Please describe your proposed solution.
CineWealth is an investment platform that aims to address the challenges faced by production houses with securing capital during the post-production phase of movies.
Traditionally, production houses experience a funding gap between selling movie rights to buyers, such as OTT platforms like Netflix and Amazon Prime and audio labels, and receiving full payment. CineWealth bridges this gap by providing revenue-based financing opportunities, allowing retail investors to lend money to production houses based on the sale contracts they have with buyers.
What’s this funding gap for production houses?
Production houses often face a cash-flow problem during the post-production phase of a film once they've sold the rights to the film but before the buyer (such as Netflix or Amazon Prime) has paid in full. While the production budget covers the costs of scripting, recording, and directing, post-production involves additional expenses such as editing, sound effects, dubbing, and music.
When movie rights are sold to a buyer such as Netflix or Amazon Prime, a contract is signed and the buyer provides a payment timeline. In this scenario there is an instant need for capital that is not satisfied quickly enough. CineWealth solves this by offering to lend money to the production house based on these sale contracts. CineWealth also obtains a direct-collection letter from the buyer, which ensures that the remaining payment is remitted to the investors according to the agreed timeline.
By participating in revenue-based financing, retail investors gain access to asset classes that were previously limited to High Net Worth Individuals (HNI). CineWealth offers investment opportunities in movie rights and audio rights, allowing investors to earn a return from revenue generated by successful movies. The platform not only provides production houses with the necessary capital to meet their day-to-day requirements but also offers investors the chance to diversify their investment portfolios and earn fixed returns.
What's Revenue-Based Financing?
Revenue-based financing in movies, also referred to as royalty-based financing, is a financing approach that allows production houses to raise capital by offering investors a share of the company's gross revenue in exchange for their investment. This method provides a way for production houses to meet their financial needs while giving investors an opportunity to earn returns based on the success of the movies they have invested in.
How does it work?
1. The Problem Cinewealth Solves:
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Funding Gap for Production Houses: Production houses face a significant challenge in securing the capital required for day-to-day operations during the post-production phase of movies. Although they have sold movie rights, they often experience delays in receiving the full payment from buyers, leading to a funding gap. CineWealth addresses this problem by providing revenue-based financing, enabling production houses to access the required capital while awaiting payment from buyers.
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Limited Investment Opportunities for Retail Investors: Traditionally, certain asset classes such as movie rights, have been accessible only to High Net Worth Individuals (HNI) due to their large investment sizes. CineWealth aims to democratize investment opportunities by allowing retail investors to participate in revenue-based financing. Introducing a blockchain-based model allows for increased accessibility and introduces investment opportunities that anyone, anywhere can participate in. The platform gives retail investors a new chance to diversify their portfolios and earn potential returns from the movie industry.
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Predictable Returns for Investors: Revenue-based financing provides investors with a fixed cash flow model, ensuring more predictable returns compared to other revenue-based investment options. By investing in secured movie and audio rights, investors can earn fixed returns within a relatively short period, ranging from 3 to 18 months. This stability can be attractive to investors seeking fixed returns on their investments.
By addressing these challenges and providing a platform for revenue-based financing, CineWealth offers a win-win solution for both production houses and retail investors. Production houses can bridge their funding gap, while retail investors gain access to investment opportunities in the movie industry and the potential to earn fixed returns.
2. Risk Management by CineWealth:
CineWealth employs a comprehensive five-prong approach to evaluate movie deals and manage risks effectively. The evaluation process includes:
1. Onboarding: Only movies that have been sold to rights buyers (OTT platforms and audio labels) are considered for investment. This ensures that the movies have already secured buyers, reducing the risk of default.
2. Evaluation: CineWealth evaluates movies based on various parameters to assess their potential for success and returns. These parameters include:
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Types of Movies: Movies are categorised as small/mid-budget or star movies, considering their budget and market potential.
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Stage & Progress of the Movie: The current stage of the movie, such as post-production or nearing completion, is evaluated to gauge the progress and timeline for revenue generation.
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Relationship Between Rights Buyer & Production House: The strength and history of the relationship between the rights buyer and the production house are examined to assess the reliability of revenue collection.
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Track Record: CineWealth considers the track record of the production house and the success of their previous movies to evaluate their ability to deliver on revenue projections.
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Pipeline of Movies: The availability of a strong pipeline of movies from the production house indicates a consistent flow of revenue, reducing the risk of investment concentration in a single project.
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Other Rights Partners: CineWealth also assesses whether the production house has partnered with other reputable investors or entities, which adds further credibility and risk mitigation.
3. Discounting Eligibility: CineWealth offers financing by discounting a portion (typically 60-70%) of the contract value between the production house and the rights buyer. This ensures that the investment is adequately secured and provides a buffer against potential fluctuations in revenue.
4. Verification: CineWealth verifies the proof of advance received by the production house and the assignment contracts with the rights buyer. This ensures that the investment opportunity is based on genuine contracts and reduces the risk of fraudulent or invalid deals.
5. Security: To secure the investment, CineWealth obtains various security measures, including:
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Direct Collection Letter: CineWealth receives a direct collection letter from the rights buyer, which serves as a binding contract stating that the buyer will remit the remaining payment directly to the investors through an escrow arrangement.
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Post-Dated Cheque: The production house provides post-dated cheques as an additional form of security, guaranteeing the repayment of the investment.
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Indemnity and Personal Guarantee: CineWealth may also require the production house or key individuals to provide indemnity and personal guarantees to further secure the investment.
3. Products Offered by CineWealth:
Invest in Movie/Audio Rights: CineWealth allows investors to participate in revenue-based financing by investing in secured movie or audio rights. The user flow for investing in movie rights typically involves the following steps:
a. Exploration: Users can browse the available investment opportunities on the CineWealth platform, where details such as the minimum investment required, rate of returns, tenure, taxes, and deal size are provided.
b. Profile and KYC Completion: Once registered, users need to complete their profile by providing the necessary details and undergoing the KYC process. This includes submitting a valid PAN card, address proof (such as Aadhar), and bank account details for payouts.
c. Joining the Waitlist: After completing the profile and KYC process, users can join the waitlist for the specific movie opportunity they are interested in. The waitlist ensures that only interested and committed investors have access to the investment opportunity.
d. Investment: Once the investment opportunity is open, users on the waitlist will receive notifications and instructions on how to invest. They can then proceed to invest the desired amount through the platform.
We have already started developing the platform, and we are excited to share some exclusive previews of the platform's user interface (UI).
Landing page:
Investor Dashboard:
4. Benefits of Blockchain-Based Revenue-Based Financing:
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Transparency: Blockchain technology provides a transparent and immutable ledger of transactions. All investment agreements, revenue distributions, and movie-related data will be recorded on the blockchain, ensuring transparency for all stakeholders involved.
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Flexibility: Utilizing blockchain technology and NFTs, we are establishing an ecosystem that enables investors to efficiently trade their NFTs in liquid secondary markets even before the maturity period. This enhances the overall efficiency of the investment process, providing investors with greater flexibility and liquidity options.
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Access Retail Investors: Blockchain-based revenue-based financing opens up investment opportunities to retail investors across the world. Investors can participate in the film industry and diversify their investment portfolios.
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No Additional Fees: CineWealth does not charge any fees to investors. The fees are borne by the production houses, and the returns on investment are credited to investors.
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Fixed Returns: Revenue-based movie financing offers attractive fixed returns, typically ranging from 12% to 18% per annum. This makes it an appealing option for investors who prefer relatively stable and predictable returns on their investments.
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Diversification: Revenue-based movie financing provides an opportunity to diversify investment portfolios. Unlike traditional market-linked investments, movie financing is not directly influenced by market fluctuations, offering a unique avenue for diversification.
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Short Investment Tenure: With revenue-based financing, investors can earn fixed returns within a relatively short tenure of 6 to 12 months. This shorter investment period allows for quicker returns compared to other fixed-return investment options.
5. Implementation Steps:
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User Registration and KYC: Users will register on the CineWealth platform and complete the Know Your Customer (KYC) process. This will involve providing personal information and necessary identification documents to verify identity and eligibility to invest.
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Cardano Wallet Creation: Upon successful registration, a Cardano wallet will be automatically created for each user in the backend. This wallet will securely store their investment NFTs, significantly improving the user experience as users won't have to go through the hassle of setting up wallets themselves.
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Browse and Select Investment Opportunities: Users can browse through the available investment opportunities, including movie rights and audio rights, listed on the CineWealth platform. Each opportunity will provide details such as minimum investment amount, expected returns, tenure, and other relevant information.
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Investment in Fiat or Crypto: Users can choose to invest in their preferred investment opportunity using fiat currency or ADA. CineWealth's platform will provide a seamless payment gateway for both options, ensuring a smooth and secure transaction process.
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Portfolio Management: After the investment is made, users will receive an investment NFT representing their share in the revenue generated by the chosen movie or audio rights. This NFT will be visible in their blockchain wallets and portfolio within the CineWealth platform. The NFT is tradeable on secondary marketplaces, but in order to redeem the amount upon maturity, the end user needs to complete the KYC (Know Your Customer) process.
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Investment Tracking and Reporting: Users can track the performance of their investments, view revenue distributions, and access comprehensive reports on their portfolio's financial performance. Cinewealth will provide real-time updates and detailed analytics to keep investors informed about their investment's progress.
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Withdrawal Options: Upon maturity of the investment, users can choose to withdraw their returns from the blockchain wallet to their linked bank account or external crypto wallet. CineWealth will provide a user-friendly interface to facilitate secure and convenient withdrawal options.
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Investor Support and Communication: CineWealth will maintain a robust support system to address investor queries, provide assistance with the platform's features, and ensure a seamless user experience. Regular communication channels, such as emails and notifications, will keep investors informed about important updates and investment opportunities.
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Auditing and Compliance: Regular audits will be conducted to ensure the platform's compliance with applicable regulations, investor protection guidelines, and industry standards. Any necessary adjustments or improvements will be made to maintain a secure and compliant environment for investors.
6. Go to market Strategy
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Branding and Positioning: Develop a strong brand identity for CineWealth that resonates with the target audience. Position the platform as a reliable and transparent investment platform that provides access to the movie industry. Craft compelling messaging highlighting the benefits of revenue-based financing and the potential returns for investors.
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Partnerships and Influencer Collaborations: Collaborate with industry influencers, film industry professionals, and financial advisors to enhance brand credibility and reach a wider audience. Partner with film festivals, industry events, and relevant organizations to establish CineWealth as a trusted platform in the movie industry.
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Strategic Alliances and Collaborations: Form strategic alliances with production houses, film distributors, and rights buyers to strengthen the pipeline of investment opportunities on the CineWealth platform. Collaborate with financial institutions and regulatory bodies to ensure compliance with industry regulations and investor protection guidelines.
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Expansion and Scaling: Initially, focus on a specific geographic market (India) to establish a strong presence. Once successful, consider expanding to new markets, targeting different film industries, and diversifying investment opportunities to attract a broader range of investors.
FAQ:
Q: What will happen if the OTT or audio rights are not sold?
A: CineWealth will only list movies or songs that have already been sold to OTT platforms or music labels.
Q: What will happen if the movie is not released or production is stopped?
A: CineWealth carefully selects production houses and conducts due diligence. The chances of the movie being stopped or not released are rare. In the event that this happens, CineWealth will take necessary steps to recover the amount from the production house directly Legally.
Q: What happens if an opportunity fails to be fully subscribed?
A: If an asset or opportunity on the platform fails to meet its investment target, any committed investments by investors will be reimbursed to their registered bank account within 10 working days without any charges.
Q: What is the investment tenure?
A: The tenure for revenue-based financing opportunities in CineWealth typically ranges from 1 to 18 months. The specific tenure for each asset will be available on the asset details page.
Q: Can I see the asset-related agreement?
A: All investors can view sample agreements under the "Documents" section and will be stored onchain as well. The actual agreement for a specific asset will be visible to investors once the asset is open for investment.
Q. How do you ensure CineWealth is compliant with local laws?
A. Our legal team has over 20 years of collective experience in the film industry. As part of our go-to-market strategy, we are initially focusing on India and have devised a legal structure for movie and audio rights after discussions with key stakeholders in various production houses. Our goal is to further enhance this structure by hiring a dedicated legal team, which will enable us to expand the product globally with the proposed fund amount.
CineWealth is an alternative investment platform that we are developing to address the funding gap faced by production houses and provide retail investors like myself with access to the movie industry. It offers revenue-based financing opportunities based on secured movie and audio rights, allowing investors to earn potential returns from successful movies. The platform employs a comprehensive risk management approach to ensure transparency, reliability, and risk mitigation. With the use of blockchain technology, CineWealth enhances transparency, security, and efficiency in the investment process. Our aim with CineWealth is to revolutionize revenue-based financing, democratize investment opportunities, and benefit both production houses and retail investors.
How does your proposed solution address the challenge and what benefits will this bring to the Cardano ecosystem?
The proposed solution addresses the following key points outlined in the challenges brief:
Creation of Value-Adding Products:
CineWealth Platform: The development of a user-friendly platform on Cardano will provide a seamless and secure investment experience for retail investors. The platform will enable investors to browse, select, and invest in movie and audio rights, diversifying their investment portfolios.
Cardano Wallet Integration: By automatically creating a Cardano wallet for each user after logging in, CineWealth ensures a simplified way of storing the investment NFTs and the transfer of funds. This integration enhances the usability and accessibility of Cardano's blockchain ecosystem and will help .
Integrations for Improved User Experience:
Payment Gateway Integration: CineWealth will integrate with on/off ramp solutions such as https://crossmint.com/ to support both fiat currency, UPI Payments and cryptocurrencies, providing investors with flexible payment options. This integration improves the end-user experience by allowing investors to choose their preferred payment method.
Additionally in terms of Impact CineWealth can bring significant value to Cardano ecosystem,
Enhanced Liquidity: By facilitating revenue-based financing and providing investment opportunities in movie and audio rights, CineWealth can enhance liquidity within the Cardano ecosystem. Retail investors can easily enter and exit investments, contributing to a more vibrant and liquid market. This liquidity can benefit both investors and production houses by ensuring smoother capital flows and enabling more efficient investment strategies.
Exposure to the Movie Industry: The integration of CineWealth with Cardano can introduce a new group of users from Web2 to Cardano, as it presents a lucrative investment asset class. This exposure has the potential to generate synergies between the Cardano community and the entertainment industries, attracting individuals from various verticals within the entertainment industry.
Given the considerable size of the global film industry and the Indian film industry in particular as it is the part of our go to market strategy, even capturing a slightest portion of this market has the potential to bring in a significant number of new users and transactions for Cardano.
The Indian film industry enjoys the highest viewership in the world. The value of the film industry in India in the financial year 2020 was about 198 billion Indian rupees. India has consistently been the world’s largest producer of films since 2009.
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How do you intend to measure the success of your project?
Measuring the success of the project can be done using the following metrics:
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Number of production houses onboarded: The number of production houses that successfully join the CineWealth platform will be an important measure of its success. This metric reflects the platform's ability to attract and onboard industry participants which will demonstrate its value proposition to production houses in addressing their funding gaps.
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Transaction volumes: Tracking transaction volumes on the CineWealth platform provides insights into the level of investor participation and the overall activity within the ecosystem. Higher transaction volumes indicate increased investor interest, engagement, and trust in the platform.
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Number of transactions: This metric measures the total number of individual investment transactions conducted on the platform. It provides a granular view of user activity and the frequency of investments made. A steady increase in the number of transactions over time indicates growing adoption and user engagement.
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Number of investment NFTs minted: The minting of investment NFTs represents the creation of investment tokens representing ownership in movie or audio rights. Tracking the number of NFTs minted provides visibility into the number of investment opportunities made available to investors and the overall level of investment activity.
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User feedback: Collecting user feedback through surveys, reviews, and ratings can provide valuable insights into the user experience, platform satisfaction, and areas for improvement. Positive feedback and high user satisfaction are indicators of a successful project.
By tracking and analyzing these metrics, CineWealth can assess the progress, adoption, and impact of our project. Regular monitoring and evaluation of these indicators will provide valuable insights for optimizing the platform, identifying growth opportunities, and ensuring the success of the project.
Please describe your plans to share the outputs and results of your project?
We plan to share the outputs by implementing the following action items:
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Regular Updates: Cinewealth will regularly publish project updates and key performance indicators (KPIs) on our Medium blog. These updates will provide detailed information about the progress, milestones achieved, user adoption, and other relevant metrics.
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Community Engagement: Cinewealth will actively engage with the Cardano community through various channels such as Twitter spaces, town halls, and AMAs (Ask Me Anything) sessions. These interactions will allow our team to present the project's outputs, discuss the impact, and address any questions or concerns from the community.
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Partnerships and Collaborations: Cinewealth will seek partnerships and collaborations with relevant influencers, content creators, and industry leaders. These partnerships can include interviews, joint content creation, or promotional activities. By leveraging the reach and influence of these partners, we can ensure that the outputs and opportunities are shared with a wider audience.
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Social Media Presence: Cinewealth will maintain an active presence on social media platforms, including Twitter, Telegram, and Discord. We will share updates, project highlights, and success stories to keep the community informed and engaged.
By implementing these initiatives, we're aiming to effectively communicate the outputs and results of the project, reach a wider audience, and foster transparency and engagement within the Cardano community.