, for our audience here on production, not so much the fan base. I mean, I'm sure I know that many of our listeners are rabid fans of the Cinematic Arts, but they're also the doers, the makers, the builders of these types of projects, if they want to learn more about Republic and this form of crowd based equity funding. What are the next best steps? Marc

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25:01  

thank you for not calling it crowdfunding. There equity Bay. I love it, and I also encourage, yeah, crowd investing over crowdfunding and next best steps are, please drop a note to republic.com/film or any inquiry onto the republic.com portal or Cameron, feel free, of course, to link directly to me with anybody listening. I encourage people who want to kind of, you know, finance any stage of their project this way is, is to think about that, that narrative and that community access point, you know, if it's a sports documentary, and if there's an executive producer of a former athlete, for example, could they be incentivized to be like, Hey, Fan Base of me or this sport? Let's make this movie together and share in the upside. If it's a musician and a passionate fan base, let's make this mute, this documentary with and by the fans. Or if it's a community or social cause driven document, or that kind of thing, or or an IP that you want to involve the fans with on their sequel. And you know, if there is that kind of play and that kind of large community, I think it could be a real hit. It could be and, and I would love to sort of brainstorm on different projects that may or may not have those access points. The other thing that I will say, just to add to the earlier point again, I'm jumping around here, is when you asked about IP innovation, or innovation in general, as I said, we are that portal for you to access retail investing into projects. The cool thing is, what Republic is differentiating the space from a few of these other platforms is we have these shares in films or projects are underpinned on a blockchain, so that you can trade your share in that so that an investor can trade their share on a secondary Market. And that's something that's really cool as well, that we can do. And so

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26:49  

that's happening where explain that more like that's a totally that's that means, so that there's this classic Market of securitizing, crowd equity funding, but that there's also a secondary Market where the equity holder has theoretically some liquidity if they if they want it, that's really novel and interesting. It could. Could you explain more? And we should, then we should

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27:14  

wrap this up. Bad, yeah, I squeeze in that last I don't usually include that point in, sort of the core benefits right now about, you know, doing raising for projects in this way, but the vision of tokenization in general, just happening in, you know, on institutional levels, with banks and everything, is that you're basically making secondary Marketplaces more liquid, that you'll be able to that retail audiences will be able to trade their share in, whether it's in assets or whether it in funds and things like that, onto secondary Markets. So if you're an investor in a film, very hard to trade out your share, you know, to somebody else, if you want to exit early or send your kid to college or whatever it is, while Republic has an infrastructure in place where an investor in a film at a fractional level that we're talking about will be able to list their share on a secondary platform, which Republic also has called INX, and our and our sort of on the Republic platform. And you know, see, create a Marcetplace for that, for somebody else to basically take that share, which comes with those revenue, rights

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28:17  

and perks off of your hands. And again, the goal there is just to create more liquidity in this Marketplace, to create a robust sort of new investment pool of everyday investors. So yeah, that is, that is a great bonus. But that does, of course, happen after the fact, after an investment is filled and going and people own those shares. So the first step is to, let's make some movies together, and please, let's share ideas that's awesome. Well, Marc, thank you for joining me on production and sharing a bit about your background. What Republic is, what Republic film is, in relation to crowd equity funding for films and film slates. And then lastly, also this, this interesting bit about a secondary Marcet as well, once there is liquidity from an exit, whether that's a VC deal, a sports team, whatever it is, very, very interesting. Really excited for our audience to sort of be able to learn more and see if something like this works for them, but fascinating nevertheless. Thank you so much.

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29:19  

Thanks so much for having me, Cameron.