Ideas

Unlike most media industry investors who invest in media technology and platforms, Blue Kings Investment is investing in media content.

Blue Kings Investment invests in scalable cross media products, which can be licensed and transferred for other delivery channels and interfaces and which can be modified and licensed for new purposes. This is a huge, underserved market.

Traditionally, VCs have invested heavily in mediatech, distribution platforms and software. The value and investments in the media industry are moving fast toward content IPR (Intellectual Property Rights). We believe that the value of the target companies is in their product rights portfolio and the licensing and public viewing payments revenue. Blue Kings Investment provides support to companies in the ownership and control of their Intellectual Properties.

The track records of Blue Kings Investment’s management team in venture capital and media business include content creation, creative direction, business management, and investment management experience. For startups and content companies, Blue Kings Investment management’s knowledge, skills, and attitude provide a relevant and helpful perspective. Blue Kings Investment is supporting companies’ ownership and control for their IP’s.

ESG POLICY
Blue Kings Investment has the mission to enable European content creation companies to reach international success with their film, TV, video game and other creative properties. We at Blue Kings Investment also aim at renewing the business of intellectual property. We want the content producers unleash their creative and business potential. Growing industry will also bring employment and welfare to society.

Our environmental, social and governance (ESG) policy aims at fostering our industry’s contribution to the society by ensuring and enhancing the companies’ footprint on environmental and social matters.

Responsibility has two dimensions in creative industries. First, as in every industry, the companies need to act to secure the wellbeing of environment, people and governance structures. Secondly, media content touches everyone on the earth and media content may affect people in good or bad ways – a fact that brings extra responsibilities for content creation companies.

Blue Kings Investment wants the investee companies to build their success in the kinds of media and entertainment content that are, as often as possible, contributing positive and important issues to society and in no way contain offensive or controversial elements.

The Fund will not finance

•  projects that present extreme physical or mental violence or pornography
•  games with an age rating higher than 16 years
•  first-person-shooter games
•  content that presents abuse, discrimination or harassment in an acceptable light
•  platforms that enable delivery of fake news or other unethical content, and where the issue of such content is not addressed in an appropriate way

As a part of our investment process we always assess that the potential investee company and their subcontractors comply with our ESG policy. Complying to the ESG policy is an absolute requirement for our investment. ESG compliance will be assessed as a part of investment due diligence process. Commitment to the ESG policy is also included in the representations and warranties list in the investment agreements.

Blue Kings Investment is member of Finnish Venture Capital Association and complies to their code of conduct.

Blue Kings Investment is generating returns for its investors through investing in European filmed entertainment – TV, film and interactive content – a sector with little exposure by VC funds due to its specialized nature.
Media and entertainment content is an asset class which is growing, lucrative and non-correlated
Blue Kings Investment’s investment instrumentation provides fast capital rotation, downside protection and low overall costs for its funds. Fund II IRR target is 21% (net). The strategy enables mezzanine risk level at VC class returns.
Fully invested Fund I has verified Blue Kings Investment investment strategy and served as a basis for Fund II strategy which started the investment period with €42m capital commitments. Final target size for Fund II is €60m.
Media and entertainment industryis not correlated to typical macro-economic drivers or to stock exchange fluctuations.
While venture funds have been actively investing in media technologies, leading often to rising valuations, media content has not yet attracted VC investments in a large scale.
Media content is the growth business that Blue Kings Investment is focusing on and it is this focus that brings Blue Kings Investment funds proprietary deal flow, which technology funds do not cover.
The media content industry is booming due to the emergence of Internet distribution and changing consumer habits. The changes open up new opportunities in monetising media content assets, especially in filmed entertainment – movies and TV. In filmed entertainment, high-quality dramatic content that appeals to large fan bases is key for profitable business. Globally, filmed entertainment is a $500bn bullish market that is further strengthened by new players such as Netflix, Amazon, Disney+ and Apple, which are competing to add the attractive premier products to their services.

It’s a recession proof industry: people will always consume media and entertainment content. Historically entertainment asset performance has no relationship to the macro-economic trends and is not affected by stock exchange fluctuations. During economic downturns, people often cancel their holidays in the sun and go to see a film instead.

It’s a unique asset class for investors because media and entertainment content is non-correlated with the general economic trends. On the other hand, individual products have simultaneously high risk and volatility and therefore high profit expectations.

Blue Kings Investment enables access for institutional investors the best European TV and Film productions and the growth of the business area and benefit from Blue Kings Investment’s know-how in managing the high volatility and difficult predictability of entertainment assets.

Blue Kings Investment’s investment instrumentation and agreements mitigate any unrewarded risks, such as production and producer-related risks. Blue Kings Investment utilises warranty-like instruments which decrease volatility and protect the downside.

Unlimited return potential from rewarded risks. Blue Kings Investment’s ability to manage the rewarded risks differentiate the fund from many of its competitors. While protecting the downside, there is an immense upside for the investments.

Blue Kings Investment has built a high-quality deal flow by partnering with leading sales and distribution companies in Europe. Blue Kings Investment has an internationally experienced team with connections to all of the key players in the industry.

Blue Kings Investment’s investing instrumentation brings fast capital rotation and a high IRR. Investments are primarily debt-based instruments that incorporate the potential for unlimited returns in successful cases. The fund receives returns from the sales revenues of financed TV series and films, which allows earlier capital returns compared with regular PE funds. In the model, the costs of investment execution and exits are also clearly lower than in regular PE funds. The target IRR (net) is 21%.

The Fund follows the best practices of Invest Europe’s recommendations for Governing and Reporting Principles which have been widely used in private equity and venture capital industries. Investments are reported at fair value according to IPEV Valuation Guidelines. Reporting to investors follows Invest Europe’s professional standards. Reporting is done quarterly at a minimum to the Fund Investors (LPs). The Fund I investors are all Finnish companies or institutions.

1. Disruption not over yet: complex distribution chain with many different partners likely to lead to consolidation eventually, but creating unseen demand for original content. Blue Kings Investment is ready to take advantage of the great demand and high prices being paid for content.
2. Rise of global on-demand TV services. Subscription-based video-on-demand services (SVODs) attract consumers with an easy pricing scheme, flexibility from the television screen and highly compelling content. In this way, they challenge traditional advertising-funded and pay TV channels. Major SVOD services such as Netflix and Amazon Prime invest annually billions of euros in content and are attractive buyers also for Blue Kings Investment’s investments.
3. Increasing role of video and mobile content. Video is winning over text-based media and video is more and more often consumed on mobile devices especially within the youngest demographics.
4. European Digital Single Market and its effect on content business models. Europe is being developed into a real-world common market also for the content industry. In today’s content business, there is a vast number of nationally operating content producers that have the potential to succeed in international markets.
5. Virtual reality (VR) in gaming and video content. VR will enhance gaming and video viewing experiences and thus open new markets for content; however, device penetration is still at low levels.
6. Artificial intelligence (AI) in content discovery and content creation. As AI technologies develop, we will see also content services that are AI powered.
7. M&A activity rising. M&A activity in media and entertainment content business has been growing especially in TV production and video games.

Blue Kings Investment Fund I (Films, TV, games, and music fund) capital €20m is fully invested.

Blue Kings Investment Fund II (target size €60m) currently invests in

1. TV content: TV, Internet video and animation
2. Film
3. Interactive content: VR, AI-based content, e-sports, IP-based video games, in-car media etc.
4. The information contained here on Blue Kings Investment website does not constitute a distribution, an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction, in which such distribution of offer is not authorized to any person.