Investments in funds - 20.9.2019
Finnish investor IPR.VC has raised a new fund investing in European TV, film and interactive content in the media production and licensing business. IPR.VC Fund II has just launched its investment operations with capital of MEUR 42 and the target of boosting the fund to MEUR 60 within a year. The investor mix includes state-owned investment company Tesi, the FoF Growth III fund, pension investors, insurance companies, family offices, art and culture foundations, and fund managers.
IPR.VC invests in the audiovisual content business in Europe. Media content is a growing investment class that is not correlated to general economic trends. The global media industry has net sales of some 2000 billion euros a year, of which TV content generates roughly one-quarter, i.e. some 500 billion euros. Most of the sector’s venture funds are actively investing in media technologies, while production projects have been financed by TV channels and film companies. The motor for growth – media content – has not yet attracted VC investments on a large scale.
“We’re delighted to promote new digital media content business in the venture capital sector. Although the investment focus of the new fund is European, we believe that Finland will also offer internationally appealing productions that attract large audiences,” says Riitta Jääskeläinen, Tesi’s Investment Director.
Most of the new fund’s investments will be made hand-in-hand with international distribution companies, so they will simultaneously build an export channel for Finnish media producers. To date, IPR.VC has financed the TV series ‘Bordertown’ (‘Sorjonen’ in Finnish) which can be watched in 180 countries.
“Over the next few years strong growth is expected in subscription-based, video-on-demand services over the Internet, such as Netflix, HBO and Viaplay, and new distributors will enter the market. They will all need their own premier content to reinforce subscriber loyalty. This can open up a fast track to growth for Finnish TV and film producers similar to the one that smartphones and mobile apps opened up for Finland’s game industry,” points out IPR.VC’s founder and managing partner Timo Argillander.
“People will always consume media and entertainment, so it’s a recession-proof industry. During a recession people often cancel their holidays in the sun, but they’ll still go to the cinema, or watch streaming video-on-demand – alongside their Netflix subscription,” adds IPR.VC’s founder and investment director Tanu-Matti Tuominen.
Elements similar to collateral in investments
“From the investor’s viewpoint, the advantage of the entertainment industry’s content business is that the sector is fairly immune to macroeconomic business cycles. On the other hand, individual products have simultaneously high risk and volatile returns. Therefore, profit expectations are high. Elements similar to collateral are needed for an investment, and some assurance that returns will be disbursed in full,” says Tuominen.
Two-thirds of the fund’s investments are product investments either in a product or in product rights. Technically, these are an investment in the form of a loan, wherein the investor receives royalties as earnings.
“In the selection of investees, product investment works in much the same way as venture capital investment, but the money starts to flow back quickly after the product is completed. Consequently, the yield rate of the investment grows because of the royalties produced by the efficient use of capital,” explains Argillander.
The company makes one-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 higher than usual.
In its investments, IPR.VC follows tangible ESG criteria that address environmental, social responsibility and corporate governance issues. This policy also improves returns and reduces risks over a longer time span. The new fund will insist that investees address, for instance, environmental impact auditing, improvements to conditions in production, anti-harassment measures, and equality in HR policies.
For more information:
IPR.VC, Timo Argillander, Managing Partner, +358 400 448079, firstname.lastname@example.org
Tesi, Riitta Jääskeläinen, Investment Director, +358 50 309 2733, email@example.com
Founded in 2015, IPR.VC is a venture investor focused on media content. The company’s objective is to create European success stories from original media content and generate a good return for investors. IPR.VC currently has capital of EUR 62 million under management. IPR.VC operates in London as well as Helsinki, and has consultants in major European media centres. Together with carefully selected TV and film partners, the company develops investment targets that have the best potential for winning popularity in the industry and among audiences. http://ipr.vc/ | @ipr.vc
Tesi (Finnish Industry Investment Ltd) is a state-owned investment company that wants to raise Finland to the front ranks of renewing economic growth by investing in funds and directly in companies. We invest profitably and responsibly, together with co-investors, to create the world’s new success stories. Our investments under management total 1.2 billion euros.
Ambition for ownership and success www.tesi.fi | www.dtg.tesi.fi | @TesiFII