We are thrilled to announce our recent investment in Backdrop, a pioneering vertical SaaS company set to revolutionize financial management in the movie, TV, and music production industry. Our decision to invest in Backdrop is grounded in the company’s innovative approach, robust go-to-market strategy, and the immense growth potential within the entertainment sector.
Backdrop distinguishes itself as a vertical SaaS utilizing cutting-edge technologies such as Optical Character Recognition (OCR) and Artificial Intelligence (AI) to automate pivotal tasks like expense reconciliation, purchase orders, budget management, and accounting reporting. This automation translates to a remarkable 70% reduction in time spent on these processes, delivering significant efficiency gains for its clients.
A cornerstone of Backdrop’s success lies in its well-defined go-to-market strategy, resembling the deployment of a “Trojan Horse”; within the industry. The strategic introduction of a global expense management solution not only expedites market entry by automating manual processes but also lays the groundwork for future growth. The company envisions evolving into a comprehensive core banking system for production companies, introducing a suite of tailored financial products, including corporate cards, vendor payments, payroll services, asset inventory management, and tax credits.
The entertainment industry, initially targeting film, TV, and commercials, presents a substantial revenue opportunity, estimated at approximately $2 billion in pure SaaS revenue. Backdrop’s expansion plans include additional entertainment segments such as music, sports, and event productions, significantly increasing the total addressable market (TAM) and revenue potential. The company’s innovative revenue generation approach involves integrating FinTech into its product offering, collaborating with banking institutions to provide corporate cards, payroll management, payment solutions, and more. This FinTech model, coupled with a percentage-
based fee on movie production budgets, has the potential to elevate the TAM from $2 billion to $20 billion and beyond. The entertainment industry grapples with significant pain points in expense management, including manual processes, delayed reconciliation, and diverse budgeting approaches.
Backdrop’s solution addresses these pain points by streamlining operations, enhancing accuracy, and providing real-time financial insights, ultimately improving cost control and budget adherence.
Backdrop’s current software product serves as a comprehensive global expense management solution for production companies involved in film, TV, and commercials. It automates data collection, approvals, and seamlessly integrates with various accounting software, leading to substantial time savings, streamlined operations, enhanced accuracy, and improved visibility.
The ultimate vision for Backdrop is to become the Global Core Banking and Corporate Card provider for the Film, TV, and commercial production industry, catering to production accountants, crew members, executives, and producers involved in the production process.
Our decision to invest in Backdrop is supported by several key factors, including its pre-seed global product, the founder’s robust tech and product background, a clear go-to-market strategy, and the identification of a gap in the market. Backdrop’s founders, Akanksha Singh and Caitlin Short, bring a wealth of experience from renowned companies such as JP Morgan
Chase, Uber, PayPal, Honey, and Microsoft, where they developed skills in product development and technology. This positions them well to build an innovative and competitive product-oriented company.
In conclusion, HTwenty is confident in Backdrop’s potential to revolutionize financial management in the entertainment industry. The company’s unique value proposition, strategic vision, and commitment to addressing industry pain points make it a compelling investment opportunity.
We eagerly anticipate witnessing Backdrop’s continued growth and success.