Just two weeks ago, EarlyShares announced a ground-breaking partnership with West Hollywood production company, Five by Five Media. The partnership is a statement that the reach of Equity Based Crowdfunding goes beyond the traditional business realm. Entertainment is an untouchable industry with its own rules, players, and power. However, every project still needs money to be transformed from a vision to an on-screen work of art. Crowdfunding is the solution that production companies have been looking for. So, whether you’re in it for the artistic value, for your love of TV shows, or because you see the potential returns on investing in entertainment, EarlyShares has carved out a path for you to get involved in the investment process.
The biggest problem that television production companies face is the difficulty of securing that last 15-30% of funding needed to cover production costs. The campaign to fund this gap is appropriately referred to as gap funding. Since the bubble burst in 2008, high-wealth individuals and institutional investors have backed off of these investment opportunities. Money is tight, times are tough. But with the signing of the JOBS Act emerged the white knight that is crowdfunding. The implementation of Equity Based Crowdfunding means that everyday Americans will be able to take a look at TV show ideas or pilots and decide which ones they think are worthy of being created or appearing on their TV screens next season. Long gone will be the days where your favorite TV shows are killed during the networks’ “Pilot” week. It’s genius – validation of the show by asking the very same people who will watch the show to finance it as well!
In addition to the allure of being an investor of a hit TV show and actually getting to tune in every week, investing in TV programs or in the entertainment industry is great strategy for hedging risks in your investment portfolio. If you’re planning on investing in just one show or one industry, you take on more risk because you’re essentially putting all of your eggs in one basket. More risk means potentially higher losses; conversely it also means potentially higher gains. For example, what happens if you invest only in tech companies and the tech industry hits rock bottom? You lose all of your investment money.
You can avoid this outcome by investing in, for example, a tech company, restaurant, bio-tech company, and entertainment project or company. So if the tech industry crashes, you still have three other live investments. This common practice of offsetting a single-investment potential loss by making other investments is called diversification. In diversifying your portfolio by investing across different industries, you offset losses with other investments that bring you gains.
The beauty of the entertainment industry is that it has a reputation for being resilient in times of economic struggle. The idea is partially psychological and economic. From the psychological aspect, when someone experiences hardship or financial difficulty, the easiest way to escape from stress is to become fully engaged in a TV show or film and forget about the hardships of daily life. From an economic standpoint, it’s also the cheapest way. So apply those concepts to an entire economy that has fallen victim to economic hardship and you have a massive demand for escape – TV. When times are good, people watch television and go so far as to record their favorite programs for later viewing. But when times are tough there’s still a high demand for escape and for television programs – a reality that reinforces the strength of the entertainment industry.
Television show financing is very complex and intricate. And while there are many other considerations to take into account, the bottom line is that once again, one cutting edge industry – crowdfunding – has broken through and merged with another great industry to create a new method of stimulating the economy. More TV show financing means more jobs. It also means supporting artistic growth and vision and encouraging this large community of creative-minded people to continue creating, innovating, brainstorming, and dreaming. EarlyShares, Five by Five Media, and crowdfunding will help with the rest.
To become an EarlyShareholder, register at www.EarlyShares.com