Global Film Emperor

Chapter 504 Preparing for Series B Funding
"Ok?"

"The company is short of money."

He frankly described the company's current predicament, gripped the steering wheel with both hands, stared straight ahead, waiting for the next change at the red light, and then slammed on the gas. The car shot off like an arrow, roaring and disappearing into the distance. He seemed to want to experience as much of the driving pleasure as possible before losing his beloved car.

"Are you gambling again?"

Do you think I'm the kind of person who would gamble with company funds?

Mickey rolled his eyes at Lu Ze, popped a piece of chewing gum into his mouth. Although he had a gambling addiction and liked to go to the casino to play a few rounds whenever he had some spare money, unlike those idiots who lost everything in a moment of passion, he always believed that he would lose everything if he went to the casino and never pursued winning money back, even though he was really good at playing cards.

In contrast, he seemed more indulging in the thrill of lavish spending than being addicted to the game. He would gamble when he made money, and leave once he had lost enough to eat. He never considered recouping his losses through gambling, nor would he use company funds to squander money, because he knew that was the capital he could continue to squander.

This is what distinguishes Mickey from ordinary people. If we're talking about self-control, then truly self-controlled people wouldn't be at the gambling table. But if we're talking about someone who lacks self-control, then at the gambling table, he can consistently maintain his spending habits and avoid taking desperate gambles. In some ways, his self-control is terrifyingly strong.

Perhaps realizing he had said something foolish, Lu Ze didn't immediately continue the conversation. Instead, he carefully considered how much the company had actually spent during this period.

From the very beginning of establishing the brokerage firm, the visible expenses such as renting office space and decorating did not actually account for the majority of the company's total expenses, so at first Lu Ze did not feel that the expenses were high. However, the problem was that the amount of those invisible expenses was quite huge, and as he calculated each expense, Lu Ze began to break out in a sweat.

From the very beginning of the agency's establishment, the biggest expense was not personnel costs, but rather the fees incurred from collaborating with other agencies. To put it bluntly, the amount of money spent on paving the way was simply too enormous.

Conventional talent agencies typically need to exchange resources with other companies or directly with downstream industries, such as film crews, to help their actors quickly enter the market. But the question is, does Mickey have that many friends in the European market? Or does he even have any friends at all?

No, even at Gambiano Pictures, a shareholder and sister company, apart from President Fatini who has a good personal relationship with Mickey and Lu Ze, they still maintain a professional attitude in their cooperation. At most, they might take a small kickback from you, which is already quite generous. Expecting them to go out of their way to help you is pure fantasy. After all, they are investing in your Universal Brothers Pictures, not Universal Brothers Agency. Your own training of actors has nothing to do with them.

In a European market where money trumps personal relationships, the only way to quickly promote your artists is through financial means: establish friendly partnerships with other agencies, build networks, and exchange resources—in other words, swap roles.

This isn't a compensation offer after securing a role; it's merely a price to connect you with other agencies. If you want more roles in the future, you'll still need to offer that agency some financial compensation so they'll take your actor and pass them on to downstream production teams.

This is the initial cost that a small company has to pay to get a share of this oligopolistic market. This expenditure alone has consumed nearly 30 million euros of the company's start-up capital in just six months. If it weren't for the preparations to open a talent agency this year and Mickey's decision not to distribute profits from the film studio, the company would probably have been completely wiped out.

Don't think this amount is too exaggerated. If the global economic downturn after 2020 hadn't caused the entertainment industry to shrink, the amount of money spent would have been even more outrageous. After all, it's a bubble, and prices change over time. As an upstream industry, film and television production is the foundation of the industry. Without a solid financial foundation, you simply can't make a living from this.

After calculating the company's current funds and deducting the production costs of Mickey's next movie, Lu Ze roughly understood the company's predicament. No wonder Mickey wanted to sell the car. Even if the car could only sell for a maximum of 1.5 million euros, it would be a drop in the bucket for the company's needs. At most, it would only cover the cost of a medium-sized scene. But... every little bit helps.

Suddenly, Lu Ze envied Fatini's financial situation. He never had a shortage of funds when making movies, and even kept adding investment. If the scene was not big enough, he would throw money at it. If the props were too cheap, he would throw money at it. It was like he had a money printing machine in his pocket, and money was spitting out.

Looking at the few small fry at Global Brothers, who had barely managed to get a little money and were already back to the days of having to share a cup of milk tea with two straws, Lu Ze leaned against the glass and sighed sadly. In a weary tone, he announced the only solution to the company's current cash shortage.

"Then we'll have to raise funds."

"Yes, we've already spread the word, and I reckon it won't be long before someone comes knocking on our door."

Individual investment is against the rules for an established company. After all, "Global Brothers" now has three shareholders, and any individual investment from any party will affect the share price fluctuations. You can't just invest money for nothing and then not change the share price at all, right? But how much of the change should be allocated?
Even with valuations in place, everyone at Universal Brothers, whose valuation is still rising and whose total value is unstable, wants to hold onto their shares. No one will easily sell them. Lu Ze and Mickey's relationship is fine, but if there are any changes in the shareholding, Gambiano will still be able to profit. Neither of them wants Gambiano Pictures to benefit for nothing.

Therefore, Lu Ze never considered touching his personal assets of over ten million euros unless there was a joint investment from three parties. But the question is, can Mickey provide an equivalent amount of cash flow? It's very unlikely.

Now there is only one last way to go, which is to raise funds and let big players enter the market. But there is a problem: it has only been less than two years since "Global Brothers" raised its Series A funding.

For a high-tech company or an IT company, the speed of financing is extremely fast. After all, they need a lot of cash flow to invest in marketing. It is said that the promotion cost of most apps is about 200 yuan per person, and it is even more in the European and American markets. Therefore, rapid dilution of equity is inevitable for high-tech companies.

However, the entertainment industry is slightly different. Although you can think of a movie as an app product of an internet company, the profits and traffic that a movie can generate are relatively limited. Therefore, the value of an entertainment company can only be measured by the accumulation of a large number of works and the value of public figures. In addition, the risks of investing in the entertainment industry are extremely high, so it is naturally not particularly favored by investment banks. This is the fundamental reason why the value of entertainment companies rises slowly.

This is the disadvantage of Universal Brothers Pictures. First, the company currently has very few works. Although they have excellent reputations, their profitability is not comparable to commercial films, so the returns are not considerable. If they had a big IP, the situation would be completely different. Unfortunately, Universal Brothers Pictures has long been making original screenplays, and the themes themselves are difficult to develop into IPs. Therefore, in the eyes of most investment banks, their small company is really not worth much money.

Lu Ze believed that investment banks would definitely be interested in his company. After all, every little bit helps, and for capitalists, making an extra dollar is something to be happy about. However, he also had to admit that the shares of "Universal Brothers" were really not worth much money.

Spending money always brings unpleasant emotions. The slow removal of those beautiful, all-powerful items from one's body inevitably causes inner pain. Therefore, neither of them was particularly enthusiastic throughout the journey, as investing capital was a risky endeavor; at the very least, it required sacrificing certain freedoms. They had both made some predictions about their future, but not enough to deter them. Their most pressing issue was how to acquire more capital and more cash before their Series B funding round.

“We should release some more awesome movies and more famous actors now. 'Nothing to Hear' is key, but it’s not enough, there are too few. I think... we should create some intellectual property.”

Upon arriving in the city, a large number of homeless people were loitering around. An elderly man in tattered clothes sprayed some foam water on the car window and quickly cleaned it before the green light. He then stood at the driver's side door, hunched over, his eyes slightly daring, and hesitated to make a sound.

Mickey rolled down the car window, slightly lowered his sunglasses, and chewed gum incessantly. He stared at the old man for five or six seconds. This wasn't a deal that was guaranteed to succeed, so the old man wasn't sure if this guy, who seemed like a bad guy, would actually give him some money. But in the end, he did succeed.

After rummaging in his pocket for a long time, Mickey pulled out a few coins, about 150 pence. He waved to the old man, who was somewhat excited. He stretched out his hand, which was covered in dirt under his fingernails, took the money, and looked at it, but was somewhat disappointed.

“Sir, this might be… too little. It’s not even enough to buy a bottle of beer, and your car is so nice…”

"Your window cleaning skills are terrible. Look, it's covered in dirty water stains. You only get this much money for a few seconds of work. Get out of here, I'm practically working as a laborer for someone else."

“Well, sir…”

Mickey was tough and sharp-tongued. Out of respect for external value, he dared not refute, and could only put on a pitiful look as he looked at Lu Ze in the passenger seat.

"What does it have to do with him? Did you work for him? Are you a car washer or a beggar? You have dignity too, right? Leave, right now, I'm leaving... Damn it, this damn economy."

The light turned green. Before starting, he flicked his cigarette ash out the window, occasionally glancing at the rearview mirror to see the dejected old man still standing in the middle of the road. Finally, somewhat annoyed, he slammed his hand on the steering wheel, letting out a sigh of frustration. Every Englishman who was unhappy with his day would curse like him. If the economy were better, perhaps... the current problem would no longer be a problem.

Lu Ze didn't want to discuss the economic downturn with him, after all, it was a global issue. In China, the pressure on employment was indeed gradually increasing, but it wasn't as bad as in Western countries, where people were going bankrupt and ending up on the streets every day. Especially in the UK, where the economic situation was already somewhat weak after Brexit, the expected V-shaped economic recovery hadn't materialized yet. So, after the interlude, the conversation returned to the main topic, bringing up Mickey's earlier talk about creating an IP.

"What aspect of IP do you want to work on?"

"I haven't figured it out yet. The script for 'No One to Listen To' has kept me very busy, so I haven't had any clue. But no matter what, it will definitely not be a superhero movie. We can't compete with Marvel, and the investment is too big. It's not something we can afford. The most important problem is that neither Zhuang Yu nor I have the ability to create this kind of IP series movie."

Mickey has always been honest about his abilities; if he can't do something, he simply can't. Otherwise, he wouldn't have bothered to bring Zhuang Yu from China to help him create a character. Lu Ze wasn't surprised by this.

"Where are the newly hired screenwriters?"

"They're clueless too. They don't know how to create a big IP with a low budget. It's too difficult. We can only do it slowly and can't rush it. Right now, all we can do is increase the company's film portfolio. I started collecting films last month."

Film acquisition, as the name suggests, involves finding privately invested films on the market and collaborating with them through buyouts or revenue sharing to distribute them on videotape or even in theaters.

Generally speaking, most privately funded films are shot by amateur or new directors. Due to their relatively immature techniques, the actors are mostly inexperienced, and the production costs are low, the visual and auditory effects are very rough, which is unacceptable to movie fans who are used to watching big-budget films. For example, "Siping Youth".

However, this does not mean that there are no high-quality movies among them. For example, Mickey and Lu Ze's first film, "The Effect," is a typical example of a film that was a huge success on DVD. It's just that compared to the vast number of bad movies, the probability of finding a good movie is extremely low.

However, given that Universal Brothers lacks sufficient resources and funds to produce films, this is the only path they can take.

Have you found any good movies?

"It's not that easy. Most of the people who come to me make grand promises, but in reality, they're all terrible. I've basically given up on that idea now. The only thing I'm hoping for now is the film that's sent over next weekend. I have a feeling that if I'm lucky enough to find a decent film, it'll be the one."

"what type is it?"

"A horror movie. I received part of the script, and it looks pretty good, quite original. The director is a graduate of an academy and has professional skills. The movie is called... I think it's something like that..."

"The Ghostly Tales... The True Story of Ghosts".

"..."

(End of this chapter)