Fund manager IPR.VC is looking for bold European drama productions for global distribution. It made its first investment in the TV series ‘Bordertown’ (Finnish: Sorjonen). Tanu-Matti Tuominen and Timo Argillander explain what support a programme-maker receives from a venture investor in European audiovisual content.
IPR.VC invests in the digital media content business in Europe through its two funds. A longstanding problem in the sector is the gulf between content producers and investors: production projects are accustomed to receiving their financing from TV channels and movie companies. Most VC investors invest in B2B technological platforms and software, and the real core of the sector – content – has been underserved.
Tanu-Matti Tuominen, a serial entrepreneur in digimedia, creative director and investor in technology, saw this as a market niche. He co-founded a company investing in content and a media-focused fund in autumn 2014 together with media management consultant and company director Timo Argillander and veteran venture investor Jarkko Virtanen.
“We challenge entrepreneurs to seek international success and new distribution platforms with their media content. New distribution platforms have widened viewers’ freedom of choice, and the demand for interesting multilingual content and media business have both grown strongly,” says Tuominen.
A pioneer in its field
The IPR.VC team’s wide-ranging expertise in the worlds of media and investment ensures they can offer diversified financing and skilled ownership to portfolio companies.
“Good investors bring measurable added value to portfolio companies. We actively support the management and participate in strategy development. We can say which things must be developed in a company or ongoing project so that the content will interest the international distribution companies we work alongside,” adds Argillander.
“We’re happy to have raised a sector fund promoting internationalisation that’s a pioneer in its field. There are surely many other sectors in Finland that deserve their own special fund. Someone needs to be bold and do the groundwork, then present a new field and its earnings potential to investors,” encourage Argillander and Tuominen.
Royalties and development loan investments
Two-thirds of the investments IPR.VC makes are product investments in either a product or in product rights. These are technically an investment in the form of a loan, wherein the investor receives royalties as earnings.
“Product investment works in selecting investees in much the same way as venture capital investment, but the money starts to flow back quickly after the product is completed, and the yield rate of the investment grows from the royalties produced by the efficient use of capital,” explains Argillander.
IPR.VC still makes a third of its investments as conventional venture investments in the ownership and capital of a company. Although exiting from these takes longer, the valuation gains expected are correspondingly higher.
Development loans can be offered to early-stage projects for developing content concepts. These can be attractive but risky investment targets or projects that need changes made to the content or commercial development before the actual investment is made.
“The most important capital from the portfolio companies’ viewpoint is, however, our assessment of the sales potential of a project and suitable partners for internationalisation, as well as tips we give for improving them. Our advice has also helped in developing those projects for which we haven’t granted financing,” points out Tuominen.
Entertainment series and movies
The second fund, to open in early 2019, will focus on the media production and licensing business from earlier investments. The fund’s target size is MEUR 60-70. Operations will expand, with a partner joining the enlarged team in London and consultants in Berlin, Paris and Copenhagen.
“We’ll focus our activities in Fund II on TV and movie content as well as on new interactive content. Earning the trust of investors is the alpha and omega in the sector fund business, so we’re delighted to have Tesi as a key investor in our new fund. Tesi’s involvement gives our fund a quality guarantee. Other investors trust the screening conducted by Tesi, making it easier for them to join us,” says grateful Argillander.
Responsibility is essential
Stories influence all sectors of society. That is why IPR.VC pays close attention to the quality of the media content it finances and to the values held by portfolio companies. Responsible investment follows ESG criteria, which address environmental and social responsibility and corporate governance.
IPC.VR’s contract terms include a clause under which a portfolio company promises to commit to an action programme to combat harassment. The investment company arranges an annual questionnaire in its portfolio companies, and makes an evaluation of how well each company implements responsibility and equality.
“Our partners appreciate the fact that we also follow up on ESG with concrete action. It increases our credibility and demonstrates that we want to improve the sector’s productive conditions and help develop better products,” says Tuominen.
The article was first published in Tesi’s Annual Report 2018 here.
IPR.VC Management Oy
What it is: A venture investor founded in 2015 and focused on media content. Its objective is to create European success stories from original media content and generate a good return for investors.
Where it is: A (soon to be) six-member team working in Helsinki, Espoo, Tampere, Lappeenranta, Finland, and London, UK.
Funds: The IPR.VC Fund I invests mostly in Finnish digital content companies that produce TV programs, movies, games and Internet content. Investors in the fund include Business Finland Venture Capital, Otava, Ilmarinen, MELA, Tradeka-invest Ltd, OP Financial Group, VR Pension Fund and Seafarers’ Pension Fund (MEK). The IPR.VC Fund II is a sector fund investing in European TV and movie business. Investors in the fund include Tesi, FoF Growth III, ELO, Konstsamfundet, Mariatorp Oy, Gustav Serlachius Fine Arts Foundation and Lyy-Invest.
Investments: IPR.VC’s first investment was made to develop Fisher King’s Sorjonen TV series (English: Bordertown). Other success stories supported by IPR.VC include the TV series ‘Love of the Wild’ (the international version of ‘Eränkävijät’), the ‘Tom of Finland’ movie, the ‘One Last Deal’ movie, the children’s animation and multimedia ‘Gigglebug’, and the ‘Cold Courage’ TV series.
Website: ipr.vc