Every year, I get pitched various shows to invest in or to co-produce. Some pitches are from friends, and some are more formal. The pitch is essentially a large advertisement for the show and why an investor should invest. Most Broadway shows do not advertise for investors. They are typically funded through private capital. Lead producers may invest their own money, or may raise it through investors or co-producers who try to secure the capital to produce the musical or play. So how do investors find out about shows to invest in?
Broadway musicals may cost between $7,500,000-$14,000,000 to produce. Plays may cost between $3,000,000-$10,000,000 or more. When a producer seeks to raise funds, they may have a go-to list of investors who they know are qualified accredited investors and who have experience producing or investing in musicals and plays.
If you ever wanted to invest in a Broadway show, one of the best ways to find out about new offerings is to reach out to other investors or producers and see how you can get on their list. Oftentimes, new production offerings go to their long-standing investors, but once in a while there are new opportunities open to new investors.
Cocktail Party Pitches
Sometimes I get the “cocktail party” pitch, as I like to call it. It is often from a friend or associate who is lead producing or co-producing and is looking for investors or more co-producers. Tell me everything I need to know about the show in 30 seconds as if we are at a cocktail party and it is hard to talk. Then, tell me the investment minimum, and any special perks or deals being offered on the investment.
The cocktail party pitch is a good way for producers looking for investors to get the word out about their production when fundraising.
Formal Pitch Packages
Many producers have lists of investors who have expressed interest at some point of investing in shows. Some investors may invest in one show, and others may have a portfolio of shows they’ve invested in. When a producer is looking to raise money to produce a show, they often develop a formal pitch deck. The pitch deck package usually contain information about the show, its creatives, reviews from out of town try-outs, a proposed budget, and information on investment levels with associates benefits. The idea is to draw interest in the production from the investor.
A pitch is not actually an offer to buy into the show. Think of it as an advertisement. If you are interested in investing in a Broadway show, you would then speak with a producer or co-producer to get the formal written offer.
How Does One Become An Investor?
Most investors in Broadway musicals and plays are “accredited investors” as defined by the SEC. An accredited individual investor is typically
an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year; or
an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000.
There may also be corporate investors, or trusts that invest, and they are subject to certain requirements.
If you are an accredited investor, you can search online or ask around to see who may accept a new investor to their list. If you are added to their list, you may get pitched new shows to invest in when they come up. An investor group is different than an investor club commonly, where clubs may pool their money and a lead investor may make investment decisions. A group may share new opportunities, with each individual deciding for him or herself whether to invest in the show. There may be no requirement to actually invest in the show, and the individual makes their own decisions. If you are interested in investing, look for producers or investors to see how you can get on their list to learn about potential opportunities. Some are exclusive and closed groups or clubs, and some are open to bringing in new investors.
There are many facets of Broadway investing to share. Always remember that Broadway investing is quite risky, but it is also full of perks unlike other investments.
ABOUT THE AUTHOR
Jason Turchin is an attorney, entrepreneur, producer and owner of InvestingBroadway.com.