Duncan Cork (above, right) and Stephan Paternot (left) are the cofounders of Slated, a new online marketplace for investment in independent film. Fast Company spoke with Cork and Paternot to talk about crowd investors, walled gardens, and black swans.
FAST COMPANY: What’s Slated?
DUNCAN CORK: We’re aggregating investors from around the world and introducing them to a highly vetted marketplace of films seeking finance. We’re targeting a global investor network, similar to AngelList.
DC: Kickstarter is a donation platform first and foremost, as is IndieGoGo. We’re about aggregating equity investors looking to participate in the profits of the films.
STEPHAN PATERNOT: I’m a backer of IndieGoGo. Often when approached by first-time filmmakers, I refer them to IndieGoGo. If a seasoned filmmaker comes to me, someone with at least one successfully released feature who’s trying to raise closer to 1-15 million dollars, then I tell them to come on to Slated. Slated is a much more exclusive community.
You launched at Sundance. In the run-up to your launch, you winnowed some 2,000 film project submissions to a small list of a few dozen.
DC: The initial blast we sent out had about 2,500 submissions. From there, we picked out a few gems and directed them through the application process. Then it became a hand-holding experience. They were also informing us as to how the product needed to be made for it to fit well within the regular film financing industry. It’s a tough nut to crack, and no one has done it yet. There are some very large and real privacy concerns surrounding film finance.
SP: Unlike other Internet business models, where it’s the more, the merrier, in film, it’s the right people, the merrier. It’s not a question of, “If you build it, they will come.” You have to keep up a bit of a walled garden, to allow confidentiality over cast attachments and who the investors are.
Aren’t you guys connecting people who would be rubbing shoulders at Sundance or Tribeca anyway? What’s the value added?
SP: I’ve been a film producer about eight years now, and even the most established independent film producers say it’s a miracle getting any movie made. That always stumped me. I don’t think it should be a miracle for a film to get made. But it is. It’s a very inefficient industry. People are constantly navigating from project to project; they constantly need to find talent, and talent is busy or drops out; they need to chase after financing. You can be Darren Aronofsky making Black Swan, a film that wins awards, but it took 12 years to put that film together. Everybody is saying we need a new solution to communicate and get things financed more easily.
Last week, President Obama signed into law the JOBS Act, which changes the rules around online investing. How does this affect Slated?
DC: Crowd investing has just been legalized through the JOBS Act. The limit on how many investors you can have in a project before you need to become a registered security has risen four times, from 500 to 2,000. Also with the JOBS Act, some rules around general solicitations are falling away. President Obama signed it last Thursday, and now it’s up to the SEC to write the actual law. They have up to 270 days to figure that out.
So a film can have 2,000 investors now? I imagine that might please some filmmakers, since it would diffuse power among investors and perhaps give filmmakers more creative control.
DC: The larger the investor, the more involved they may be in the decision-making process, which can be frustrating. It’s an age-old conversation between the creative people and the business people. With the most creative people who have achieved large amounts of success in the past, investors would not want to get too involved in the creative process. But with a filmmaker with less of a proven track record, investors might feel they could take that opportunity to exercise their own creative ideas. I think crowd-funding is going to continue that debate. The crowd out there will also have an opinion, as an aggregate. They’re going to potentially influence filmmakers through blogging, through social media. Having one investor with some creative influence is one thing; having 10,000, each with their opinion, is something else. I don’t know if this is going to solve the problem that the creative person feels with the investor, or whether it’s just going to unearth a bunch of other frustrations.
That’s what technology is for: to unearth new frustrations.
SP: There’s a joke in the film industry, that all too often, one wealthy patron is writing a check for a film that might have no audience. A lot of filmmakers are saying, “We need to engage with the audience earlier on, so we know if there’s really an audience for this.” This is the beginning of that process.