ZDONK, an early startup set to open its doors this spring, plans to create a market for new comedy movie scripts in a step towards democratizing the movie-making and investment process.  Once enough investors purchase shares of a script, ZDONK will guarantee its production and distribution and investors will reap what the movie earns at the box office and in distribution.  On the creation side, the company is looking to build a network of writers and movie fanatics in order to keep up the flow of new scripts.

Making a movie is an extremely risky affair.  What better way to combat those risks than by measuring a movie’s financial success by crowd-sourcing it from both angles — investment and creation.

ZDONK will start out with a collection of existing Hollywood scripts that have yet to make it to the big screen.  If you’re to believe Entourage, that means there are a lot of great, hidden scripts simply sitting in studio drawers, waiting to be made.  ZDONK wants to let you, the users and investors, weed through that pile and determine which of them are fit to be the next blockbuster hit.

Want to own a part of a movie and invest in hits?  You’ll be able to invest in movies much like you can invest in shares of a company.  Want to be sure a particular movie makes it to the big screen?  Be a part of a group of investors that invest enough money to be sure it happens.  Want to turn your idea into a movie?  Start writing a script and have it ready for this spring, and, if enough investors believe in it, watch your idea become a reality.

The ZDONK founders

I’ve been following ZDONK and their founders since the idea was a mere glimmer in their collective eyes.  Before leaving New York this past September, Zack and Dennis — two of the company’s three founders — sat with me for lunch to share their experience building a company and navigating both the financial and film worlds.

Dennis is a former Bank of New York analyst who’s handling the financial side of the business, setting up the market for their scripts, and providing energy enough for the entire team.  Zack, a child of the Hollywood scene, has been helping the company make connections, find scripts, and create partnerships.  Roy, the third founder, is focused on project management and works with the company’s two other team members, their engineer and graphic designer.

Right now, the team of five is working to set up the core infrastructure for the site, making partnerships, and creating an online presence with their blog.  At the time that we spoke, they were learning to brand their idea and went through several logo iterations.  Since speaking with them, it looks like they’ve started to hit their stride with a collection of fun and informative blogs posts and a great tag line — Hollywood’s not just for asses anymore.

In December, they were in the process of raising funding to both build the site and start acquiring scripts, and they’ve since successfully raised a $1 million first round of funding.  Their next task, assembling their board of directors, also looks to be moving along with top-level experience from Fox, Walt Disney and Revolution Studios.

Since they’re essentially creating a stock market for scripts, a lot of their costs are spent on legal fees. Their business type — a market for movies — carries with it unique complications and intellectual property issues.

What they’re up against

Movies compete against a host of other media for our attention.  Once created, they’re likely to be pirated everywhere from college student dorms in Boston to marketplaces in Bangalore.  The financial crisis certainly hasn’t helped the industry’s outlook.

Heck, even ZDONK acknowledges what they’re up against in this environment — just check out recent ZDONK blog posts on startups in a crappy economy and the film industry during the financial crisis.

One of the ways they’re trying to combat this is by focusing on what can make money with less risk — comedies. (With a name like ZDONK, what else would they be focused on?) Comedies can be created on lower budgets and have the potential to earn significant long term revenue after distribution.  Also, during these hard times, board member Joe Roth points out, “It’s already bad enough, movie-goers need an escape.”

As things seem to be moving along, it seems now that one of their biggest challenges is powering through the low points and building a community to get behind them.  Working with the film industry requires a lot of connections, and at this point, their idea has been picked at from every angle.  Just ask Chris Albrecht of NewTeeVee, who takes a look at the hard economics of actually funding a movie online — 6,000 investors with $500 each.

At the end of the day, creating a website that could potentially help create movies is a great thing to be able to call “work”, the ZDONK’s founders told me.  This is the movie business, after all.  Everyone has a chance to become the next big blockbuster.

Update (1/4/2009): Since it had been awhile between when I met with ZDONK and when this post went live, it appears some of the post requires clarification.  I asked Dennis if I could re-post his response because it’s a much better representation of the company than I could make alone:

“create a market for new comedy movie scripts – For the most part, we will be working with agencies, development executives and riding the traditional industry channels to acquire properties (eg – talking with people who already have some level of vetting). We definitely plan on engaging writers on the site, but we’ll be doing that more through having “log-line” competitions where the winners develop comedy shorts to be distributed on zdonk.com and then syndicated across the web. Ideally, if a writer was very good, we’d eventually want them to write features for us but we are not comfortable rolling that out just yet.

We will definitely be encouraging writers to use their profile on our site to post their feature films and potentially receive feedback or find representation, but we will make it clear that we will not be scouring the web looking for feature scripts (too many IP issues). That is not to say, however, that a producer wouldn’t see a script they really liked on our site and pick it up and finance it themselves.

- Their next task, assembling their board of directors, also looks to be moving along with top-level experience from Fox, Walt Disney and Revolution Studios This was no biggy but we’ve had our Board of 5 people set for a while now. Lastly (and also unimportant), we raised about $1.4m and are done for now…raising money became too “expensive”.”

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