A group of creative people has an idea about something people want and will pay for. But they don't have the capital to bring their idea to life and market it. They're just scrappy innovators. They are willing to give up a piece of the action to investors who will commit their capital to making their vision a reality. But it takes a special kind of investor: someone who understands the business, can assess the risks, and believes in the vision.
Sound familiar? It's a startup story but not what you think. It's Broadway.
At Project W, we have seen how more women investing – as fund managers, VCs, or angels – has led to more women-led companies funded. Women investors are changing the face of venture capital, and we were interested to learn how the women who invest in Broadway theater are changing what we see on stage.
With help from Elisbeth Challener and Lori Fineman, co-founders and partners of FineWomen Productions, and our colleague Carrie Casselman who represents theater producers and investors, we did a deep dive into how Broadway shows are financed, the differences and similarities between venture financing and Broadway financing, and how the women investors of Broadway are changing what we see on stage.
The Women Who Invest
After getting a degree in musical theater at the Boston Conservatory of Music, Elisbeth Challener performed in regional theater and summer stock. Lori Fineman grew up as a theater kid and took that passion to college where she was deeply involved in her college theater company, both onstage and backstage. Both were eventually drawn to the business side of theater: Elisbeth as executive director of a California-based arts center and then managing director of Austin's major regional theater, and Lori as executive director of a nonprofit Off Broadway theater. Their paths collided through their involvement in the National Alliance of Musical Theater, where they discovered their shared passion for musical theater, especially the creation of new musicals. Over a lunch meeting at Sardi's, FineWomen Productions was born.
As producers, Elisbeth and Lori invest their own capital and raise capital from other investors. And they are not alone – there are other notable women producers of Broadway shows. Through FineWomen Productions, Elisbeth and Lori are part of a movement to bring more stories of diverse voices to the stage and to create more opportunities for women creators and producers.
Here's how.
Broadway -v- Venture
The Investment Vehicle
The investment vehicle used to fund Broadway shows is similar to a special purpose vehicle (SPV) commonly used in venture investing. The investment in each show is led by lead producers who manage a limited liability company set up to license the rights to the show and oversee its development, financing, and production. The lead producers either commission the work or acquire an option to produce an existing work. They also are responsible for raising the funds necessary to bring the show to the stage. To help them raise capital, the lead producers bring in coproducers who commit to raise a certain amount of capital. Unlike general partners in venture, however, the lead producers bear the risk of any fundraising shortfall and, in the event of a shortfall, would be required to make up any deficit in the project budget or risk rescission of the investment offering.
Because the lead producers procure the rights to the show and take the risk of raising the necessary funds, they call the shots regarding all aspects of the show including the budget, the creative team, the venue, and the identity of the other producers. Investors in Broadway shows have no voting rights and no role in the development or management of the production; their role is passive except for certain information rights.
How Broadway Investors Make Money
In a Broadway investment, every investor, including any of the lead producers who invest, is entitled to recoup her investment – get her principal investment back – on a pro rata basis. After the show opens, each investor is paid a pro rata share of net income (i.e., gross receipts less the running costs of the show) until she has recouped her original investment. If and when the principal amount invested is returned to investors, the remaining net income (profit on the initial investment) is split 50/50 between the lead producers and the other investors. Typically, during the fundraising phase for the show, the lead producers agree to share a portion of their 50% of the profits from the show with certain coproducers who commit to higher levels of investment as an incentive for those coproducers to bring in additional investors.
The Exit
There is no typical "exit" for a Broadway investment – no IPO or acquisition. Whether or not the initial production of a show fully recoups, the revenue-generating capacity can continue. For a highly successful long-running show like Hamilton, the investors will continue to receive net income distributions for years. Even if a show does not recoup its full investment during its initial commercial run, if the financing entity owns a share of the playwright's future proceeds, the investors may continue to receive distributions from other productions such as tours or from licensing revenue from regional theaters, community theaters, or schools.
Evaluating an Investment Opportunity
As with any investment, it helps that Lori and Elisbeth have deep and varied experience in theater. Lori notes how that experience "gives us a sense of how a show is going to sell and who is going to buy tickets." Elisbeth adds that "[b]ecause we've had decades of collective experience in the nonprofit world thinking about how to use every last dollar most effectively, it's in our DNA to be careful stewards of the money investors commit to a show."
The key factors that drive their investment decisions are:
The Art
For Lori and Elisbeth, "the art comes first." As Elisbeth observes, "You lead with the art. Just like a tech investment, you believe in the idea around which the business is built." And like many venture investments, a Broadway investment offers an opportunity to be part of creating something, to have an insider experience, and to leave a legacy that may endure long past an investor's lifetime.
To move forward with an investment, Lori and Elisbeth have to love the show and be deeply committed to seeing the show brought to the stage. Sometimes this is despite a checkered history. Even though the original production lasted only 18 performances, Lori and Elisbeth were excited to invest in a revival of Merrily We Roll Along, reimagined by a female director, Maria Friedman. Their instincts proved resoundingly correct. Not only did the show win a 2024 Tony Award, but it has also been financially successful. Investors contributed their capital in July and August of 2023 and by March 2024 had recouped their principal investment. Lori and Elisbeth and their investors have also invested in a motion picture release, which is another potential source of revenue from the show.
Lori and Elisbeth take a long view. While they also loved and believed in Lempicka, a show about a little-known woman artist, Lempicka closed early without recouping their investment, despite having received three Tony Award nominations. Elisbeth and Lori are hopeful that future productions and opportunities will generate revenue for investors in the original Broadway production. Some of those opportunities are already in the works: a cast album was released this summer, and a new production of the show is planned in Seoul, Korea for Spring 2026.
The Team
With control over artistic and financial decisions, the lead producers are critical to the success of a show. They control a show's weekly running costs. Lori and Elisbeth invest alongside lead producers who have a demonstrated track record and whose vision, business acumen, and financial discipline they trust. They also look for lead producers who are collaborative and are willing to listen to and consider feedback from coproducers like Elisbeth and Lori.
The lead producers hire the creative team: actors, designers, directors. The makeup, talent, and experience of the creative team are key factors for Lori and Elisbeth in evaluating a potential investment. While talent and experience are must-haves, they also look for a diversity of perspectives and backgrounds among members of the team which, just as in a venture start-up, can lead to more successful and innovative outcomes.
Financial Performance
While passion for the art may be the driver, Lori and Elisbeth and their investors are in business to make money. Investing in a Broadway show comes with many risks, but over the past twenty years, Broadway investments have generally had a better success record than venture investments – with one in five Broadway investments recouping the initial capital and going on to be profitable, according to Elisbeth. Financial due diligence involves vetting the production budget, assessing the assumptions underlying revenue and expense projections, and evaluating the likelihood of recouping their investment.
Lori explains that there is transparency around the financial performance of a Broadway investment. When an investor signs up for an investment, she sees the budget and the projections of weekly running costs. After the show opens, the weekly box office grosses are publicly available on sites like Broadway Grosses. The show's accountants also release quarterly statements to investors. As a result, an investor is able to monitor the financial performance of an investment on an ongoing basis.
Changing the Face of Broadway
Lori and Elisbeth are part of a group of women on Broadway who are putting their capital to work to change the face of Broadway. Along with other women who have made their mark on Broadway, Lori and Elisbeth are using their influence to uplift women creators, amplify women's voices and their lived experiences, and change the conversation, all while making smart investments that will generate financial returns.
FineWomen's first production was The Piano Lesson with a Black woman director – the first for any of August Wilson's many plays produced on Broadway. An upcoming FineWomen Production show is a revival of the cult musical favorite The Last Five Years, directed by Whitney White, a Black female director making her Broadway debut.
Lempicka tells the story of a remarkable but little-known Polish painter Tamara de Lempicka, who spent her working life in France and the United States. Although that show did not perform as well in its Broadway debut as Lori and Elisbeth had hoped, it did call attention to the work of an important artist. Since the Broadway show, there are two first-ever American retrospectives of Lempicka's art – at the De Young Museum in San Francisco through early February and at the Houston Museum of Fine Arts opening in March. And there is a documentary about Lempicka's life which will debut at the New York Jewish Film Festival at Lincoln Center in late January.
The recent production of Suffs, a musical about the Suffragist movement, which opened in the middle of an election cycle and boasted a host of women producers, including two women as lead producers, is another example of how women are exercising their investing muscles to educate and engage audiences with stories that resonate in our times.
Like Lori and Elisbeth, Carrie Casselman has spent much of her life in and around the theater: participating in high school and college productions, earning an MFA in Theatre Management and Producing at Columbia University, and working at a nonprofit theater. Carrying over her passion for theater to her law practice, Carrie works with leading producers and investors to bring to life many memorable shows on and off Broadway, including productions such as Suffs and Hell's Kitchen, another current Broadway musical highlighting the story of a woman – inspired by Alicia Keys' life – finding her voice and taking control of her future. Carrie observes that the theater world has always been a home for individuals with different backgrounds, experiences, and personalities who don't conform to a certain type.
In the theater world, when diversity is embraced, women like Lori and Elisbeth have license to use their expertise and experience to create opportunities to amplify stories that resonate with women and to elevate the women who tell those stories. They are changing the face of Broadway -- and with commercial success.
Let's hope the venture world will take a cue from Broadway.
From left to right: Elisbeth Challener, Lori Fineman, Carrie Casselman
Learn more about Elisbeth's and Lori's production company and their investments here: FineWomen Productions or by contacting elisbeth@finewomenproductions.com or lori@finewomenproductions.com
Learn more about Carrie and her practice here: Carolyn J. Casselman