I feel so lucky and honored for the opportunity to share my thoughts at World Conference on Creative Economy (WCCE) 2022. I discuss IP based Financing and how we can fund the creatives, along with two incredible panelists: Lilyclaire Bellamy (Executive Director of JIPO Jamaica) and Bero Beyer (CEO of Netherland Film Fund). My talk was focusing on investment in creative IPs which basically current INFIA's playground.
I mainly shared our framework of creative IPs investment which was constructed based on our experience and benchmark results of world class players in the industry. We
To put a little context to my story, let me start from our pivotal year, the year 2019. In that year, Infia decided to transform and shift our business model from media-agency into creative IP house. We focused on building creative IPs, develop our IPs to their full potential and help them utilize the power of their IP to monetize and build derivative businesses.
The new business model was executed by investing in early stage creators who show great potential which then successfully build their presence in the social media landscape. To expand further, we collaborated with other creative powerhouses to co-create and co-invest in more creative IPs.
This strategy allowed us to build a complete creative IP ecosystem, that can help potential IPs—The rookies- in developing both their creative and commercial side. Our ecosystem provided the rookies with role models, growth hacking system, creative consultation, commercial team, corporate services, financing and most importantly our accumulated lesson learned.
Before successfully grow and develop an ecosystem, we were also a creator who struggled to build our existence, to get noticed, to grow and to get funded. Having a “creator background and experience” is what made us special to most early stage creators. We understand their struggles, speak the same language, share the same fear (of being helpless, clueless), which makes us naturally relatable and thus become their aspirations. Being a creator put us on a big advantage when we play the investor role.
We understand well that a successful creative IP has a huge playground to play in. You can tap the creative IP into media and entertainment business, commerce, food and beverage, almost everything. Not to mention the licensing opportunity you'll get once you put yourself on the map. Unfortunately, the entry barrier is high. Global strong players dominate the market using their vast network, resources and money. While on the other side, the potential creators barely have access to those mandatory components of success
This phenomena has motivated us to help potential local creators compete in the asymmetric market. We want to help them capture those enormous opportunities within their own land. This 'why' has become our raison d'etre and our driving force to pursue our vision to help as many creators as possible and become the creative IP powerhouse in Indonesia.
We injected this vision into every aspect of our operation, including the investment system. We built a system that allows us to help a great numbers of creators. However, this is not an easy task. A lot of early stage creators don't have the basic useful information which can assist our decision making process. Early stage creators typically don't have a business plan let alone a financial report. Some even don't have any idea what business model is.
As a consequence, making a prudent decision is hard. While on the other side, the dynamic of creative IP business force us to be fast. “If you don't quickly capture an emerging opportunity, your competitors will”. Given these circumstances, the challenge is how to create an investment framework that allows us to be fast and prudent.
The process can be described as follows. We basically create a pipeline flow that can be divided into two parts. The first part is the sprint zone where we get superfast. While in sprint zone, we build a scouting system, assess our scouting database with initial assessment. We observe our candidate by testing the rookie's performance and traction when we promote their content with a more mature IP in the ecosystem. We've developed a set of tools: checklists, questionnaires, scorecards, matrices, metrics, etc which help us accelerate the flow in this sprint zone. Based on the sprint zone result, we then try to decide whether to invest in, partner with or leave the potential IP.
The second part, we call it the marathon zone, is where we get prudent. If an IP potential passes the sprint zone, we don't rush into things. Unless the potential is greatly visible, we often start slowly by creating partnership. We create partnership to build trust with the creator and at the same time partnership gives access and time to assess more. Using partnership, we are able to help the creator define their strategic goals, business model, and build cases.
Once we build cases and business plans, we get a clearer picture and also numbers to analyse. These allow us to make decisions that rely on a more insightful information rather than intuition. Partnership also allows us to judge the value of an IP better, now we have the basic figures. We then use standard valuation methods such multiplication of top line as well as EBITDA. We also use Discounted Cash Flow Analysis, scorecard and many standard tools that is commonly used by any financial institutions.
However, with fast paced business environment and highly dynamic competition again and again we are pushed to make
a faster decision. In some cases, we don't have time to build insightful partnership before we decide based on the financial figure we would have gained from the partnership. Instead, we had to take a guess that is hopefully accurate enough to the real value.
We don't like this guessing game because they are highly unreliable. So, we tried to develop a model that use other metrics as proxy to financial metrics. We developed a method to predict the value of an IP which instead of using the financial value of an IP, we use available metric such as social media metric, production capacity, market size. Utilizing past data from our mature IPs, we can build a simple prediction model, fine tune the value using scorecards, and put creator’s vision, team capability, business potential, and other factors into our consideration. The nonfinancial model might be far from perfect, but it helped a lot when we didn’t have enough information whilst we needed to decide fast.
I personally believe this approach can be improved over time using larger sets of data. It can also be expanded to another type of IP valuation as long as we have the data and active participation from multiple stakeholders. Collaboration is vital. Imagine if we put together IP creators, researchers, government, financial institutions, and investors into this initiative. We can build a robust model using a large set of data, allowing us to get faster and fairer valuation of an IP.
We need this kind of collaboration in creating a greater financing access for IP owners. These kind of collaborations allow those creatives to boost their growth, can help them pursue their dream and find their way to build world class IPs.