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Tuesday, May 28, 2024

Investment Platform Promises Vetted Entertainment Financing

Equity investment platform Untold.io wants to reshape entertainment industry financing with a platform that allows anyone, including average, nonaccredited investors, to put money in films for as little as $1,000 each.

Headquartered in Universal City and New York, Untold was founded by Ali Aksu, a film producer, director and entrepreneur who is seeking to address the loose and unvetted finance models used by the entertainment industry, which, according to Aksu, are hindered by untrustworthy financiers that shake the confidence of investors.

“Here in Hollywood, we don’t necessarily have people trying to do things by the book. It’s mostly financiers walking around and really scamming a lot of people,” Aksu said. “Every time I speak at events, I ask the crowd, ‘Hey, have you invested in films and how was your experience?’ It’s almost always 50-50, where half of them got scammed and half of them made profits.”

Untold is not Aksu’s first venture into the intersection between entrepreneurship and entertainment. He also founded Auteur Academy, an online film platform that teaches producers of any kind how to create products in the industry and have a successful exit.
But when it came to Untold, soft-launched in 2019, Aksu wanted to bring more certainty to financing films, shows and streaming content.

The platform is registered with the Financial Industry Regulatory Authority, or FINRA, and is a Securities and Exchange Commission-registered funding portal. Those registrations allow the company to accept investments from accredited and nonaccredited individuals.(Accredited investors are those who meet fairly high financial thresholds and are authorized to buy unregistered securities. Nonaccredited investors are average-income people who should not buy such securities, which are deemed riskier.)

Attaining registration with the agencies was a challenge, according to Aksu. Previously, the platform could be used to raise money only through private investors.

The process of becoming licensed took Untold about a year and a half to complete, an obstacle Aksu likened to passing a bar exam. “You have to have a certain required background to show that you’re able to sell securities and market securities,” he added.
Untold is the only entertainment-centric investment platform listed on FINRA’s list of regulated funding portals.


Pandemic effects

Another challenge came in the form of launching the business just a few months before the Covid-19 pandemic, which rocked the film industry with production shutdowns, financial woes and the accelerated adoption of streaming content by consumers. Aksu noted the shift to streaming resulted in increased content acquisition by companies such as Apple and The Walt Disney Co.

However, with the pandemic waning and the production of entertainment content reviving, Untold has come out of the other side of its challenges looking for people to use its platform.

The company has not reached seed funding yet, but has received pre-seed backing from Forty33 Ventures, its lead investor, and Prescient Capital. Aksu has also funded a portion of the startup himself, according to Crunchbase. The pre-seed funding was conducted in 2020 and clocked in $500,000.

Untold operates in a digital space ripe with crowdfunding websites used for entertainment financing, including Patreon, GoFundMe and Indiegogo.

Through sites such as these, filmmakers, often on the indie level, enable fans to support their projects with subscriptions or one-time donations that range from pocket change to thousands of dollars.

However, investments made through Untold, as well as the movies hosted on the platform, work differently.

Investments can be made on the Untold platform for as little as $1,000 for films with established directors and actors. Untold has hosted “The Comeback Trail” on its portal, a film featuring Robert De Niro, Morgan Freeman and Tommy Lee Jones. Potential investors can view the film and decide if they want to invest; the money in this case would be a refinance of older debt.

The first film featured on Untold was “Alaska,” a movie that used the platform as a budget source for the entirety of its production.

“We offer many different levels of investment just like when you invest in startups, where you can be an angel investor, a seed investor, or a Series A, B, or C investor,” Aksu said. “In this case, “Alaska” came to us as a seed with a script and we raised almost like an angel and a seed (funder).”

Investments made through Untold go toward projects and people that have been vetted, a significant part of Untold’s model.

“Our job is to really make sure that the producer has gone through the due diligence, the movie has gone through the due diligence, bad actor checks, we check everything about them,” Aksu said. “(The movie team) becomes SEC compliant by the time we open up them for offering.”


No hits … yet

Untold’s evaluation of film executives is based on their past commercial track record, personal and industry reputation, awards, and more.

On the investment side of the platform, investors using Untold would likely have to take into careful consideration the potential box office numbers of the movies hosted on the platform. So far, Untold has not had a significant hit on its platform.

Untold has hosted just three films so far, but it has big ambitions, not only in terms of surface-level growth, but regarding sustainability as well.

“We want our content to be related to the 17 sustainable goals of the United Nations and we want that content to be, you know, impact-driven from the get-go,” Aksu, who is also a young professionals ambassador for the Southern California Division of the United Nations Association of the United States, said.

The UN’s 17 Sustainable Development Goals include ending poverty, combatting climate change and the promotion of inclusive institutions.

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