There is one big challenge in animation, both for the animator as well as for the entrepreneur, the challenge of Making the Figures on Paper come Alive.
Besides the human resource crunch, one of the toughest issues to grapple with for animation studios is a funding model that works. Animation & Gaming ventures require quite some rounds of funding before one can see the light at the end of the tunnel and everyone involved needs good amount of conviction for that to happen.
The Power Panel on Financing in Animation and Gaming at NASSCOM Animation India 2006 had 3 panelists including WayGate Capital MD Rajesh Jog, Intel Capital India Director Dr Kumar Shiralagi and Sony Online Entertainment VP Cindy Armstrong.
As each case is dealt with individually, the subject of financing cannot be generalised even for a specific field. The presenters did however have a few points and perspectives to share.
Intellectual Property with larger footprint looks attractive
Speaking about how he had yet to be convinced about the Animation Outsourcing model, WayGate Capital’s Rajesh Jog voiced his inclination to invest in Intellectual Property where revenues were recurring.
He said, “I still remain to be convinced about an animation outsourcing model that works. The work for hire model may not be as attractive to investors like me as much as the ownership of intellectually property which offers recurring revenues, all this as long as it is scalable and has a larger global footprint. Animation content can be ported into so many difficult cultures and looks promising”
Education looks attractive too
Intel’s Dr Shiralagi (Intel is a strategic Investor in Maya Entertainment Limited as well as in Nipuna which has an animation vertical) said,”As a strategic investor, our involvement goes beyond the money we invest”
“MEL has a parallel education arm and that really helps acess a talent pool as well as gets in revenue. We are big believers in education” he added.
Gaming Gleams
Continuing Dr Shrilagi remarked,”We are now looking at something in Gaming with an Internationally accredited institute”
Waygate’s Jog quipped,”We have invested in Fantasy Labs, a gaming company based out of Bangalore and Mumbai, the company is working on its own IP”
Sony Online Entertainment’s Cindy Armstrong gave a list of three things that made an investor confident:-
-Addressable Market
-Quality of Management team
-Quality of founding team
Succesful exits boost confidence
All the panelists agreed that successful exits help boost VC confidence.
Waygate’s Jog commented,”There have been very few succesful exits for VCs who have invested in animation and entertainment at corporate equity levels. One name that I can recollect is Indiagames whose investors Infinity and ILFS had a succesful exit. We need more like those to get more VCs interested”
Gap Finance
The VCs were also unanimous in their opinion that enterprises approaching them needed to look at more innovative ways of funding propositions. “Everybody goes to the VC first but you could approach us for Gap financing” remarked Jog.
Making the right kind of noise
“Private equity flows into India are going to treble and if as an industry animation and gaming can make the right kind of noises than a sizeable amount of funding can be channelised” concluded Jog.