What convinced you to set up IPR.VC and invest in creative media and film content, a sector that is inherently a risky business?
Timo Argillander: We are three co-funders: Tanu-Matti Tuominen, Jarkko Virtanen and myself and we all have experience in media content. So far Finnish investors have focused on technology, platforms, not content. We felt that it was time to attract their attention to the growing business and potential value of IP rights of media content. We therefore set up our company in September 2015 with an initial fund of €13m and last week, we were able to raise this level to €20m.

How did you manage to raise your budget from €13m to €20m in less than a year?
T.A: I’ve used investors’ language, explaining to them what investing in media content is about, how money flows to a project and how media content can be scaled up on an international level. What was appealing to institutional investors as well was the opportunity to spread their investment in a totally new area. 

What are your key criteria to invest, is there a cap per project, and at what stage do you usually come in? T.A.: We are a high risk-high return investor, so we are looking for big success stories and at the same time, prepared to take risk and to loose money. We are therefore mainly interested in projects that have the potential to make an international breakthrough. 

We look at producers’ track records and at the entire team behind a project. 

When a project is developed, producers look for funding from various sources, by selling off some of their rights as pre-sales agreements. What we are mostly interested in is how much revenue a project can create after delivery. We therefore look for projects where IP rights are still in the hands of the producer. Our funding help producer keep as much IP as possible. When you don’t give IP rights too early, then the IP is more valuable and it allows producers to have stronger negotiation power when they discuss for instance with Amazon or Netflix as there are less exceptions to rights licencing.  

We are not a gap financier, we like to discuss with the director, producer, to make sure we understand and share their vision. But we can also add some gap financing later on if necessary. 

A crucial element for us is to make sure producers put money aside for marketing as this is a key element to increase a project’s potential. If a project has international potential, we ask to know the marketing strategy for the project.

Do you invest in people/companies as well as in single projects?
T.A.: Absolutely. We provide funding for companies as equity funding, and project financing, or a combination of both. For instance we have invested in two ways into the Finnish pre-school character and universe Gigglebug. We’ve invested in the second season of the TV series Gigglebug [produced for YLE and SRF in Switzerland] and in the company Gigglebug Entertainment because we are interested in the company’s entire team and projects. When we take a share in a company, it is typically 10-30% and €2m maximum. So far we’ve invested mostly in companies with Finnish registration, but we can also invest around 15% (€3m) outside of Finland. Our comfort zone in terms of project investment is from €500,000 to €1m. 

When we invest in a project, we take an MG position, from the first revenue, with a certain formula. After that we have back end royalties. Our upside comes from these back end royalties. Our rule of thumb is that while we lose money on some projects, it should be possible for us to multiply our investment in an average project by 3 and hopefully, even by 10 in the best cases.

Tom of Finland by Dome Karukoski produced by Helsinki-filmi is one of the major feature films in which you’ve invested. What was your level of investment?
T.A.: We invested €900,000 in the film that had a budget of €4m. We came in at script stage, during development.

With the crime series Bordertown, what convinced you to come on board?
T.A.: We liked the feel of the Nordic noir drama and we believed in the team. We stepped in at a later stage, when distribution was already secured with broadcasters and with Federation Entertainment. We invested €500,000.

Do you have a set number of projects in which you’d like to invest?
T.A.: We estimate that we will do 15-20 major investments during the life of our fund. We expect to do these investments during three years starting from September 2015. So far we have made a total of 13 investments totalling €5m in films, TV programmes, games, music and multi-media products. We also have another investment tool called ‘Development loan’ worth €50,000. There are special reimbursement rules when the product is ready. Among the 13 investments made so far, half of them consist of development loans. This is a way for us to invest early in projects and to invest at various stages. 

For instance, we have invested in Finnish writer Salla Simukka’s Snow White trilogy. 

Typically, an author sells her/his TV or film rights to someone who develops it further. Here, we are the ones providing a development loan to the author who can hire someone to develop the project to the next stage and then contact Hollywood. Now the concept has been created and the author still holds her IPs and is in a stronger position with Hollywood to negotiate her rights. Our motivation is also that we are in a first position to fund the film project when it will start. 

What is your mid-term plan?
T.A.: Our main mid-term plan is to launch a new, bigger fund targeted to Northern Europe (the Nordic countries, Baltics and perhaps Germany). We will wait for the results of our initial funding and will then decide on the next step of our expansion.