Film Financing — How to Connect with the Right Venture Capitalists
What today’s Venture Capitalists are teaching me is much different than what my VC colleagues and mentors taught me in the past.
It’s been two years since I decided to take a hiatus from Hollywood and return to Silicon Valley to launch my new platform, Fundpire. Getting back into Silicon Valley was somewhat of a shock to my system, for the culture has changed quite a bit since I left in 1999.
However, one thing that has remained the same was the ease of connecting with Venture Capitalists; in fact, connecting has proven easier today than it was in the ’90s. Many have been willing to schedule a call or lunch with me to discuss the current business climate and how they might be able to source deal flow through my Fundpire platform.
As most know, a financier’s or film producer’s daily email inboxes are littered with pitches. During one of my re-connection meetings, something dawned on me: I was in a very unique position.
I could get just about any investor on the phone or get them to meet with me.
Why? Very simply, I wasn’t pitching them ANYTHING. Fundpire was self-funded, so I wasn’t personally raising money for it’s operation, and I’m not in a current raise for film production. I wasn’t asking them for anything other than spending time as a trusted colleague having a mutually beneficial discussion about business.
Ready, value-adding exchanges are the keys to the kingdom and open any door I want opened.
Since that day, I’ve been paying a lot more attention to WHAT it is that investors want.
Hopefully, my time spent with these investors and what I’ve learned about how they invest in film will help those who are currently in a capital raise:
The following points should be understood:
Shared Risk — Investors want to know that you’ve got skin in the game. Not just with a company or IP you’ve developed, but what contributions you’ve made monetarily.
Pitching By Not Pitching — Knowledge is the world’s most valuable currency. Asking an investor to review your business plan/prospectus for feedback is a good way to pique their interest without pitching.
Pitch the Current “Original Content” Storm — One thing that Venture Capitalists like is the marriages that have taken place between tech and entertainment. I’m talking Hulu, Netflix, and Amazon. They can see the correlation between content supply and demand with these online streaming outlets and huge profits.
Build Your Distribution Network — Attend EFM, Cannes Marche du Film, MIPCOM and AFM to meet distribution professionals and content buyers. Investors want to know that you know the right people to buy your content or to give you a distribution deal.
Show Them the Money! — Investors want to see how you are going to spend their investment and how you will pay them back. Make sure your plan and prospectus is very transparent and accurate when it comes to the financials. It is always helpful to enlist an experienced line producer to create your budget.
Deadlines — Most PPMs designate hard deadlines for a capital raise. You should, too. Give your investors a certain time in which you would like them to decide whether or not they are going to invest.
Always do your research and make-sure you are well informed about the legal perimeters when raising funds. The SEC website is a great resource if you are unfamiliar. These are just a few things you should consider when raising VC money for motion pictures.
Thank you for reading! If you enjoyed this article, feel free to read similar articles I have written.