EIS or Isn't it?
Updated: May 2, 2018
We went live to the public on Crowdcube today. PS - Did anyone out there come to us in the last 24 hours via the newsletter that Crowdcube sent out? If so, just say... "Yeah, I did!" I am interested to see how effective Crowdcube's own marketing reach is.
But for now, let's quickly talk EIS. Many of you messaged me privately about it and a prospective investor posted about about it on the forum. The question being "Is Movie Collective EIS or isn't it and why not?"
If this doesn't interest you, then log off now, because this could get technical. There will be other blogs to come on casting, story development, selling movies, the wonder that is Cassian Elwes, script development, music, locations and how we intend to make Movie Collective a force in the movie business - that you will be part of. However, if you are interested in EIS - read on.
For those who don't know what EIS is, it stands for the Enterprise Investment Scheme and it has been at the heart of most movie production in this country for many years.
EIS allows individuals buying shares in a new companies to claim back 30% of what they have invested off their income tax bill. This was set up by the British government in the early 90s to encourage investment in riskier startups. And generally, it has been fantastic. For the film business in the UK it has been essential.
So, for example, if you invested £100 in a new company that was EIS approved, you could then get £30 back off your income tax bill. Before some of my actor friends get excited, this does mean you have to be earning significant income tax. So yes, as a scheme it does suit those earning larger incomes.
So why isn't Movie Collective EIS? Well, as I explained to the prospective investor in the forum on Crowdcube - and you can find my answer there too - we plan to make lots of movies - not just one. If we were going onto Crowdcube and raising finance for just one movie - then it would work because all the money you raise into an EIS approved business has to be spent by that business. What we want to do is be able to put money into multiple projects - break up the money - put £500k here, maybe £100k there (assuming we break our fundraising targets). We want to be a movie studio.
Yes, approved EIS funds are able to invest in minority film projects, but as I pointed out in the forum these are investment funds and we want to be a studio that will own, operate, produce and distribute our own movies. In this scenario, EIS rules require that we own at least 90% of the voting and economic rights of all subsidiaries in which we invest any EIS monies. In order to give us the flexibility in funding our projects, we decided to not go down this EIS route.
This is the simple and quick answer. We want more flexibility with what we do with the money.
Also, a bigger point. I am not wholly convinced that EIS schemes set up by accountants in order to facilitate tax benefits for wealthy individuals have always been in the interests of making good films. Often, and I am not naming names, the films are not very good because the driver was the EIS relief - not whether the inciting incident in the first act came too late or whether the desire line of the protagonist went missing in the second act or whether the barriers to love were not great enough.
By not being EIS, Cassian and I are boldly saying, we want to make good films that stand on their own merit that are not dependent on a scheme to help individuals claim some of their income tax back. Yes, I know this will lose us some investors but there are 100s of very good EIS approved businesses out there that are not movies that would suit the same investors. Crowdcube has plenty and some of them are brilliant.
We are looking for the movie fans that want to back the stories we want to tell and who are willing to give up the 30% relief on their income tax in favour of a movie business (a movie studio in fact) that has the ability to back different projects at different levels.
To all those investors who have backed us so far, we are humbled that you have put your faith in us. To those that have yet to back us, email me anything you wish or call or come to my offices just off Old Street to discuss further.