The first of such offbeat investments will be announced tomorrow by entertainment site Idealive, which has secured post-production funding for a Palestinian film called "Olive Harvest," directed by Hanna Elias. The investment, valued at $127,000, is one of many that the San Francisco-based upstart plans to announce in the next couple of weeks for films, art exhibitions and music.
The film's two investors, which include Silicon Valley venture capitalist and managing partner of Global Catalyst Partners Kamran Elahian, get "shares" in the project and are compensated once it reaches a distribution deal, much like when a company goes public. Elahian said he's taking the same approach to investing in films that he has taken with young companies.
"With the amount of new content that the Internet can support, entertainment intellectual property needs the valuation structure that is applied in the venture capital community," Elahian said in a statement.
Taking a page from the venture capital industry, Idealive is banking on the demand for untapped and potentially lucrative investments. After launching in March, the upstart has been lining up what it calls bankable artists, filmmakers and musicians to link with high-net-worth investors.
"People love bragging rights at having discovered new bands and new films," said Melanie Robins, Idealive co-founder. "But it's much more engaging to profit from this expertise in identifying talent in arts and entertainment."
Yesterday the company partnered with private equity fund NVST.com to help tap more investors.
Like "The Blair Witch Project," grassroots investing online for such projects may catch on.
"Entertainment is kind of a venture capital industry," said Malcolm Maclachlan, media analyst at International Data Corp. "'The Blair Witch Project' was made for the price of a Ford Taurus, and it grossed millions, so this could produce something."