Small Business

A Tight Focus on Financing


By Vivek Wadhwa

"SKIN IN THE GAME." But no, Gene had a different reason for declining the investment: It seemed too good to be true. Gene's words: "I'm not saying this is a scam, but as a writer with a writer's imagination but a businessman's real-world experience, it has the characteristics someone with an orientation like mine could take to be a scam." I had no idea how to respond to this objection.

Frustrated, I asked my wife, Tavinder, if we could take some of our modest savings and invest them in this venture. She knew how I had become emotionally attached to this project and said that she would support me in whatever I decided. So I told Brad to start the project, and I would get him the money one way or the other. I also decided to get much more involved with this venture myself.

Once the project had started, and this was more than a business plan, I called some friends to tell them I had taken the role of executive producer and was funding this project myself. In the info-tech business, venture capitalists call it "skin in the game." And they generally won't invest in a company unless the founder has not just sweat equity but some of his own cold, hard cash tied sunk into the venture.

MATTER OF TRUST. Evidently, my willingness to take the risk convinced others to do so. I was so relieved when nearly every friend I called agreed to invest. This made me realize that, even though most people had lost interest in making investments for the sake of investment, they will take a chance on people they know and trust. Within a week, I had received commitments for $40,000 more than we needed to start up.

Things moved very fast after that. With the enthusiastic involvement of Duncan Clark, ex-Columbia Tri-Star International division president, and Hollywood director Richard Martini, we scaled up the targets, produced a world-class script (see BW Online, 2/17/04, "The Plot Thickens, Slowly"), recruited top players to help with the production, including well-known movie stars.

We also decided that we would produce a movie of the quality of My Big Fat Greek Wedding and Monsoon Wedding, and not take any shortcuts. Duncan asked that we triple the budget and produce something that he would feel comfortable with marketing to the leading worldwide distributors.

MINING CONNECTIONS. The new plan required us to raise an additional $400,000 for the production, and $300,000 for marketing. Marketing dollars should be easily obtained once the film had been completed and investors understand what they were betting on. But that still left the challenge of raising the $400,000. Duncan asked his partner, Doug Falconer, CEO of Pacific Media & Entertainment, to help dig it up.

Doug was also an ex-technology executive and a veteran of the entertainment industry. He was very well-respected and connected in the financial community, and he had been both the producer and executive producer on several films. He had raised tens of millions of dollars and was excited about our Bollywood project.

He felt that top investment groups would be very interested in this but had a concern that the amount we were looking for might be too small for their portfolios. He immediately contacted six entertainment-investment groups, and each expressed strong interest. They now needed to go through their normal due diligence and decision-making processes.

LIMITING RISK. Having been through the venture-capital fund-raising process many times and knowing how long and difficult it can be, I was reluctant to bet everything on Doug's contacts. We agreed that we would have a dual-track process to complete this funding. I would seek private investors while Doug worked on venture capitalists, and the first one in line with a check for the full amount would win.

So, we put together new documents and plans, and a funding document that allowed for a maximum investment of $25,000 per accredited private investor. Even though we could have had a higher maximum, I didn't want anyone to take too much of a risk. After all, just in case something went wrong with our project, I still wanted to have some friends left in the world.

So I passed the word on, and arranged for Brad and his movie-star wife, Kashmira Shah, to visit us in North Carolina and discuss the investment. To my amazement, friends introduced me to other friends, and by the time of their visit, I had already received $300,000 of investment commitments. The word was out about this project and its goals. The Indian community saw this as a chance to educate and help change attitudes of the American public about South Asians, and my American friends loved the idea of investing in something so exotic and exciting.

Hardly a sale needed to be made when Kashmira mingled with our guests at a lunch I hosted, and Brad presented an overview of the project. The only special request I received was for photographs with our movie star. I was so relieved that we didn't have to go down the path of dealing with venture capitalists and were able to keep working with friendly investors. Now that's a true Hollywood happy ending to act one.

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Edited by Alex Salkever


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