Jon Gosier is the Founder and CEO of FilmHedge, a financial lending platform for TV and film producers. FilmHedge provides solutions for both film financiers and producers looking to borrow.
In this interview, Gosier discusses his inspiration for creating FilmHedge, the company’s business model, and his goals for the future. He also shares his thoughts on the current state of the film and TV industry and the emerging technologies that are shaping its future.
What inspired you to create FilmHedge?
I’d been working in tech and VC for about 10 years and I’d learned how long it can take for a tech investment to pay out (usually 5 to 10 years), if ever as the fail-rate of seed-stage startups is like 99%.
After selling a company back in 2017, with a lot of new money to invest, I started to think about different asset classes to get involved in. I put some money into a movie, a $10 million sci-fi film called SKYLIN3S that repaid me my money with 15% interest in around 7 months.
I couldn’t believe it. I have companies that I invested in in 2010 that I still haven’t seen a dime from! After that, I was convinced that scaling Film/TV lending was a huge opportunity I had to pursue.
Can you explain how FilmHedge’s business model and how it benefits filmmakers and investors?
FilmHedge is one of the largest and fastest growing private financiers of Film/TV productions. 10% of all major Film/TV productions in the United States apply for FilmHedge lending (Data source: MPAA, Box Office Mojo).
The real problem we solve is for institutional and accredited investors who want to allocate capital to Film/TV but in a risk-mitigated way.
FilmHedge is a private credit platform, a lender, to TV and Film producers who need liquidity. We evaluate their productions based on pre-sales, distribution agreements, or tax incentives – all deals any filmmaker can negotiate before they even pick up a camera. If any of those are in place, FilmHedge advances up to $20 million in cash to a producer.
Our model is simple, if there’s a sales contract or tax incentive that’s worth say $5 million to the producer or production company. We’d advance say $4.8 million to the producer. When the receivable pays out, it pays us back instead of them.
Because we only offer debt, this allows producers to retain equity (the most valuable part of their ownership). So the problem we solve for TV/Film producers is we help them retain ownership and be more profitable.
What criteria do you use to evaluate potential investment opportunities in the entertainment sector, and what strategies do you employ to mitigate risk?
A lot of inexperienced Producers think the way to make a movie is to ask as many rich people as they can find to invest money and hope for the best. This is incredibly risky and there’s very little recourse for an investor if they give a lot of money to a producer who may not do the right thing, or who may even do the right thing but ends up making a movie that isn’t ever distributed to the public.
In both scenarios, the investor is simply out their money.
FilmHedge is a platform where films are financed after thoroughly being de-risked. Our team has been behind more than 35 feature film productions starring A-list talent, with budgets ranging between $5 million and $35 million. We’ve had zero defaults, incurred zero losses, and all of those films have made their way to places like Hulu, Netflix, Apple, Paramount, and national and international theatrical distributors.
We apply bank-grade underwriting and risk mitigation and apply it to independently financed productions.
This allows our institutional and accredited investors the opportunity to do something they normally wouldn’t have the risk tolerance for, financing Film and TV.
How has the film and TV industry changed in recent years?
Business is booming. There has seriously been no better time in the history of Hollywood to be a creator. There are more places than ever for people to distribute content, to consume content, and more ways for that content to be funded (at every level).
Groups like our friends at Legion M make it possible for regular people to invest in movies and for any Producer to crowdfund their budget, BondIt and Buffalo 8 allow independent filmmakers a better path to get coverage on their scripts and an opportunity to be financed as well, Slated.com allows aspiring creators to meet and match with financiers based on their investing preferences.
All groups that do nothing like what FilmHedge does yet all of us are expanding opportunities for financing (and investing) in Film/TV.
On top of that, groups like Netflix, Hulu, Amazon, Apple, Paramount, and others are on buying sprees to acquire as much independently produced finance as possible, or they license existing content libraries (legacy shows that already exist).
I say all this to say that there’s been an exponential growth in opportunity for everyone. This is what has created the opportunity for groups like FilmHedge to pop up only four years ago and become one of the largest and fastest growing private lenders in the space. We originate over $1 billion in loan applicants annually and each lending opportunity is around $10 million grossing 16-27% each.
It’s an incredible business for us.
What current trends or emerging technologies in the entertainment sector excite you the most, and how do you see them shaping the future?
I think the best emerging technologies are related to A.I. specifically NeRF technology (Neural Radiance Fields) which allows one to ‘scan’ any photo or video of an environment and turn it into a fully immersive 3D space that can be manipulated in a computer.
When you couple that with XR Stages and LED Screens, it means you can very cheaply re-create any real-world location as a digital set without spending 1,000s of hours computing or spending on special FX.
This is going to greatly reduce the cost of producing everything from Film and TV shows to video games. I’m currently producing a film called COLLATERAL DATA where we’re experimenting with these technologies and it’s the most amazing thing I’ve ever seen!
What are your goals for FilmHedge in the next 5-10 years?
FilmHedge is already the fastest growing lender to Hollywood and we’re already on the path to be a unicorn company in the next 18-24 months based on revenues.
What is really accelerating is the sheer demand we now have from accredited investors who are looking for new places to invest. They might be angel investors or high net worth investors who have been used to writing checks to companies with a 99% fail rate like tech on a hope and dream and rarely ever seeing a return.
When they learn they can write a check into an asset class that has a 99% success rate (the complete inverse of what they’re used to), earn double-digit interest returns, in less than 12 months from a platform with a demonstrable track record of returns (the content they’ve actually enjoyed at home on streaming channels or in theatres) it’s a no brainer. If nothing else it allows them to diversify into a new asset class beyond real estate and tech investing.
Our mission is to build a new financial operating system for Hollywood!
by Tony O. Lawson
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