Betterinvest is the new kid in the alternative investment world. After the Covid- 19 pandemic, there has been a massive boost in investments, and people are more aware of different investment options. People aim to make better financial decisions and seek new ways to grow their wealth. While earlier, people invested in the stock market, Gen- Z is looking for avenues beyond the conventional option available to invest, such as Alternative Investment Options. In this blog, we will discuss an alternative Investment Platform – BetterInvest.
What is BetterInvest?
When a film is referred to as a high or low budget, it’s the production budget of a particular movie. However, even after scripting, recording, directing, etc., there is a huge process that requires a lot of funds; this stage is known as post-production.
Post-production is when the filming part has been wrapped, and the editing of the visuals and audio starts. It includes cutting raw footage, assembling the footage, adding sound effects, dubbing, music, etc. Production houses have to hire many people to complete these tasks on time. That’s where BetterInvest comes into play.
The production house sells the movie to Buyers and Buyers pay the advance amount and sign a contract. Buyers are OTT platforms like Netflix, Amazon Prime, and Audio labels like Saregama, and TIPS. You lend money to the Production house based on the sale contracts; Betterinvest also gets a direct- collection letter from the buyer. The buyer will remit the remaining amount as per the direct-collection letter and agreed on timeline
BetterInvest is an alternative investment platform that allows retail investors to invest in asset classes that were earlier available only to High Net- Worth Individuals (HNI) because of huge investment size, but with platforms like BetterInvest; retail investors can also participate. BetterInvest and its partners have a collective experience of over 70 years in the South Indian film industry.
Pradeep VS, Sedhumanikandan, and Sriram Anax are the co-founders of BetterInvest.
Pradeep VS co-founded Herotalkies in 2013, a Tamil OTT platform, even before the launch of major OTT platforms such as Netflix, Hotstar etc. He has led political consulting teams and worked with multiple candidates in Indian elections. BetterInvest raised a pre-seed round of funding of $350,000 from Chennai- based angel investors. Sedhumsnikandan worked with him closely in Herotalkies Growth
What is Betterinvest Business Model?
BetterInvest follows revenue-based financing in movies, also known as royalty-based financing. It is a method of raising capital to meet the business requirements from the investors, who get a share of the company’s gross revenue in exchange for the amount invested. Unlike most RBF opportunities where returns can vary, here the model is similar to invoice discounting with fixed cash flow. Movie production houses get their payment from the OTT platforms within 30-90 days after the movie’s release. Still, production houses require capital in this period to fulfill day-to-day requirements. To meet the gap, movie houses sell their OTT invoices to the investors (lenders) like you. The OTT pays directly to the lenders. This can be explained as follows:
- The Production House sells OTT or Music rights where the buyer pays the invoice amount after 1-12 months.
- The production house sells this invoice at a discounted price to the investors who lend money to production houses.
- Investors receive the invoice amount from the buyer in 3-18 months.
Features of BetterInvest
- You can get a high return on investment of up to 18% p.a.
- The investment is secured and offers confirmed future cashflows from top OTTs and Music labels.
- You can receive returns in a short period of 3-18 months.
How does Betterinvest Manage Risk?
Betterinvest follows a 5 prong approach to evaluate deals
- Onboarding -They choose only movies that have been sold to Rights Buyers (OTT/audio labels)
- Evaluation – It is done on the below parameters
- Types of movies – Small/mid or Star movie
- Stage & Progress of the movie
- Relationship b/w Rights Buyer & Production House
- Track record
- Pipeline of movies
- Other Rights Partner
- Discounting Eligibility-60 to 70% of the contract value is discounted. Tenure – 5 to 12 months
- Verification – Proof of advance received, Assignment Contract with the Rights Buyer
- Security – Direct Collection Letter, Post Dated Cheque, Indemnity, and Personal Guarantee
Products offered by Better Invest
Invest in Movie Rights
With BetterInvest, you can invest in secured movie rights and get an opportunity of earning high returns. First, you have to click on the ‘Explore Now’ button from the home page. Then, you will be redirected to the page with investment opportunities available in movie revenue-based financing.
You can click on ‘Get early access’ to invest in a particular movie, and you can see all the details, such as minimum investment required, rate of returns, tenure of the investment, taxes, and deal size.
Invest in Audio Rights
Like movie rights, you can see the opportunities available to invest in audio rights on the ‘Explore Now’ page and all the details related to the opportunity.
How to Invest with Better Invest
You can start investing by following three simple steps after you register using the above link
Step 1: Go to your profile, enter your details, and complete the KYC process. A valid PAN Card and address proof (Aadhar) are required. In addition, your bank account details are needed after you invest in making the payout.
Step 2: Join the waitlist to invest in a particular opportunity. Only waitlisted users can invest.
Step 3: You can start investing when the opportunity is open.
Currently, Betterinvest is the only platform that offers revenue-based opportunities in the movie industry. However, there are a few platforms in India that offer different types of alternative investment options. Some of the alternatives you can consider with similar yields are as follows:
Grip Invest is a platform that lists equipment leasing, inventory-based financing, and commercial real estate investing deals on it. It has a constant flow of new deals and has been one of the pioneers in this space in India. The minimum amount to invest is Rs.10000 and you can get an average IRR of 12-15%+ depending on which deals you invest in.
Leafround lets you invest in assets that are then leased to Enterprises. They have multiple opportunities available to invest on the platform. The minimum investment is Rs.10000 and you can expect 20-25% IRR.
This is a new but fast-growing alternative investment opportunity listing platform backed by Sequoia and other popular angel investors. Apart from invoice discounting, corporate debt, and other instruments, it also has equipment lease-based investment options on its platform. The minimum investment is slightly higher at Rs.100000 per deal but might vary depending on the deals.
Klubworks is India’s first revenue-based platform with an expected IRR of 20-27%. Revenue-based financing or royalty-based financing (RBF) is a type of financial capital provided to small or growing businesses. You can start investing with INR 2.5 Lakhs. The investors inject capital into a business in return for a fixed percentage of ongoing gross revenues. Therefore, the payment increases and decreases based on business revenues, typically measured as either daily revenue or monthly revenue.
Pros of BetterInvest
- Secure: The platform is safe and secure. Your personal details are hosted on a secure cloud network, and all data transfers occur between Bia 256-bit SHA encrypted channels.
- No Extra Fees: The platform does not charge any fee from the investors. The fees are charged by the production houses, and the return on investment is credited to the investors after paying taxes.
- Fixed Returns: Revenue-based movie financing offers 12-18% p.a. fixed returns. This can be a suitable option for investors seeking fixed returns on investment.
- Diversification: Revenue-based movie financing is not linked to the market and is a great way to diversify your portfolio.
- Short Tenure: You can earn a fixed return in a tenure of 6-12 months, which is higher than other fixed-return investment options.
Cons of Better Invest:
- Refund Policy: The amount invested cannot be refunded because once you invest the amount is already financed to the production house.
- Returns: The returns on revenue-based financing are not guaranteed; the returns depend on the OTT content’s revenue.
- New Concept: Revenue-based movie financing is a recent phenomenon, and there is less awareness and data available. Investors are still making educated guesses about the investment.
Personal Experience of Investing on Betterinvest
I have invested in 2 deals on Betterinvest. The investing experience was smooth. Details of the deals I invested in are below
- Hindi & Audio Rights of Nenu Student Sir! movie
- OTT right of Thalaikoothal movie – II
Revenue-based financing in movies offers an excellent opportunity to earn good returns quickly. However, an investor must know the risks associated with the investments. If you want to diversify your portfolio and invest in non-market-linked investments, BetterInvest can be a good option. Happy Investing. I have invested in a few deals and will update my portfolio performance in the upcoming review
Frequently Asked Questions
- Is BetterInvest Risky?
Revenue-based financing in movies is a great way to diversify your portfolio, as it offers opportunities to invest in instruments that are not market linked. However, there may be several kinds of risk while investing in revenue-based finance in movies, such as payment default of production house, delay in movie release, etc. BetterInvest mitigates this risk by signing a deal with the production hose to transfer the revenue directly from the OTT to the investors. Additionally, if there is a delay in the movie release, BetterInvest will charge interest for the delayed period from the movie houses and share it amongst the investors.
- How much return do you get from BetterInvest?
You can get up to 18% pre-tax returns on OTT and Music rights; the tenure depends on product to product which can be from 3 months to 18 months, and a TDS of 10% is applicable on the gains. For example, if you have invested Rs. 1,00,000 in movie rights and pre-tax returns are expected to be 18%, the amount you shall get:
Rs. 1,18,000 (with 18% returns) – 10% TDS (TDS is applicable on the returns and not the principal amount)
Rs.1,18,000- 1,800 = 1,16,200
- What is the minimum investment required for Revenue Based Financing in Movies?
You can invest as low as Rs. 50,000 with BetterInvest.
- What is revenue-based financing in movies?
It is lending money to movie production houses to fulfill their capital requirements based on their future cash flow.
- What will happen if the movie fails at the box office?
BetterInvest only curates movies that have an Outright Sale agreement with the buyers. Buyer (OTTs/Audio labels) pay the amount as per the signed
contract irrespective of the performance of the movie
- What if there is a delay in movie releases or collections?
A delay in the release of the movie will extend the tenure for repayment. In such instances, we will collect interest for a delayed period
- What happens if the Producer does not repay the Money?
BetterInvest receives a “Direct Collection Letter” from the Rights buyer (Netflix, TIPS, etc) agreeing to pay the remaining amount directly to investors through an Escrow. So we are not dependent upon the production house for collection
- Is Direct Collection Letter a valid contract in case of default/dispute ?
The Direct Collection Letter is considered one of the valid security documents under law. The letter will be signed by 3 parties – BetterInvest,
Production House & Rights Buyer – OTT/others in the letterhead of the Production House.
- Is there any risk of default from OTTs?
BetterInvest curates movies that are sold to leading OTTs with zero default history. OTT pays 10-40% of the invoice value to the
Production houses as advance, enhancing their commitment
- What are the perks I get apart from returns as an investor?
Apart from returns, investors also get perks such as movie merchandise, access to exclusive events, movie tickets and vouchers.
- What is the investment tenure?
The investment tenure for revenue-based financing opportunities ranges from 1- 18 months. The tenure varies from asset to asset, and the details can be checked from the asset details page.
- What happens if an opportunity fails to be fully subscribed?
If an investment opportunity fails to be fully subscribed, the investor’s amount is reimbursed to the investor’s bank account within ten working days without any charges.
- What will happen if there is a delay in the movie release?
The rights buyer releases the payment only after the release of the movie. In such a case, BetterInvest will charge interest for the delayed period from the movie houses and will share it amongst the investors.