Will you lend me $1000? I don’t know when I’ll pay you back – but i’ve got a really great idea …
- Do you feel like rushing to give me a $1000 loan right now? Unlikely. You want me to give you better, more detailed information about the loan, its terms and the chances of my paying you back. It’s exactly the same for getting a movie financed.
What is The Movie
- Learn to pitch it – to sell it to a potential investor in 30 seconds.
- If you hook them, there’s plenty of time to go through the synopsis, budget and screenplay.
I’m creative, i’m an artist …
- If you’re thinking “but i’m creative, i’m an artist – I don’t want to be involved in commerce” – forget it. You have to learn the one in order to achieve the other. Getting a movie financed means understanding how this works.
- You’re asking to borrow money – take the time to understand the process.
- However, as it is unlikely that a writer/director/producer is also an accountant – make friends with someone who is.
Funding Sources: Each Investor Group Looks at the movie in their own way
- Your finance plan is unlikely to be from one source. It’s more likely to a puzzle of money which will include the following:
- Equity – i’m an investor with cash to place in return for ownership & profits. Maybe i’m a film fan; I want to walk the red carpet; or be involved in production. The equity want to know where they sit in the financial waterfall – how will income be distributed? They are taking a risk. So are you – make sure you have an attorney – not all films return their investment.
- Sales – a sales agent will look at the budget, finance plan and see where they can help raise funds to close the finance and greenlight the movie. They do this by pre-selling rights to international distributors. They make estimates on sales to be made. Many will Executive Produce and help getting the movie financed. Check the sales agreement with an attorney.
- Financier – there are companies who will cashflow the soft money; tax credits; sales and gap – they look for a return. They will charge fees / interest on the different types of loan according to the risk. Have your attorney check the contracts.
Types of Soft Money Financing
- Soft money is finance in the form of rebates, loans, grants etc. The investment is less driven by financial return than other forms of investment.
- Film Bodies – each has a set of criteria which guides their involvement – usually shooting part of the movie there; the story having resonance to the location; and using local talent – examples – check out the BFI; Northern Ireland Screen; Screen Australia.
- Tax Credits / Rebates e.g. Saudi Arabia offer a 35% rebate to shoot there. Why? To bring in production, to create their own film industry and to drive tourism. This is why people go to Georgia, Canada, Australia Bulgaria etc – even if the movie is set in Arizona.
- Brand investment / partnerships – If you’re lucky enough to have a decent budget, cast with visible value, distribution and a marketing campaign – there are ways to integrate brands into your movie. Some might not provide hard cash but will ‘dress’ a set for you i.e. they won’t give you funds but by providing their product, it will save production time / money re legal clearances.
The ROI – Return On Investment
- Each party approached will want to know how you intend to return their investment.
- When will the movie deliver; who will distribute; what’s the marketing approach; who’s the audience; what’s the likely box office; will there be ancillary deals (TV / SVOD etc.).
- Research this so that you can discuss the hoped for process – let the money know that you understand it’s a commercial enterprise.
- Once you have a budget, you need to draw up a finance plan.
- As part of the finance plan, there has to be a waterfall – this the process for money coming back in once the film is released.
- Where does that money go i.e. the distributor takes their share / marketing costs; the sales agent takes their commission / costs etc.
- Hire an attorney / accountant to look at finance plans / waterfalls.
- Have a collections agent be the point at which all money comes in – and then is disbursed according to the previously agreed waterfall.
Will You Make Money
- As part of the waterfall, the production is usually placed low in the recoupment schedule – waiting until all investors are repaid.
- Above the line talent (director/producers/cast) will often be asked to ‘defer’ – this means, not getting paid until everyone else has recouped.
- Many producers don’t see any upside until the film has left theaters; gone to DVD; SVOD …
- By now, you’re reading this and thinking it’s too complicated. So – ask for help and surround yourself with experience.
- If you are a first time filmmaker, it will be difficult to get your movie financed – a backer won’t have any previous information with which to judge your ability.
- Know your movie, your pitch, the budget etc inside out.
- Be realistic about the scale and approach.
- Be honest about your ability to get to talent.
- Know your audience.
- Reassure backers by hiring clever & supportive partners e.g. find the best line producer you can, ask them to go through the script and budget with you.
- When hiring HoDs, look for the ones with experience – who have done this many times before, love your project & can support you in this new endeavour.