IPR.VC: Targeting Untapped Content Investments
- IPR.VC is generating returns for its investors through investing in European filmed entertainment – TV, film and interactive content – a sector with little exposure by VC funds due to its specialized nature.
- Media and entertainment content is an asset class which is growing, lucrative and non-correlated
- IPR.VC’s investment instrumentation provides fast capital rotation, downside protection and low overall costs for its funds. Fund II IRR target is 21% (net). The strategy enables mezzanine risk level at VC class returns.
- Fully invested Fund I has verified IPR.VC investment strategy and served as a basis for Fund II strategy which started the investment period with €42m capital commitments. Final target size for Fund II is €60m.
- Media and entertainment industry is not correlated to typical macro-economic drivers or to stock exchange fluctuations.
- While venture funds have been actively investing in media technologies, leading often to rising valuations, media content has not yet attracted VC investments in a large scale.
- Media content is the growth business that IPR.VC is focusing on and it is this focus that brings IPR.VC funds proprietary deal flow, which technology funds do not cover.
The media content industry is booming due to the emergence of Internet distribution and changing consumer habits. The changes open up new opportunities in monetising media content assets, especially in filmed entertainment – movies and TV. In filmed entertainment, high-quality dramatic content that appeals to large fan bases is key for profitable business. Globally, filmed entertainment is a $500bn bullish market that is further strengthened by new players such as Netflix, Amazon, Disney+ and Apple, which are competing to add the attractive premier products to their services.
It’s a recession proof industry: people will always consume media and entertainment content. Historically entertainment asset performance has no relationship to the macro-economic trends and is not affected by stock exchange fluctuations. During economic downturns, people often cancel their holidays in the sun and go to see a film instead.
It’s a unique asset class for investors because media and entertainment content is non-correlated with the general economic trends. On the other hand, individual products have simultaneously high risk and volatility and therefore high profit expectations.
IPR.VC enables access for institutional investors the best European TV and Film productions and the growth of the business area and benefit from IPR.VC’s know-how in managing the high volatility and difficult predictability of entertainment assets.
IPR.VC’s investment instrumentation and agreements mitigate any unrewarded risks, such as production and producer-related risks. IPR.VC utilises warranty-like instruments which decrease volatility and protect the downside.
Unlimited return potential from rewarded risks. IPR.VC’s ability to manage the rewarded risks differentiate the fund from many of its competitors. While protecting the downside, there is an immense upside for the investments.
IPR.VC has built a high-quality deal flow by partnering with leading sales and distribution companies in Europe. IPR.VC has an internationally experienced team with connections to all of the key players in the industry.
IPR.VC’s investing instrumentation brings fast capital rotation and a high IRR. Investments are primarily debt-based instruments that incorporate the potential for unlimited returns in successful cases. The fund receives returns from the sales revenues of financed TV series and films, which allows earlier capital returns compared with regular PE funds. In the model, the costs of investment execution and exits are also clearly lower than in regular PE funds. The target IRR (net) is 21%.
The Fund follows the best practices of Invest Europe’s recommendations for Governing and Reporting Principles which have been widely used in private equity and venture capital industries. Investments are reported at fair value according to IPEV Valuation Guidelines. Reporting to investors follows Invest Europe’s professional standards. Reporting is done quarterly at a minimum to the Fund Investors (LPs). The Fund I investors are all Finnish companies or institutions.