Independent Film Financing Redefined
In the world of film-making, there are two types of superheros: The ones on screen - now there are a universeful of them, they are even to be found in your happy meal. And there are the other types, they make us dream of better worlds, fight against all odds, their names mostly unheard of. I call them, independent filmmakers.
This article is about the behind the scenes of how great ideas reach your screen, assuming you are already fed up with a league of people saving the universe and appreciate the muse of everyday reality, drama and tragedy. This article is about the painful process of financing an independent film, with a slight twist at the end.
Film Industry Today
Film industry is going through a transformation. Not only theaters, but screens of all sorts are bombarded with quality content, produced by independent filmmakers from all over the world. Instead of superhero movies with converging universes from mainstream studios, independent film arena is booming with diverging fresh, bold and unique content for the likes of anyone.
Along with the comeback of independent theaters and new distribution platforms such as Netflix, Hulu, Amazon, etc. the number of independent films increase at every part of the world. Yet, the mechanics of film financing stayed the same, centralized, exclusive and bureaucratic.
Film Financing: Private vs. Public
For a moment, consider you have a great story idea. You convince a producer to join on board. Together you do the math, and come up with a budget. Considering moving images are the most expensive way of storytelling, what’s your next step? Well, after a quick round of failure at raising through friends and family, the obvious step is to aim for equity based financing, where you reach out to investors, in exchange for an ownership interest in the film.
In most parts of the world, finding equity investors is a tough process. To start with there aren’t many of them, and convincing them in the commercial potential of the project is difficult.
With coming of internet, a lot of independent filmmakers tried the grassroot crowdfunding movement, where they asked to a large crowd to invest in smaller amounts in exchange for humble perks, such as DVDs, tshirts, invitations and title credits. This smart promise gradually turned into an insufficient way to collect money, mostly because raising enough finances needed an extra step of massive marketing for way smaller contributions.
In many parts of the world, especially in Europe, where private funding for films are scarce, filmmakers rely on funds and grants mostly from governmental or institutional bodies, which target different periods of film production processes, development, production, post-production and distribution. Most of the funds are asking for recoupment, they basically operate as government credit with zero interest. It’s very common for each production to commence applying to the funds earlier in the process. Local and regional funds are not enough to cover the total of expenses, film production companies prefer to go for international co-production, with the aim to collect rest of the finances from other regional funds from their co-producer’s countries. Towards the end of the financing stage -after each party successfully finishes their round of national public funding applications- each party seeks for supra-national funds with their joint application. Until this stage, to develop and prove the originality and the potential of the work for a wider circulation, the film preferably takes part in script development labs and co-production platforms.
In broad terms, film financing in Europe operates in stages.
Development funds
At the early stages of the film production, a production company can raise finances for conceptual development, research and scriptwriting of the film; that also allows an early exposure for the project and raises its chances for further funding opportunities at later stages.
Production funds
Major of the finances for the funding bodies are reserved for production phase, which covers the production costs during the planning and shooting period.
Post-production funds
When a production only raised money for the shooting, the company may take the risk for raising additional sum during the assembly and finishing the film. It’s also a convenient approach for first time filmmakers or creatives with edgy projects where it gets easier to show an assembled material (Work in Progress) to the decision-makers rather than trying to convince them before even realizing it. Limited in amount, these post-production funds (or gap finances) cover online editing costs, such as color grading, visual and sound effects, sound design, etc. With lower risks and quicker returns, it’s also more convenient timeframe for investors and investors to join the projects.
Distribution funds
Targeting independent film theaters, these distribution funds aim to support them in their efforts to compete against mainstream movies. The major investment goes to renovating and digitalizing the theaters and creating a sustainable economy for independent film cinemas.
The Future: The Era of Blockchain
To put things in perspective, the funding process is a difficult task for independent filmmakers, because
- it may be painstakingly slow process.
- private money is scarce. there aren’t many investors and most of them are inaccessible.
- there’s way too much bureacracy for public money.
Along came the blockchain technology, a disruptive tool for decentralizing, accelerating and democratizing the distribution of assets.
Let me explain by giving an example.
As an independent filmmaker, you need to reach out to multiple investors. There can be one, two or ten investors; but when the number increases, the amount of legal, bureaucratic work skyrockets. And from the investor perspective, they want to limit their risk by investing to not to a single film but a slate of them. That’s where blockchain may come handy. Through smart contracts, no matter the amount of investment or the portfolio size, each transaction is automated and registered through the network.
A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties.Wikipedia
In a way, it’s crowdfunding with meaningful share and revenue distribution, fast, secure and hassle-free. With minimum or no intermediaries, turning old school investment pool into transparent and democratic one, where, investment in smaller numbers are guaranteed by the framework and film-lovers from every part of the world are incentivized to take part in financing of independent films that matter.
In the upcoming years, thanks to blockchain, independent filmmakers may not only accelerate and crowdfund their financing hassle-free, they will also be given a new tool to connect with their investor/audiences in a collaborative way.
Creating IndieWonder, a decentralized and independent film financing platform, we think that it will not only help to finance independent films faster but also support the film industry by allowing more films to be realized, creating a deeper bond with its audience/investors and promoting a new generation of film lovers. By creating an autonomous film fund which reinvest its returns to the pool, IndieWonder aims to quickly broaden its scope and reach more films with ever increasing investment numbers, so that it evolves into a sustainable and transparent ecosystem. We believe, today, every token on IndieWonder is an investment to filmmakers of the future, our league of superheros.
