UK independent film and TV producers are crying out for better access to financing, with UK public funders’ purse-strings ever tightening, private financiers charging high fees in return for investments and the loss of European financing still a sore point.
Enter the British Business Bank (BBB), which began operating in 2014, and is owned and funded by the UK government, with a mandate to drive growth in small and medium-sized enterprises (SMEs) and to fundraise in innovation.
“We do that by essentially working through others,” explains the bank’s non-executive chair Stephen Welton. “It’s not the role of the bank to replace the private sector; it’s the role of the bank to be a catalyst.”
BBB helps around 20,000 companies a year to access loans, with tech, energy, healthcare, cosmetics and hospitality businesses making good use of the facility. Meanwhile, the complexity of financing in the film and TV business has made it difficult for production companies to get a look-in. Until now.
Extra boost
Last year, the government’s spending review gave an extra £6.6bn ($9bn) in funding for BBB, with £4bn ($5.5bn) allocated specifically for the government’s eight priority sectors across four years, of which the creative sector is one, plus £2.6bn ($3.5bn) for regional growth. “The bank has got more firepower,” stresses Welton.
The £4bn will start to be formally allocated to businesses from April, across four years. “The creative industries is an area I’m taking an active interest in. It’s probably one of the hardest to help because it’s so big and fragmented,” says Welton, whose daughter is a freelance script editor with credits on The Crown and House Of The Dragon.
On February 17, the British Business Bank and the Department for Culture, Media and Sport (DCMS) unveiled a cornerstone commitment to the creative sector, with £45m allocated to venture capital firm Redrice Ventures, to specialise in seed stage investments earmarked for the creative industries. The DCMS has also named Creative UK as the leading body for research into a new ‘single front door’ service to offer clear finance guidance for the creative industries.
BBB has been conducting roundtables with the creative industries – with more of these discussions for the creative sectors than any of the other seven priority areas – to identify how it can best help. Production companies, trade bodies, financiers, the BFI and public sector broadcasters have all been part of the talks.
The industry side has been calling for more access to equity financing, gap financing to help close budgets on projects, and long-term company investment. Welton pinpoints a key learning from the roundtables: “The big companies are getting really big. Increasing the power of those big [US] companies is to not only dominate the funding, but dominate the ownership of the underlying content… We’re going to have to think, how do you invest in IP [intellectual property] and create that IP?”
BBB has two arms, a banking division and an investment division, with more than 180 finance partners, ranging from traditional banks such as Coutts and NatWest to venture capital firms Seedcamp and Balderton Capital. Its banking division improves access to finance, working with third-party financial institutions, providing guarantees to enable them to support SMEs.
“It is intervening to help them get more comfortable with the underlying credit quality so that they can take enough risk to then provide loans to small companies,” explains former banker and qualified barrister Welton, who has held BBB’s non-executive chair post since 2023, and was an advisor to the government on setting it up in 2013. “That’s going to be very relevant in the context of the creative industries.”
A challenge for the screen industries is that, historically, lenders want to lend against assets, such as when a mortgage is taken out for a house. “Into that mix comes IP, highly relevant for the film and TV industries,” says Welton. “We recognise that the future economy is going to have a lot more intangible assets, which come from people and talent, and is encapsulated in IP.”
The investment side of BBB is focused on equity and taking stakes in companies, largely through the venture capital community. BBB is roughly 20% of the venture capital market in the UK, with the territory the third-biggest venture capital market in the world (after the US and China).
To date, film and TV companies have found it easier to access BBB support through the bank’s Nations and Regions Investment Funds, which is an industry-agnostic scheme that aims to level the playing field for businesses across the UK.
Last year’s beneficiaries included Edinburgh-based LS Productions (Irvine Welsh – Reality Is Not Enough), which secured an £800,000 ($1.1m) growth loan via fund manager The FSE Group; and Manchester-based virtual production company SilverScape, which received an undisclosed six-figure investment from fund manager River Capital.
Next steps
To achieve a mutually beneficial partnership between producers and BBB moving forward, a shift in perspective will be needed from both sides, believes Welton. Producers will need to build long-term strategies, rather than thinking from project to project. Access to BBB financing for one-off productions, predicts Welton, is unlikely. “Funding for a one-off film is going to be pretty tough because [investors] have no idea whether it’s going to be successful. Funding a slate is much easier than funding a film.”
Lenders, meanwhile, will need to begin to understand the value in IP from the creative industries. The government last year committed to establishing a working group with the creative industries to tackle barriers to IP-backed lending.
“We absolutely believe a better understanding of IP among lenders is crucial,” says Welton. “You have got to convince them that what you are creating has some value. I’m sure it can be done, because it’s been done in other sectors. That’s where the industry has to think differently. It’s an industry that’s been living on a hand-to-mouth existence, but you must think longer term and strategically.”
Welton gives the example of life sciences as a sector that has successfully managed to harness investment in its IP creation. “You come up with a new formulation of a drug and you’ve got a patent, then that’s clearly highly valuable. How we think about that in the creative industries is very different.”
BBB has partnerships with specialist fund managers for life sciences. “For film and TV, what we need are more specialist fund managers who understand where the talent is… The challenge in the creative industries is that there isn’t a list of 10 big established fund managers that have been doing this for 10 years. There is an element here of market shaping needed to create new managers,” explains Welton.
Engaging different kinds of investors with the screen industries is a key focus for BBB. “Pension funds will probably think, ‘We don’t understand the film industry, it’s all about blockbusters and it’s very glamorous, but is it sensible?’” says Welton. “We have to translate those concerns into something they understand, which is that we are giving you access to brilliant creative talent.”
BBB is still in an exploratory phase of how it can best support the screen industries, but understands the need to be outward-looking. “We are actively looking to develop the ideas and the sort of funds and managers that we can develop,” says Welton. “We can’t just sit and wait for people to knock on our door. We need to be proactive.”
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