The options to finance a film is getting significantly more interesting these days with the independent filmmaker getting a slew of new options.
I’ve listed some of them below and would be happy to go deeper in to each of them if there is additional interest in the subject.
Equity
This is usually the first place to start. Equity essentially means that an investor is willing to bet on you as a producer and your abilities early on in the cycle. Equity financing could be as simple as reaching out to a rich uncle or acquaintance interested in the film industry or on the other end of the spectrum, production houses and even the large studios.
If this is the first of your endeavors, you’re most likely to be reaching out to relatives and friends first. However, as Sean Covell, the producer of films like Napolean Dynamite and Concrete Blondes states — It’s been far easier to raise equity funding over the last couple of years. Despite the economy being bad, the Dow, NASDAQ and Mergers & Acquisitions have been really hot, this is leaving many investors with a lot of money on the sidelines and investing in films is always enticing to them.
Experienced equity investors will ensure they hold the rights to final-cut approval, which has been the cause of much heartbreak in Hollywood, so tread carefully.
If there’s interest in this subject, I can get into the details of financing and offering premiums and deal terms to new investors.
Presales
Presales involves selling the rights to your film before it has been produced. The buyers pay you to own the rights to your film once its ready. You can opt to sell domestic and foreign rights for various properties such as theatrical, DVD, VOD etc.
Keep in mind that presales usually don’t have a lot of insight in to your abilities, so they often tend to buy “names” or genres like horror, which has a wide audience. Names, being high profile attachments like actors or directors. Don’t consider foreign presales if you don’t have brand name actors, or if you’re making a drama or comedy that doesn’t always travel well overseas.
You can attempt to pitch your film to international distributors at any of the various film markets like Cannes, The American Film Market, Toronto or hire a Sales Agent to do it on your behalf.
Debt
This can be as rudimentary as high-interest credit cards or as structured bank loans. According to Jordan Horowitz, the producer of films like The Kids are Alright and Save the Date, banks tend to want to minimize risk, so there’s a high chance they want you to have a lot of funding from the other sources and most of the check boxes ticked on ensuring your film will be completed. Additionally, this is much easier to structure in places with a film culture such as Los Angeles than the neighborhood bank in, let’s say Denver, Colorado.
Debt financing also gets to be repaid first before the equity and filmmakers themselves get to see any of the profits, so its low risk for the banks but its likely based on interest rates that you, as the producer won’t see any of the profits.
Soft Money
This is a bit of a soft skill that requires some consultative help, seek advice before structuring this. Filmmaking comes with a slew of incentives from the government and film organizations in the way of tax credits, co-productions, subsidies, tax rebates, etc. Based on where you shoot, this could be a sizeable portion of your financing.
These usually take some time to realize, however. Several of these can only be filed after you finish shooting the film and then there’s several months of paper work processing involved. However, several financing companies exist to give you the money upfront and then hold on to the credits when they are paid out. This is minimal in risk for the financiers, who then take a discounted repayment from the incentives due for your film.
Crowdfunding
This is relatively new development in the world of financing. You have the benefit of returns-free financing, however, it usually works for productions that strike a chord with a section of the populace. Remakes or series caps like “Veronica Mars” has managed to raise $5 million from Kickstarter. Documentaries that cater to a certain niche of the populace seem to perform well too.
I’d be happy to get into the details of what we’ve seen are some best practices for Kickstarter campaigns if anyone is interested.
