It was an investment opportunity with a difference. Nearly 20 years ago, Nick Archer spotted a chance to be involved in funding and filming a low-budget movie.
Intrigued, the private equity executive injected £1,000 in the film project called Out of Depth that set out to tell the story of a “poor boy made good”. He soon found himself on camera, mingling with actors in a pub scene exploring the life of an East End gangster.
“That very first experience was magical,” he says. “It was so far removed from my day-to-day job in financial services. It was a bit of an escape.”
The film had a premiere in London’s West End but was not a financial success. Even so, Mr Archer was hooked. Since then, he has been an enthusiastic backer of the arts — helping two more films and about 80 plays get off the ground — as a sideline to his other personal investment activities in the financial markets.
The experience has been a rollercoaster ride with many losses and a few big hits. One of the successes was Billy Elliot, a stage musical about a coal miner’s son who becomes a professional ballet dancer. As well as getting his capital back, he went on to almost triple his stake over the 10-year run.
Investing in film and theatre is high risk, he says. When he backs a production he does so without any expectation of making money. Even so, he detects some encouraging trends. “Audiences have picked up. I like to think it’s slightly more profitable for us than it used to be.”
He is not alone in being upbeat about the sector. “The UK’s creative economy stands tall on the world stage,” said James Murdoch, chief executive of 21st Century Fox, in February. Last year, a record £1.6bn was spent on film production in the UK, up 13 per cent on the previous year. West End box-office receipts have more than doubled since the turn of the century. Overall, the creative industries is one of the fastest-growing sectors of the economy. Yet for all its glitz and glamour, it is often difficult for investors to make money in the entertainment sector. Those considering getting involved need to ask some hard questions. How much can they afford to lose? How best to judge the risks and minimise or spread them? How far should tax breaks influence their investment decisions? How can outsiders get a slice of the most promising projects?
