How exactly does one find film financing in New York? Where do you look?

[sb2012]

I'm trying to research this as best as I can. I'm in NYC and I make about $40,000 per year. If I wanted to make something for say anywhere between $50,000 to $300,000, for instance....

Where would I go?
Who would I talk to?
What do you promise them in return? Obviously I'm a nobody right now so there's no guarantee the film will make anything, so do you just tell them the truth?

I know of the option involving asking each of your friends/acquaintances for $100 each and you'll pay them back, but aside from that, are there like specific companies or services that help with film financing for your low budget film? Or do you talk to someone at a bank or on wall street?

I keep hearing everyone talk about "raising money" but how does a nobody with no connections and who makes $40k a year do this?

 

[Kevin Vega]

No where. No wall street firms fund individual independent films. They're looking for at a minimum of a multi-film package, or an actual film studio/production company. You might get some where with an individual (angel) investor, or a hedge fund if your budget is over $1 mil, and you have a bankable cast attached.

You also have to deal with the Securities and Exchange Commission under Regulation D. And register with the state in which you seeking investors. In New York that would be a registration fee of $300, if you're seeking less than $500k; $1200 over $500k. To cover your ass you're going to need a PPM (Private Placement Memorandum), that will outline the deal, and essentially tell the investors that they could lose their entire investment.

You also need a subscription document; that would allow the investors to actually subscribe to the investment deal. You're also going to need an LLC or Corporation operating agreement, that outlines whose in charge and to clear permission of the investors so that you can make unilateral decision on behalf of the company.

You're looking at $10k + in lawyers fees.

And with all that you're limited to taking investments from people with a net worth of over $1 mil (or an annual income of over $200k), or a company with a net worh of over $5 million.

 

[maranfilms]

Barry Green wrote a brilliant post about the advantages of tax incentives. I cant remember exactly where it's at. But it's a great post and how it can be used to attract investors, Or even just wealthy people that can benefit greatly by investing in an independant film. It's a win/win FOR EVERYONE. I think it may be in the thread about a guy here that made an indi feature with Tom Sizemore. But not 100% sure on that. You may want to PM Barry, and see if he remembers writing it, if not maybe ask him how you can use tax incentives to attract investors.

 

[Kevin Vega]

Barry Green wrote a brilliant post about the advantages of tax incentives. I cant remember exactly where it's at. But it's a great post and how it can be used to attract investors, Or even just wealthy people that can benefit greatly by investing in an independant film. It's a win/win FOR EVERYONE. I think it may be in the thread about a guy here that made an indi feature with Tom Sizemore. But not 100% sure on that. You may want to PM Barry, and see if he remembers writing it, if not maybe ask him how you can use tax incentives to attract investors.

I think the tax incentive (181) your referring to was the one from the federal jobs act from a few years ago... that sunset this year and was not renewed.

 

[David W. Richardson]

Unless it's changed, you can get around the need to be involved with the SEC by following a few rules. I believe the restrictions include (but are not limited to) having a maximum of something like 30 investors -- it may be less. Also, it involves how you approach investors. You essentially have to do it one-on-one. You can't put an ad in the newspaper, or even put up a post online looking for investors -- that constitutes a 'public offering', and the SEC would definitely come down on you at that point.

But it is possible to secure one or two or even several investors without having to register with the SEC. Do some research. There are many excellent books out there on independent film financing.

You can also have "donors" -- people who contribute to your movie budget and get no return on their money. This would generally be family, friends, and anyone who just simply likes your project and wants to see it get made.

A third source would be something akin to pre-sales. You can offer a package for sale that would include a copy of the DVD when it's released, as well as other items -- maybe an autographed cast photo or a signed poster from the film. Some people have included "passes" to visit the set and watch a day of shooting. The pricier the package, the more stuff they get. I heard of one film project where the top-dollar package included something special on the DVD extras -- a clip of the main cast members personally thanking the buyer -- by name. Be creative!

And, of course, there are always sites like www.kickstarter.com.

Good luck!

 

[Kevin Vega]

This isn't 100% accurate... a public offering and Regulation D (this is the exemption you are referring to) filings are different, but you still have to file with SEC no matter what... Any time you take somebody elses money you have to file with the SEC and the state regulators (unless it's a donation). A regulation D filing is free of charge federally, but not at the state level. A Reg D filing is done on "form D" (http://www.sec.gov/about/forms/formd.pdf) takes a shorter amount of time to accomplish than going public... "going public" is entirely different and done on "Form S-1" (http://www.sec.gov/about/forms/forms-1.pdf). Going public takes months, requires SEC approval, requires audited financial statements, a payment to the SEC and the states, requires quarterly and annual filings with the SEC, and can take upwards of $100k to do initally, and then thousands every quarter just to keep up with the required quarterly filings.


And as I laid out in my last post, Reg D exemptions are limited to individuals with $1 million in net worth, or over $200k in annual income (for the previous two years), or a company with over $5 million in assets (aka accredited investors). When a company goes public there are no limits on who can invest.

Oh, and the general solicitation ban is set to expire on August 22nd (if the SEC approves the new rules at their meeting on that day). You would be limited to only advertising to individuals that fall under the Reg D accredited investor capitalization requirements.

Unless it's changed, you can get around the need to be involved with the SEC by following a few rules. I believe the restrictions include (but are not limited to) having a maximum of something like 30 investors -- it may be less. Also, it involves how you approach investors. You essentially have to do it one-on-one. You can't put an ad in the newspaper, or even put up a post online looking for investors -- that constitutes a 'public offering', and the SEC would definitely come down on you at that point.

But it is possible to secure one or two or even several investors without having to register with the SEC. Do some research. There are many excellent books out there on independent film financing.

You can also have "donors" -- people who contribute to your movie budget and get no return on their money. This would generally be family, friends, and anyone who just simply likes your project and wants to see it get made.

A third source would be something akin to pre-sales. You can offer a package for sale that would include a copy of the DVD when it's released, as well as other items -- maybe an autographed cast photo or a signed poster from the film. Some people have included "passes" to visit the set and watch a day of shooting. The pricier the package, the more stuff they get. I heard of one film project where the top-dollar package included something special on the DVD extras -- a clip of the main cast members personally thanking the buyer -- by name. Be creative!

And, of course, there are always sites like www.kickstarter.com.

Good luck!

 

[maranfilms]

Damn Kevin, you know your stuff. r u a broker? or financial advisor? What about tax incentives at the state level? I know my state MA, offers pretty hefty tax breaks, Michigan used to as well. Of course you need to be careful. But wouldn't it be useful for a wealthy person to invest as a write off?

 

[Kevin Vega]

Damn Kevin, you know your stuff. r u a broker? or financial advisor? What about tax incentives at the state level? I know my state MA, offers pretty hefty tax breaks, Michigan used to as well. Of course you need to be careful. But wouldn't it be useful for a wealthy person to invest as a write off?

Nope not a broker or advisor; I've started 4 businesses, and just do as much research as I can, so I can do as much of this stuff as possible myself, without involving a lawyer at $300 an hour.

Not sure about the write-off, because I don't really know much tax law; but from what I know it could be beneficial.


If you really want to dive into the bulk of the securities act you can check out this site:
http://taft.law.uc.edu/CCL/xyz/sldtoc.html

It has every single word from the act (as amended) online. It's how I completed a S-1 filing document myself; I have yet to submit the registration to the SEC though.