Digital Animation & Economic Development
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Transcript of Digital Animation & Economic Development
Digital Animation & Economic Development
Scope of WorkRO, MK, BG, SCG
Investors/Donors: 20+
Studios Visited: 30+
1.Capacity
2.Education
3.Film Financing
4.Digital Media Parks
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1. Capacity Findings
Capacity exceeded expectations
Many small studios
Local advertising dependency
Very high quality
Some large studios (70+ employees)
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1. Capacity Recommendations
“Production pipeline” R&D effort
Regional collaboration
International Promotion Campaign
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USAIDFROM THE AMERICAN PEOPLE2. Education Findings
Free Introductory Training (MK 3D@E-Schools)
Professional Fee-Based Training (Chiron, Belgrade)
On-the-Job Training (WorldwideFX)
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2. Education Recommendations
Replicate MK 3D @ E-Schools – BG
Expand Chiron program
Scholarship for women gender balance
Shared curricula:
E-Schools/Chiron/Universities
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3. Film Financing Findings
Government /Donor Agency Funding:
Most countries have existing film financing funds
Multiple donor agencies interested
Private Equity Investors:
Strong interest to invest in media projects
Plenty of capital, but no capacity to evaluate
3rd party expertise needed to evaluate deals
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3. Film Financing Recommendations
Secure $5M investment for film project
Identify promising and real opportunities
Identify other potential projects
3rd party financial analysis
Long Term: a targeted Digital Media Fund
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4. Digital Media Park Benefits
Professional space
Wired and full capacity
Collaboration/networking
Lower rent
Central services
Incorporated training
Rental of digital/film equipment
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4. Digital Media Parks Findings
Attractive to all studios
Large building inventories
University/Gov Partners
Example: IRIDE (RO) and MK
Venture capital exists to finance digital ventures
But no real estate equity to finance digital parks
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4. Digital Media Parks Recommendations
Support local teams: BG and SCG
Research properties Research funding for properties
Development Team guides local teams
Create an Eastern Europe Real Estate Fund and Regional Economic Development NGO
The for-profit Fund finances the self-sustained NGO
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4. $75 – 100 million Eastern Europe Real Estate
Fund
The Fund provides equity for economic development real estate projects and digital media parks:
Spreads risk and reduces risk
Cleans contamination
Clears title
Helps get permits/entitlements/land assembly
Mobilizes government assistance
With NGO partner, makes tough deals work
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4. $75 – 100 million Eastern Europe Real Estate
Fund
Concentrates Real Estate Expertise: Structures financial deals that work Manages government, NGO and private
relationship Attracts high-quality investment partners
Attracts International Capital to region
Creates Eastern Europe Economic Development NGO that is self-sustaining
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Eastern Europe Real Estate Development: The Challenge
Many private equity funds in region
But none are real estate focused
Great untapped opportunities for a dedicated real estate fund
Developers hindered by very high equity requirement (50% – 65%)
Fund as partner shares this equity requirement
Fund’s presence reduces future equity requirements
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Case Study: IRIDE Business Park
30,000 sq meter bldg dedicated to digital media Shared filming facilities and equipment Fully leased at construction 50% equity requirement is a burden on developer
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United States Experience
Real Estate Private Equity Funds for Economic Development
$0 in 1998 $3B in 2005
Institutional Investors (banks, insurance companies, pension funds)
US Pension Funds want intl real estate investments
Dramatic Impact on Economic Development Provides scarce equity
Provides expertise to developers
Cleans up contaminated property
Assists with governmental process and approvals
Funds self-sustaining regional NGO for economic development
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Real Estate Financing Recommendation
Create a $75M – $100M Eastern Europe Real Estate Fund
Converting old buildings and blighted factories/military sites
ULI Conference findings
Contaminated site/brownfield clean-up
Revitalizing & re-positioning dilapidated buildings
Housing Manufacturing
Offices Technology Parks
Business Parks Retail
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2 . Fund Sponsor and Regional Economic Development NGO
· Raises seed capital ($600,000 for Phase I and Phase II)· Manages creation of the Fund· Selects and hires the Fund Manager· Receives $600,000 back once Fund is closed · Hires staff - regional economic development assistance· Receives 20% of Fund Manager’s Fee annually ($400,000)· Financially self-sustaining from Fund Manager’s fee· Helps develop early stage projects
Project A
Re-positioning of dilapidated office buildings
3. Eastern Europe Real Estate Fund I· Raises $100M from Investors· Private-Sector Fund Manager· Makes investment decisions· Provides capacity to developers· Receives 2% annual management fee $2M/year· Invests the $100M ($1M – 20M in each project)· $100M investment plus profit is returned to
investors (target net returns to investors of 12% to 16%)
4. Investors
Project B
Digital Media Business Parks
Eastern Europe Real Estate FundThere is an opportunity to create a risk-adjusted market-rate-of-return private equity fund specializing in Eastern European real estate that could advance the digital media park and economic development agenda much more rapidly than those markets will evolve without such a market-driven catalyst.For the purposes of simplicity, the following example is for a $100 million fund.
1 . Fund Development Team (“Team”)
Project C
Re-positioning of older retail corridors
Project D
Clean-up of contaminated military sites or factories and creating
new business parks
PHASE I: Feasibility (4 months)· Economic Feasibility Study (Real Estate)· Develops parameters of Fund· Assists Sponsor with creating/structuring NGO
· Identifies potential Fund Managers
PHASE II: Building of the Fund (3 – 6 months)· Prepares RFP for selection of Fund Manager· Interviews Fund Managers· Reports recommendations to Sponsor
· Negotiates contract b/w Sponsor & Fund Manager
PHASE III: Capitalizing the Fund (6 – 12 months)· Assists with capitalizing the Fund
· Corporate Investors· Banks· Aid Agencies· Pension Funds· Insurance Companies
5. Real Estate Projects
Project E
Re-position abandon buildings for modern apartments or housing
$100M Investment
$2M
$4M
$10M $20M $5M
$10M $20M $40M
$1M $2M
$100M + Profit
$100M Investments $100M + Profit
$3M – 20M each
Food Mart