Funding the Future of Digital

Screen Yorkshire

We heard from our trusted sources that if you have an amazing idea for digital content there just might be a pot of gold available to make it happen. We sent the small but sceptical Leanne Buchan to find out how much of our soul we will need to sell to realise our creative dreams.

I have a confession to make. I don’t particularly agree with grants.

I’ve witnessed many great projects come from grants. I’ve also witnessed what I consider to be utter rubbish. I’ve seen things that made a lasting difference to the environment, communities, cultures and our cities overall. I’ve also seen a lot of money spent with little thought for return on investment.

Don’t get me wrong I’m not talking about the whole ‘art for arts sake’ debate. There are some beautiful examples of art for arts sake, that in my view have benefited many audiences and made us a more cultural rich society. I’m talking about the kind of projects that we’ve all seen where we’ve been reminded of ‘The Emperor’s New Clothes’ and came away wondering what else the money could have been used for in the cultural sector. I say ‘in the cultural sector’ as I also want to clear the whole ‘it could have been used to fill pot holes’ debate.

No, it couldn’t.

Usually the money comes from a specific pot with a specific objective e.g, cultural development or investment in the arts or in this case investment in digital content. The debate is around how to get best value in that sector with that money, not where else you would use it.

So when I was asked if I was interested in writing something about the new £15million content fund for Yorkshire I have to admit that part of me was intrigued but another part of me balked slightly at the idea of another large pot of money that was for the generic development of the creative and digital sector.

Being employed by a local authority (yes I have a day job that involves me sometimes peeling myself away from the internet), words like ‘grants’ and ‘fund’ make me shudder. They make me think of convoluted application processes with bizarre criteria.

The problem I have with a lot of grants and funds and such like is that they create things for the sake of it. There’s no long term plan and no real impact on the industry they are supposed to benefit. They have fixed time-scales and when it’s done we move on to the next thing.

So I went to meet Hugo Heppell, Screen Yorkshire’s Head of Investment with a slight feeling of trepidation that I might not be completely supportive of this new fund.

I met Hugo in Screen Yorkshire’s offices on The Calls. It’s small and full of posters from the films and series they’ve helped to create. Already this feels a little better. For a start they are a creative bunch who’ve had weather a storm of their own the last few years. With the closure of Yorkshire Forward and the shake up of regional funding Screen Yorkshire’s world changed overnight, and it is no longer a Regional Screen Agency.

“They don’t exist any more,” says Hugo in the very matter fact of tone of one who has come to accept that times have changed. “The funding for Screen Yorkshire used to come via all sorts of public sector bodies from Yorkshire Forward to DCMS and the UK Film Council, which was also abolished with the change of government. We are now a completely independent private sector, not-for-profit organisation, and that means that we are about return on investment. We don’t have the luxury of handing out money for things that are ‘nice’ any more.”

I’m a little more intrigued to see how a government fund managed by a private sector company aims to see value for money.

I’m relieved to hear it’s not a grant scheme. “The days of grants are long gone. Just as private companies need to see a return so too does the public sector,” adds Hugo in that same frank tone.”We aren’t a charity we want to see a return not for our own pockets, but to ensure that opportunities like this exist in the future as £15million content funds won’t come along too often. So we need to use the money wisely, helping to create content now, but securing something for future generations as well.”

The money will be used as an investment fund. Here’s how it works.

Let’s say you have an idea that needs £4,000 to get it off the ground. You will need to raise half of this yourself. We’ll be optimistic and say that you create something so amazing with your £4,000 that you overshadow Pinterest and seriously threaten Twitter’s domination of the social media market. In your first year you make £20,000. You pay your £2,000 back to the fund + a % of the £20,000 profit. Each year you make profit the fund takes an agreed percentage of this profit. This money goes back into the fund to ensure that it will be available beyond the initial two and a half year set up stages.

This sounds reasonable and much more sensible than grants that are one off injections of cash with little or no incentive to make a return on this investment. The need to match fund the investment makes people consider their idea, it’s not just someone else’s money they are playing with. The money made on the investment is put back into a fund to invest further down the line making it a more sustainable approach to funding the development of the digital sector. But investment funds aren’t new, surely this is already available from a private finance company?

“Finance is available from all manner of private sector sources but the difference with this fund is that it’s secured against the project not the company. A private financier may want to secure the investment against assets that will pay should the investment fail. That’s not what we’re about, there’s still an element of taking a punt on something that just might be out of this world. But that’s always a risk.

The idea is to encourage creativity, encourage people to think big and encourage people to take a calculated chance. If the project fails then we lose our investment but we don’t take the company down with it. If it’s a success we only take back money associated with that project rather than bleeding the business dry as it flourishes on the back of the project’s success.”

The content fund will cover all manor of digital projects from films and television to apps, games development, the creation of new platforms, and content for social media channels and web – but before you get carried away they must all bring a return not just a one-off moment of glory.

Hugo is pragmatic but excited about what the fund could be used for: “So much of digital is unknown in terms of what it will be in the future. The landscape has changed dramatically and continues to change daily. The rise of e-readers and tablets is just the latest distraction. Next month it will be something new and the never ending need to evolve and deliver content across this ever-expanding plethora of platforms is challenging, fantastically creative and ultimately costly for many of the region’s businesses. The fund will make it easier for businesses to push the boundaries where they might have played it safe or simply allow them to take advantage of what is already on offer.”

The final nagging question I have is one of ownership. I am naive about investment funds, never having dealt with them. Many of the people I know carving a living in the digital and design sector are fiercely protective of their work and are more likely to struggle on without than to give up their ideas and sell out.

“The IP belongs to the person or company who created the project. We simply share in the exploitation of it, a bit like being paid a royalty for use. The creators are free to sell the IP at any time but whoever takes on the IP will still need to pay us a percentage of the return they get from the use of it unless we choose to sell our share.”

I came away from my meeting with Hugo impressed. Not only does this fund have some serious money to play with but it has a serious strategy for how that will bring value back to the region. From the cold hard cash value of returns on investment to the unspoken value of enabling a region to raise its game on a global stage. Screen Yorkshire have survived a few tough years to come out as an organisation that knows what it wants and is determined to make its mark.

I suspect that a £15million content fund is just the start of things to come.

For more information about the fund and how to apply visit Screen Yorkshire’s website.


  1. Revolving loan finds are in theory better than grants. In practice however they rarely work out well as the lender is on a hiding to nothing. If they lend they are usually villainised for the interest rates that they charge. If they don’t lend they are villainised too. If they make bad loans – guess what? They get villainised….

    Commercial projects are probably best left to the markets to finance. because public sector bodies don’t have a great track record in picking the success stories that private investment capital has overlooked….

    Let’s hope that Screen Yorkshire come up trumps…

  2. I sat through one of Hugo’s briefing for the Content Fund and it struck me how antiquated a method this was. Lots of talk about returning value to the region, but none about sharing the risks… and it seemed to largely be propping up old models of production.

    From what I understand – I’d need to have Sean Connery contractually locked in and half my funding, plus a path to revenue secured to unlock this funding. Well, if you can manage that, you most likely don’t need an assist…

    Fortunately, for digital tech, the UK’s got a reasonably good venture capital scene and an emerging set of accessible and innovative crowdfunding options, though angel investment isn’t as mature as the US.

    For a city that’s purportedly the country’s secondary fiscal hub, its not really capitalising on new models of funding…

  3. I’ll admit, I know little or nothing of financing a business never having done it. I have worked on projects that were joint funded and scraped together sponsorship. These projects were hard fought and made a difference in some small way.

    Had funding been available that could have enabled these to be bigger, better, more innovative I would have taken it.

    No an investment fund isn’t particularly innovative (although lending against a project not a business seems quite a unique offering to me). It is however really easy to knock something when others have done the hard work – if this isn’t innovative what is? What would you suggest Screen Yorkshire should have done instead?

    Remember whatever they do also need to safeguard their own future, they are still a business.

    1. Sorry Lea, not knocking Screen Yorkshire.

      If we really want a vibrant tech industry then a strong investment market is essential. Moot point whether a public loan fund lik ethis stregthens or weakens that.

      This morning I spent some time with a Relationship Manager for a major investment bank with special responsibility for tech, media and telecoms. They have 2 full time staff looking at financing tech and media, both based in Manchester – because it is seen to have a much more conducive environment. Of course it is easy for them to pop over to Leeds….

      I hope the revolving loan fund works well, if we learn the lessons from history, then it has a chance. But as Imran points out if want a really vibrant and well funded tech industry in Leeds this at best will be a part of much larger investment system.

      I do try to be a critical friend than a knocker….

      1. No need to apologise. I wasn’t telling you off just looking for elaboration I guess on what kind of alternative solutions are out there if any? And how else this could have worked?

  4. The Yorkshire Content Fund (YCF) is obviously only one option for digital businesses looking for finance and won’t be suitable for everyone. But we have managed to structure a fund that could access this ERDF finance – which wasn’t easy. There is now £7.5m for digital companies in Yorkshire (and TV, film, games) to access, if appropriate, which there wouldn’t have been otherwise.

    One key point to understand is that YCF can only invest with private match financiers on identical terms as the fund cannot undercut the market for finance – due to EU state aid laws. The YCF is there to address the lack of overall finance available in the market. So investment decisions are partly underwritten by the fact that private finance is also investing. Although, Screen Yorkshire does have a track record of making such investments – some successful, some less so, often the case in the very risky creative industries.

    The YCF is a risk fund but only to the extent that the private match financier would risk their investment – in terms of a film, all investors would want cast and other finance and often pre-sales in place before deciding to invest, whether Sean Connery or not! I’m sure there is a need for other types of funds but we’ve had to structure this fund within certain rules and limitations.

    Imran – I’m not sure how the YCF is propping up old models of production as it is a commercial investment fund, looking for a return on an equal basis to private finance. It is not a subsidy or ‘soft money’ (at the bottom of the recoupment schedule or matched with in-kind support) like many previous regional funds (and lottery film funds).

    Hope this helps and please spread the word to anyone you think the YCF may be relevant to. Or get in touch if you want more detail.
    Screen Yorkshire

Comments are closed.