How Sharknado is not unlike an emerging fund manager

August 11, 2014 admin

For those of you plugged into current popular culture, the cult cable movie Sharknado 2, The Second One was recently broadcast on the SyFy channel. For those of you who aren’t that connected to this particular franchise, the premise is different, even for a SyFy original movie.

Essentially, the pop culture phenomenon began last summer on a very slow entertainment and news day when along came this movie about tornadoes forming in the Pacific Ocean and picking up schools of sharks and then bringing them into Los Angeles where mayhem ensues, including much blood and gore. In fact, Sharknado became the highest tweeted event in cable television history that evening.

It was so successful that the “Second One” was soon under production.

So, how does this relate to the investment fund management business, especially in terms of emerging managers? Connecting the dots, or fins, is not as difficult as one might think. Basically, most individuals who create new funding platforms have come out of larger managers and want to set their own course. Sharknado featured such a type of actor, including Ian Ziering of Beverly Hills 90210 and Tara Reid of American Pie and The Big Lebowski. To round out the cast, a “seasoned” veteran was also brought in with John Heard of Home Alone, Big and The Sopranos. The budget for this production was in the $1 million to $1.5 million range.

Sharknado 2, The Second One brought back its original team of Ziering and Reid and brought in an even more “seasoned” veteran in the form of Judd Hirsch of such classics Taxi and Ordinary People. (John Heard was no longer available as because his character perished in the first movie.) The budget for this spectacle was obviously higher and considered to be in the $2 million range, which is nearly 25–50 percent higher than the first round.

And how does this relate to the emerging manager field? First, a group of successful individuals break off from larger investment funds to form their own management firm and need to come up with an original way of investing to attract capital. Much like Sharknado, no matter how much success you’ve had in the past, it’s what you’re doing today that counts, and it’s all about reinvention. And the hardest fund to find capital for is the first one. Now with a success under way, the emerging manager begins to raise its second fund, and this is no cakewalk either but there is some name recognition in the market. Sharknado 2, The Second One was a huge success, and now they’re off to Sharknado 3 and one can imagine how much bigger the budget will be for that movie and how much easier it will be to raise capital.

And closer to the point in terms of similarities, the Sharknado film series seems to focus on “core” markets, as the first two have been set in Los Angeles and New York City. It’s not a stretch of the imagination that the third movie will be filmed in a global location, perhaps London or Tokyo? Once again, it all comes together on a not-so-imaginary scale.

In essence, raising capital in any industry falls into the same trajectory. It starts small, but with the right mix of talent, drive and luck, in many cases it can build into a recognizable franchise. Sharknado’s rise is no fluke (pun unintended) and an interesting model to observe.

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JS_91x119Jonathan Schein is senior vice president and managing director of business development at Institutional Real Estate, Inc.

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