On ‘The Walking Dead,’ ‘Invincible’ Owner Skybound Entertainment’s $75M Public Equity Drive

Skybound Entertainment is the company behind some of the most beloved original IPs of the past 20 years, including The Walking Dead, Invincible (both ideas from co-founder Robert Kirkman) and the upcoming series Renfield. Like many companies that got their start in comic book publishing, Skybound wanted to improve its in-house capabilities to gain greater control over the production and distribution of its material across the medium. But unlike others seeking institutional investment or overseas financing, privately held Skybound LLC will offer an unusual investment product directly to its followers.

Today the company announced a new Regulatory A+ Events Raises up to $75M in new capital on the Republic platform directly from the publicincluding $11 million raised in a just-closed quiet period. [prospective investors, be sure to examine the company’s Form 1-A]

On Friday, I sat down with Skybound CEO Dave Alpert and Co-Chairman Jon Goldman to discuss the company’s strategy, the terms of the offering, and what Skybound is trying to achieve with its new cash infusion There was a conversation. Our talk has been edited for length and clarity.

Rob Salkowitz, Forbes Contributor: Can you briefly summarize what the purpose of Skybound’s release is?

Skybound CEO Dave Alpert. At Skybound we talk about “The Wheel of Awesome” and we help creators commercialize their ideas in any medium they want, from digital to TV to comics to games. for the purposes of this Ordinance. The raise is about bringing fans into our ecosystem, getting them inside the company, making our success their success and being the connective tissue.

Reply: It looks like you’re offering 150,000 “units” at $500 each, correct?

Jon Goldman, Co-Chairman of Skybound: The headline raise is $50 million and you can scale that up to $75 million, so we’ll see where that goes.

Reply: Does that include the $11 million already raised during the quiet period?

Jaeger: Yes.

Reply: I noticed that in the prospectus, it says that the price of the units has nothing to do with the company’s asset value, value or earnings. So what are you pricing the units on?

Jaeger: I think it might be legal jargon. We arrived at a fair market valuation in consultation with the platform Republic and a number of research groups that research stocks for us.We priced institutional financing at $330 million, and that was before our second round [post-The Walking Dead] hit, invincible, which is a legitimate global hit. I think it’s valuable given the growth trajectory and the fact that we’re probably the second largest independent IP library that isn’t part of a large conglomerate. When you consider the multiples of the video game industry which is a large part of our business, we feel like we’re pricing it wisely.

Reply: So, roughly speaking, what percentage of equity does this offering represent?

and: We’re based on a pre-money return of $500 million, so it’s going to be a little bit less than a 10% post-money return [based on the baseline $50M target, not the extended goal of $75M].

Reply: How will the new funds be used?

and: If I may give you a little narrative background first… the company was completely bootstrapped for the first 9 years. We put all the money we earned back into the company. We’re starting to go directly to consumers in comics, but in TV we still have to go through AMC, studios and networks to get our shows to market. In gaming, it’s purely a licensing business.

As we continue to recycle our margins and cash flow, we ultimately build additional capacity to select, develop and pay for scripts in the film and television space. We expanded our comic book business. When it comes to video games, we have some in-house talent that can help oversee production.

As the company continued to grow, we realized we were making huge amounts of money for third parties, but not necessarily making the same amount of money for ourselves or our creators. We see both a market opportunity and an obligation to do a little more internally. Then, in 2012, when our partner went bankrupt, we needed millions of dollars on short notice to salvage a video game project. It’s tough without outside capital.

In the past, it took us a long time to get external partners to see the value of our IP. Now we’re able to accelerate that process by bringing more of this capability in-house rather than relying on third parties to make it happen for us.

Reply: You mentioned that part of your goal is to create this kind of partnership between fans, creators, and companies. Are any shares reserved for creators? Do they participate?

and: We give creators the ability to buy; instead of cash, right? [The offering] It’s about cash raising, so people want to be involved in that way, we absolutely love to do that, we encourage people to do that.

Reply: Are the units offered through a Reg A sale of common stock, with voting and distribution rights, or are they special classes?

Jaeger: They have the same rights as common stock, the same as Dave and Robert [Kirkman] I have got. As minority shareholders, they can’t force the company’s direction, though they often say smart things, and as we’ve seen on the campaign page, they’re not shy about expressing their ideas, which is fine.

Reply: Are these units liquid? Do they have a secondary market for people to sell?

[At this point, the Skybound PR rep joined in to clarify some points for the principals]

Jaeger: It’s not as liquid as a public company, although there are now investment banks that trade for private companies on the secondary market, especially for larger deals. The limit for this release is that one person can buy up to $2 million, so I imagine if we have any big players like this, they will have the opportunity to do secondary sales in the future. Moving individual units can be more difficult.

Reply: Some people might look at this public event and think you’re trying to raise money by appealing to people’s frenzy rather than their investment sense because people are so emotionally invested in these properties. What do you say to them?

Jaeger: If you look at it that way, we are undervalued and Tesla is overvalued (laughs). If you do a traditional comparative analysis of global IP holdings — for example, the company that was sold to Disney — I think it’s easy to conclude that our investors are getting many multiples of the pricing on exit. You know, we can’t guarantee it; no business can. But at some potential exit point, the value of what we’re doing is well over $500 million.

and: We had, and still have, many opportunities for more institutional funding, and at some point may end up doing so. The goal here is twofold: one is to raise more money for our transmedia strategic plan, and one is the opportunity to work with fans, which we think is really transformative because a lot of traditional media companies, and even some disruptive like Netflix
NFL
, is still organized around a form of distribution where we can switch focus. We think we’re the first media company that’s organized, not just a single channel distribution, but connects you to it in a 360-degree way.

Reply: Are you concerned about the headwinds we’re seeing in the streaming, entertainment and technology industries right now, given this grand strategy you’ve come up with in terms of media integration and direct customer access?

Jaeger: No, everyone is sticking to traditional tactics, but the idea of ​​putting our own stuff together is that it doesn’t have to be sold to streamers right away. I think being able to market the shows that we’ve talked about in Africa by region will end up being a very smart strategy. And, by the way, we’ve all been through the ups and downs of the market and it turns out that people spend more on entertainment during a downturn because some people have more time on their hands and they spend more money.

Reply: One of the things we’ve seen with investments and acquisitions in the comics space over the past year is that investors have become increasingly impatient and companies have found themselves having to make tough choices about layoffs and strategy. This kind of capital is directly facing the public and those who are not qualified to be so rough with you. Do you think your strategy will have a little more space?

and: It’s about not being dependent on those outside forces. The whole point of this Reg A for us is, if you buy Skybound stock, we’re on the same team. You are following us. We follow you.That’s the real thing: no one, not Facebook, Netflix, Amazon
amazon
or apple
NASA
, you can take it away. That’s why this is so powerful for us.