Have you ever dealt Investors??

[FilmBoy77]

everything i read always suggests that investing in films has one of the highest risks for losing money. the more i read about it the more it seems like investors rarely make any money back off of indie films.

recently i've been approached by an investor a week ago expressing interest in some future projects they heard about and i may be introduced to another woman pretty soon who is interested in investing films.

so my questions if anybody has any experience with this are....

1) what's the advantages for investors on an indie film?

2) how much control do they have over the project?

3) are they able to pull out at anytime? or is there a clause in place that prevents you from being left hanging?

4) as a director/writer do you build in a small salary for yourself in the project when pitching a production budget?

5) what type of things should the investor be presented with in order to actually get them to make a commitment to the film?

 

[craigbowman]

http://www.amazon.com/Reel-Deal-Everything-Successful-Independent/dp/0446674621

There you go. Step by step instructions.

 

[jls4]

everything i read always suggests that investing in films has one of the highest risks for losing money. the more i read about it the more it seems like investors rarely make any money back off of indie films.

recently i've been approached by an investor a week ago expressing interest in some future projects they heard about and i may be introduced to another woman pretty soon who is interested in investing films.

books are cool - sometimes they don't give things like they are in real life. but I do encouage you read as much as you can.

first of all this is true if you go in with no clue of what you're doing. 99% of people do this in everything, not just movies. If you have no PLAN, then you're screwed (usually)

so my questions if anybody has any experience with this are....

1) what's the advantages for investors on an indie film?

2) how much control do they have over the project?

3) are they able to pull out at anytime? or is there a clause in place that prevents you from being left hanging?

4) as a director/writer do you build in a small salary for yourself in the project when pitching a production budget?

5) what type of things should the investor be presented with in order to actually get them to make a commitment to the film?

1.) - If done right, can prove a huge investment potential 100 to 200% of their money in less than 30 months.

2.) in my contract - absolutely none

3.) In my contract - no they can't. Once I get the money their contract is valid, a contract is not valid if they haven't given me money. I don't consider the money until a check is cleared.

4.) NO. I don't. But many will disagree. I invest my money and time. I'd never ask anyone to invest in me, if I didn't believe it would work.

5.) A reel of the people involved, a set of movies that were successful which are similar to the movie you're trying to produce.

 

[seunosewa]

Hmmm. Movies sound like a bad investment.

 

[FilmBoy77]

yea i've read the reel to deal book. got it at home. i've found that a good amount of the info is a little outdated. it's a great read for general info on the movie business and deals though.

1.) - If done right, can prove a huge investment potential 100 to 200% of their money in less than 30 months.

2.) in my contract - absolutely none

3.) In my contract - no they can't. Once I get the money their contract is valid, a contract is not valid if they haven't given me money. I don't consider the money until a check is cleared.

4.) NO. I don't. But many will disagree. I invest my money and time. I'd never ask anyone to invest in me, if I didn't believe it would work.

5.) A reel of the people involved, a set of movies that were successful which are similar to the movie you're trying to produce.

jls4 - when you say "a reel of the people involved" you dont mean a physical reel do you? you just mean like a list with their experience or contact info or something?

do you keep your investors updated with production, etc or do you just let them know when it's done or something? how much communication do you have with them?

if you (in your current situation) dont build in any compensation for yourself as a director do you just elect to recoup your money on the backend? i was under the impression that all aspects of the crew should be paid, even the writer if the script was purchased. shouldn't all this be part of the production budget?

also did you have a lawyer draw up your contract or did you use some kind of standard template contract and modified it to your standards?

 

[Cryogenic Filmworks]

jls4 - when you say "a reel of the people involved" you dont mean a physical reel do you? you just mean like a list with their experience or contact info or something?

I would assume he means physical, which in this day could be a DVD video of their work along with a paper list of their work. Visuals help sell you and your people.

Dov Simons tells you to get your DP, then hire a theatre screen before they open and have the potential inverstor meet you and the DP there to view the reel on the big screen. The impress them factor.

 

[jls4]

yea i've read the reel to deal book. got it at home. i've found that a good amount of the info is a little outdated. it's a great read for general info on the movie business and deals though.

jls4 - when you say "a reel of the people involved" you dont mean a physical reel do you? you just mean like a list with their experience or contact info or something?

Something for the investors to see of your work, crew members and maybe cast. (not everybody though - a few folks maybe) People like to see something - they don't like to just see "air".

do you keep your investors updated with production, etc or do you just let them know when it's done or something? how much communication do you have with them?

Yes, I email them about every month, with progress. I've only had 1 investor who's a little upset because it's taking me longer to finish than I had anticipated.

if you (in your current situation) dont build in any compensation for yourself as a director do you just elect to recoup your money on the backend? i was under the impression that all aspects of the crew should be paid, even the writer if the script was purchased. shouldn't all this be part of the production budget?

also did you have a lawyer draw up your contract or did you use some kind of standard template contract and modified it to your standards?

Truth is there is no right or wrong way. there's just a way... For me, I've built up something to be beneficial for myself and my investors. I invest in my own movies. I'm not looking for a free hand to make mistakes and then let others clean up financially after me. And yes, I'll recoup on the backend. I'm in the same boat as everyone.

There's a sliding scale to my contracts to allow people to come in at different points. The scale is based on money and how much work someone is doing. Investors get paid at the first level.

My next movie, I plan to do this the exact same way. The only people I care to protect are the investors. Most of the Prod Team is me, and my crew is up and coming. They do shorts sometimes for themselves for free - just to learn. They have a benefit that they can use my equipment on their projects without rental cost. And Cast - while I love them - you can always get actors. So I've to protect my main investment.

My investors make money if the movie sells for $60K. So I'm sure the deal will be profitable to them.

I wrote up the contracts myself based on contracts that I used in my first movie, then sent them to my lawyer and had him to make small changes to ensure the legal side was okay. Lawyers are expensive, so if you can work a deal that you do much of the work yourself and they "approve check" it's cheaper than them writing up from scratch. They'll never just give you a contract that's prewritten. It cost me over $300 just to look through them and tell me what to fix!

 

[FilmBoy77]

okay that makes sense in what you're doing.

did you include costs for marketing & PR or are you paying that yourself?

what happens if your movie sells for less than $60k?

 

[jls4]

I would assume he means physical, which in this day could be a DVD video of their work along with a paper list of their work. Visuals help sell you and your people.

Dov Simons tells you to get your DP, then hire a theatre screen before they open and have the potential inverstor meet you and the DP there to view the reel on the big screen. The impress them factor.

You guys are big money people. I wish I knew big money people. I just go over to their house and stick the DVD in. For right now that's worked for me. My hope is to slowly wean myself off of "other investors" and be the sole investors of my projects.

If I believe in them, I don't mind putting my money where my mouth is. And when I do get big enough to invest in others, I'd never invest in a movie where the producer, director, or writer is not putting up a substantial amount of cash.

 

[JonathanLB]

I agree. The common knowledge is never invest your own money in your movies, but that's kind of silly -- if you don't believe your movie will make its money back, why in the god's name should anyone else believe it will?! Haha, that's just amazing to me. It may be a great idea and all, good advice, but that's a tough sell unless you have an established name. And then, if you have an established name, why wouldn't you want to invest in your own project? It's like owning stock in the company you start, you probably want as much as possible if you believe in it, because you believe the ROI is going to be high.

I have to admit if I had investors for my first feature I'd be pretty stoked because I could probably increase the budget a bit, and have less exposure, but on the plus side if I lose money on a feature I can use that as a tax write-off and I won't lose quite as much as it would seem.

Feature investing is a pretty bad idea, though. Somehow, before I went to film school, I got on a list of "Accredited Investors." An accredited investor means $200,000/year in income or $1 million net worth or more. I'm not going to get into the truth of that status, haha, but suffice to say I don't have the kind of available cash they are usually looking for from investors and wouldn't want to invest my money with them, so I'd get calls about gold investments, oil, weird inventions, and features. I got several feature pitches, and usually all I had to say to get them to hang up was, "I'm in the film business." After that, they would say, "Thank you for your time" and hang up, i.e. they know that anyone in the film business wouldn't be stupid enough to invest in other peoples' features Also of these calls you get, I was told by someone who knows about this kind of stuff that basically 90 out of 100 are total scams. 9 of them are very solid returns, maybe 20-30% per year, and 1 is an absolute home run, 100-300% return per year. The gold one was the home run, actually. That guy was completely correct. It was about April 2007, and he said they were buying gold on leverage, 10 to 1 margins, and believed gold would hit $1,000/ounce within just more than a year, I think he said 12-18 months. Sure enough, gold has recently traded at nearly $1,000 an ounce, I believe $985 or so was its high. Somewhere around there. That would have been a VERY good investment. But, again, I don't really trust my money just thrown into someone's fund who I really don't know. I remember this one guy was really funny, I still laugh at this tool. He called me and started talking about my financial situation, and how I was on this list, and I said yeah I know. He says, "You sound young, how old are you anyway?" I said, "I'm 25." He is like, "25? Wow, well I must have the wrong number then," and I'm just like yeah whatever. So he is basically talking down to me like, well, if you're 25 you can't have any money, blah blah, and I'm just like sure you're right I have no money, whatever. Either way, whether a guy does have money or not, it's just funny in today's day and age to assume someone who is young doesn't have money.

There are a number of young guys who have done amazing business. I knew a guy online who never went to college, he was running a big online operation by the time he was 18, and he hired his dad as an employee! His dad was all ticked he didn't go to college at first, then he ends up hiring his dad and earned his first million by the time he was 21.

 

[Prodigi Pictures]

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[mediamogul]

1) what's the advantages for investors on an indie film? I offer my investors 110-120% return, plus up to 50% of net profits.

2) how much control do they have over the project? It depends if they are passive (no control) or if they want to be very involved. Its all negotiable.

3) are they able to pull out at anytime? or is there a clause in place that prevents you from being left hanging? You always should have the money in the bank before starting your film. Have all your investors sign their deal memos. Always have everything in writing.

4) as a director/writer do you build in a small salary for yourself in the project when pitching a production budget? Totally depends on the budget size. if its a micro film say under 50k then i would say no. if the budget is above that a small salary is fine. If this is your first film then i would put all the money into the film itself. This makes investors feel warm and fuzzy.

5) what type of things should the investor be presented with in order to actually get them to make a commitment to the film? for some of my small films i just gave them a script and discussed my vision. On my 30 mil feature Im doing right now we had a Private Placement Memo, Business plan including details on how they recoup all their monies, Info on soft money. The director Im working with also did a ton of previz and gave each investor an ipod with his reel and the trailer for the film. its worked wonders.

 

[aalleexx]

maybe I am missing something here, but how did you guys give a trailer for the film when you are raising capital at the same time?

 

[mediamogul]

maybe I am missing something here, but how did you guys give a trailer for the film when you are raising capital at the same time?

Actually its more of a teaser. We shot some footage and a CG test. But it tells the viewer what the film will be about.

 

[jls4]

okay that makes sense in what you're doing.

did you include costs for marketing & PR or are you paying that yourself?

what happens if your movie sells for less than $60k?

What marketing? rogar-BigGrin(DBG) A movie for $25K doesn't have marketing. You guys read too many books! I have enough money to try a few festivals and enough contacts to get the movie into a few people's hands that can push it. Last night, I spoke with the writer of the movie and she told me she would try to get it into the hands of a local music artist who now has interest in independent movies. If he just put's his name on it, "John Doe Presents..." the movie will sell for 5 to 10 times what I want for it.

You need a movie to get you started, but I believe you need a plan to make it work. My plan has always been what RR talked about. Make 3 movies. Learn on each one. Make each one better and try to sell each one for more.

As you make each movie, you'll raise people's eyebrows are you. People will know you are serious and you can keep investing in equipment, people and knowledge until you perfect your product. And remember networking and "who you know".