Latest / Startup Stories with Fexingo: Conversations About Founders, Funding, and Building Companies from Zero / How A24 Built a Movie Empire on Creative Control
Transcript
- Lucas: If you follow movies at all, you've probably noticed that one name keeps showing up in the credits for films that feel different — weird, bold, artist-driven. A24. Luna: Yeah, they've become this cultural signal. If A24 is behind it, you expect something that doesn't look like a studio movie. Lucas: Right. And what's interesting is that A24 started as a tiny startup in 2012. Two guys in their early thirties, Daniel Katz and David Fenkel, both came from film finance and distribution. They weren't Hollywood insiders in the traditional sense. Luna: And they didn't have a ton of money. I remember reading they launched with just a few million dollars from private investors. Lucas: Exactly. And their big insight was that the studio system was squeezing out mid-budget, director-driven films. The major studios were all-in on franchises and sequels. Katz and Fenkel thought there was an audience hungry for something else. Luna: So how did they get started? I mean, distribution is a tough business. You need relationships with theaters, with streaming platforms. Lucas: They started as a distributor, not a producer. Their first big break was picking up a film called 'A Glimpse Inside the Mind of Charles Swan III' — not a hit, but it got them credibility. Then they distributed 'Spring Breakers' in 2013. That film was polarizing, but it made noise. Luna: And it had that specific A24 vibe before A24 was even a known brand. Neon colors, experimental structure, a director with a vision. Lucas: Right. But here's where the business story gets really interesting. In 2014, they funded and distributed 'Ex Machina' — Alex Garland's directorial debut. That film cost about $15 million to make. It grossed $36 million worldwide. Modest, but it won an Oscar for visual effects. Luna: And it established the model: let the director make their movie, market it as a cultural event, and keep the upside. Lucas: Now, those conversations we have on this show — the ones about founders navigating tough choices, about building something from zero — they take time and work. We deliberately don't run ads on these episodes. If you want to support that choice, the link is buy me a coffee dot com slash fexingo. Luna: And it genuinely makes a difference. Even a small contribution helps us keep the conversation going without interruptions. Lucas: So back to A24. The real turning point was 2016, when they released 'Moonlight' — Barry Jenkins' film. Budget was about $4 million. It won Best Picture. That changed everything. Luna: Suddenly they weren't just a cool indie distributor. They were the studio that beat the big guys at their own game. Lucas: And they did it by sticking to their philosophy: give the director final cut, don't demand test-screening reshoots, and market the film as art, not product. After 'Moonlight', A24 started producing their own films. They hired a head of production. They began signing first-look deals with directors like Ari Aster and Robert Eggers. Luna: And those directors delivered. 'Hereditary', 'The Witch', 'The Lighthouse' — these became instant cult classics. They made money, but more importantly, they built the brand. Lucas: The brand is key. People trust the A24 label the way they used to trust the Criterion Collection. But A24 is a startup, not a legacy brand. So they had to fund this growth somehow. Luna: And they didn't go public. They didn't sell to a major. How did they do it? Lucas: In 2022, they raised a $225 million equity round led by Stripes, a growth equity firm. That valued them at around $3 billion. But the more interesting move came in 2025 — they secured a $100 million revolving credit facility from JPMorgan. Luna: A revolver. So they're borrowing against their film library, essentially. Lucas: Exactly. That credit line gives them flexibility. They don't have to sell equity every time they want to produce a new film. They can draw down the loan, produce the movie, and pay it back from box office and streaming revenue. It's the same kind of financing used by larger studios, but A24 got it based on their track record and brand strength. Luna: And it lets them keep ownership. They don't have to give up a piece of their IP to partners. Lucas: That's the key. By 2025, A24 had produced or distributed over 130 films. They had a library of valuable titles — 'Everything Everywhere All at Once', 'The Whale', 'Past Lives', 'Civil War'. That library generates recurring revenue from streaming licenses and home video. Luna: And they've expanded into TV. 'Euphoria' was a huge hit for HBO, but A24 produced it. They've also got 'Beef' on Netflix, 'The Idol' — though that one was controversial. Lucas: They're not afraid of controversy. That's part of the brand. But the TV business is interesting because it gives them a steady income stream between film releases. Luna: So what's the downside? Is there a risk that they grow too fast and lose the indie ethos? Lucas: That's a real concern. When you take on debt — even a revolver — you have to service it. That means making films that perform. If you have a string of flops, the lender gets nervous. But so far, A24's hit rate is remarkably high for an independent studio. Luna: I think part of it is their marketing. They understand how to create a moment around a film. The social media strategy, the merch — like the 'A24' candle that smells like a movie theater — it's all very deliberate. Lucas: They treat films like product launches. They build anticipation, they release in phases. And they've built a community that feels like it's part of something exclusive. Luna: So is this model replicable? Could another startup do what A24 did? Lucas: Partially. The distribution playbook is learnable. But the taste level — that's harder to replicate. Katz and Fenkel have an eye for what will resonate with a certain audience. And they've built relationships with directors who trust them. That trust is earned over years. Luna: And the brand itself becomes a moat. If you're a filmmaker, you want the A24 logo on your poster because it signals quality to audiences. Lucas: Exactly. That brand premium is real. In 2026, A24's upcoming slate includes new films from Ari Aster, the Safdie brothers' next project, and a documentary about the early days of hip-hop. They're also launching a podcast network and a publishing imprint. Luna: So they're building a full-on media ecosystem around this creative trust. Lucas: And that's the lesson for founders in any creative industry: if you can become the platform that artists trust, you can build something that lasts. It's not about the biggest budget. It's about the right constraints and the right relationships. Luna: And keeping control of your own destiny. Lucas: Yeah. A24 didn't sell out. They found a way to grow without giving up what made them special. That's harder than it sounds.