Five years after entering the UK screen industries with the launch of the Creative Content EIS Fund, Calculus Capital CEO John Glencross reflects on how its investments in six indie production companies are performing.
It is five years since Amanda Nevill, then chief executive of the British Film Institute, asked City veteran John Glencross, CEO and co-founder of private equity fund manager Calculus Capital, to invest in the UK film industry.
“We looked at it [the film and TV sector] at the time and thought, ‘Well, that’s interesting.’ It had three things a venture capitalist would be looking for,” says Glencross, recalling how he was drawn in following years of success at Calculus, investing in sectors including tech and healthcare. “It was a relatively inexpensive sector for investors to get into; there was strong consumer demand for quality content; and there is and has been a very active market for acquisitions by bigger companies of successful smaller production companies.”
Glencross cites Bad Wolf, Eleven and Plimsoll as just a few of the independent production outfits snapped up in recent years in lucrative deals by major media corporations (Sony Pictures Television in the case of the first two, and ITV with the latter; on the film side, the executive could have referenced Fremantle’s 2022 acquisition of Element Pictures).
Of course, the industry has been through tumultuous times since 2019, when Calculus and its then partner Stargrove Pictures launched the UK Creative Content EIS Fund to help UK indie companies scale up. The pandemic, the Hollywood strikes and retrenchment by the streamers have all stymied growth.
Source: Calculus Capital
John Glencross, chief executive of Calculus Capital
Nonetheless, Glencross remains in bullish mood about the six production companies Calculus has invested in so far: Raindog Films, Brouhaha Entertainment, Maven Screen Media, Wonderhood Studios, Home Team Content and Riff Raff Entertainment. A common theme is the celebrity ownership of some of these outfits — Colin Firth with Raindog, Jude Law with Riff Raff and Trudie Styler with Maven. Meanwhile, Brouhaha is run by Oscar-nominated UK producer Gabrielle Tana alongside two Australian partners, distributor Troy Lum and producer Andrew Mason; Home Team is Dominic Buchanan and Bennett McGhee’s company; and Wonderhood was set up by former Channel 4 CEO David Abraham.
The end goal for Calculus is still to sell these companies on. “If they show they have a good track record with reasonable consistency in developing commercially successful content, then the larger companies in the sector will want to acquire them,” declares Glencross. “That is where the return [for investors] comes — and that is the nature of early-stage investing. You are prepared to stay with the companies for several years.”
Glencross believes at least one or two of the Calculus-backed outfits will be ripe for acquisition by 2026, although he declines to specify which ones. “Some of these companies were little more than start-ups. Some had a little more mileage on the clock,” he notes. “It takes time for these small, growing companies to reach a level of maturity where it is appropriate to sell.”
Glencross also confirms he and his team are on the lookout for other outfits they can get behind. “Every week, we are looking at potential investments,” he says. “We are definitely in active acquisition mode but we are rather choosy.” The Calculus boss repeats his familiar mantra that producers he works with will need to know “how to grow a business” as well as how to get films financed.
Illium purchase
Over the summer, Calculus took over the management of Great Point Media’s film and television production finance business, Illium, which provides loans to fund film and TV production, after the parent company fell into administration following the death of its founder and majority shareholder Jim Reeve in February.
“When we looked at Great Point, it had three activities,” says Glencross. “One was what I call the old-style, limited-life EIS, which hadn’t been possible to do since 2018; there was a portfolio of equity investments in production companies similar to the ones we have; and there was the Illium business. We looked at all three and the only one we found attractive was Illium — there is fundamentally a very good business there of cashflowing film and TV productions.”
According to Glencross, Illium had already issued “over 100 loans and they’ve all performed”. Productions that have taken advantage of the facility include the BBC’s Small Axe and Channel 4’s Brexit: The Uncivil War. However, Calculus discovered a “certain amount of money had been directed elsewhere”.
“Of some of the activities that the Great Point group managed, money was taken from those activities for various purposes and then money was taken from other funds to replace the money that was taken,” Glencross says obliquely. “It’s a complicated trail. We have a pretty clear knowledge of what was going on.”
Glencross insists, however, that Illium itself remains a very good business, noting “in the 10 weeks we have been in charge, we have closed three new loans”. He will not give details because the producers have not yet announced the projects, but says they are all for UK productions budgeted under $19.5m (£15m) — making all of them eligible for the recently ratified UK Independent Film Tax Credit, which will provide approximately 40% relief to these productions. On two, Illium is lending against the tax credit and on one it is lending against the tax credit and pre-sales.
He acknowledges the theatrical market remains tough for UK indie producers but believes there is still a sweet spot. “If you have an interesting film that you can make for under £7m [$9.1m], if you’ve got a good film and a good story, it is possible to make that work,” he says. “There are still pre-sales. Distributors in different countries are picking films up. But it is difficult to make the numbers work once you get over £7m.”
The six companies that sit under the Calculus umbrella have all been ramping up, albeit often on projects with higher budgets than that. Riff Raff’s The Order, in which Law stars as a US detective investigating white supremacists, was well-reviewed out of Venice and Toronto. Styler and producer Celine Rattray’s Maven Screen Media is soon to launch Eleanor The Great, the feature directing debut of Scarlett Johansson, which will be released through Sony; Maven also has high hopes for Christmas Karma, Gurinder Chadha’s Bollywood-influenced take on Charles Dickens classic A Christmas Carol, for which True Brit Entertainment has UK-Ireland rights and is planning a theatrical launch in late 2025.
Raindog, which is run by Firth and music industry veteran Ged Doherty and has been winning plaudits recently for Dawn Porter’s music documentary Luther: Never Too Much, now has, says Glencross, “incredible momentum” with numerous projects in the pipeline. Brouhaha had a sizeable hit with its Australian coming-of-age TV series Boy Swallows Universe, which ranked high in the Netflix charts in January 2024, and is about to start production on the feature Switzerland starring Helen Mirren as novelist Patricia Highsmith.
Home Team recently signed a first-look deal with Universal International Studios and has several projects in advanced development, while Abraham’s Wonderhood, which focuses on TV and advertising, is also prospering. “Each, in their own way, is making progress.
It is never less than a challenging market but we are trying to help them navigate [their way],” states Glencross.
When Calculus first entered the UK film industry, it was closely advised by Stephen Fuss’s Stargrove Pictures. Fuss, however, jumped the fence to become CEO of Riff Raff, working alongside Law, back in 2022. “Stargrove helped us identify companies in the market, which was very useful in the early days when we didn’t have a profile. They were an important part of the chain at that time,” says Glencross, explaining why Calculus no longer requires such a matchmaker. “Several years down the line, our profile in the market is such that people know of us and of our interest in investing in the sector.”
Calculus’s EIS investments are geared firmly towards building companies. “If you go back to the original [EIS] legislation in 1994, it talks of this [being] intended for companies with the prospects for long-term growth and development,” notes Glencross. Early on, HMRC [HM Revenue & Customs] tolerated the use of EIS for single projects because “it was a small part of the totality… [but] it was when certain entities tried to industrialise the process that they felt it had gone too far. They [HMRC] re-emphasised and made a core requirement out of the evidence of growth and development over the longer term.”
Despite some in the industry calling for it, Glencross does not hold out any hope that HMRC might be persuaded to revise the criteria again to bring single projects back into the mix. “I can’t see how it would square with where the Revenue and the Treasury are at the moment,” he says, adding that it is questionable whether encouraging more production at a time when so many films are struggling for distribution would even be sensible. “If they’re not getting distribution, they are not making any money for their investors.”
In Glencross’s opinion, there are already too many reasons not to invest in UK film. “An industry that doesn’t have the greatest reputation for probity is handicapping itself to an extent,” he reflects. “An investor looking at the entertainment industry has a whole choice of places to put his and her money.”
However, the fascination for film and TV among investors remains a strong lure. “The challenge is to show that it’s a deserving place for investment,” he says. That is why the Calculus companies are being looked at as such an important test case for the UK industry.