West End and touring productions are, on the whole, financed as a single and separate entity with each production having its own capital and running costs.
The capitalisation is raised through independent investors or ‘angels’, who individually invest a specific agreed amount of finance into the capital and whose liability ends at that amount.
The first profits from the production always go straight back to these investors until they have recouped their initial investment, after which the production is deemed to be in profit. Once this capital has been repaid, the investors will share in 60% of the production’s profits, with the producers retaining the remaining profits of 40%.
Usually, the minimum amount required to invest in a commercial play is £5,000; and for a musical approximately £20,000, but smaller amounts are possible if agreed with the producer. Investment in commercial theatre is extremely risky and investors can lose all of their investment, however, it can also be very profitable and it is infinitely more interesting, fun and glamorous than a lot of other investments.