Public subsidy or venture capital: who pays for Swiss cinema

Peter Thiel has no connection to Swiss cinema and is not announced in Locarno. This article uses his financing model as a point of comparison, in order to understand better how the one that sustains Swiss production works.

At the 79th edition Switzerland is present with 28 films and eight co-productions, a total of 36 titles out of 233. That share does not come from the market. It derives from federal and cantonal grants, from the public broadcaster and from private foundations.

The exhibition the festival is accompanying at the Casa Rusca museum illustrates the mechanism well: it is supported by the Swisslos Fund of the Department of Education, Culture and Sport, by the Ernst Göhner Stiftung and by the Fondazione cultura nel Locarnese. Three different bodies, none of which expects a financial return.

How the other model works

Thiel founded Founders Fund in 2005, and in 2004 he had been Facebook's first outside investor, with 500,000 dollars. The logic of venture capital rests on an asymmetric distribution of outcomes: the great majority of investments return nothing, and a very small number of cases produce a return large enough to cover all the losses.

Applied to cinema, that model would have an immediate consequence. The financier would not look for thirty-six films, but for one capable of earning as much as thirty-six.

The Swiss system is built to do the opposite. It spreads modest amounts across many projects, accepts that much of it will not reach a wide audience, and treats production itself as a result, independent of box office.

Neither arrangement is free of cost. Venture capital concentrates resources on what can grow quickly, and the films arriving in Locarno from Palestine, Georgia or Colombia would not meet that criterion. Public funding, for its part, decouples the money from the audience, and a system in which takings do not count will inevitably produce work that nobody watches.

The Swiss model's viability therefore depends on a political choice renewed each year in the budget. As long as it holds, it produces an industry the market would not find interesting, and which without that support would not exist in a region of 350,000 people.

The comparison mainly serves to clarify one thing. The relevant question is not which system is more efficient, but what each of the two counts as success, because that is where they diverge before any counting begins.