Investors

[Mickey Munday]

what advantages do investors have for investing in an indie film project?

i've seen some really decent sized budgets from independent feautures from $50,000 to $100,000 and then the movie is not really good when it's done. i mean it LOOKS good but turns out to be a snoozefest or just not interesting. then i've seen some that are just terrible but the actors and directors i think were high off the fact they had a big budget and 25 man crew. then i've seen some features from independent films with smaller budgets that were surprisingly better.

a few people are interested in funding my next film but they've asked when will they see their money back? i really didn't have an answer but the door is still open. it just seems like more of a benefit to me then it is to them. so if you have a group of people like that with money that were interested in investing in your next project what do you tell them when somebody asks how do they benefit??

it's my understanding that most movies lose money. so if that's the case why do you have so many people that continue to invest???

 

[MichaelP]

Lots of different reasons. Disposable income, want to feel they are part of "Hollywood, etc. It is a lot like playing the lottery. Many of the investors would rather invest in more than one film as in instead of making one film for 10 million, they spread their chances with 10 films at $1 million each. Increasing their chances that one or two of them "hits." The same goes for smaller budgeted films.

Investors should really go into this like any other investment such as stocks, etc. There is no guarantee - there are only things you can do to reduce the risk.

As you say, you need to start with a good story, there is no known formula for a hit film - As William Goldman said in his first book "adventures in the screen trade": - "nobody knows anything"

Getting any revenue is based on distribution -whether it be you doing it, or someone else picks it up. Then there are domestic versus foreign sales, who is starring in it, etc.

Do you have a business plan in place? Most of them have the same things in it; theatrical and DVD revenue potential, success stories of self-distribution, etc. Just keep in mind that any self distribution model will need marketing - and that needs to considered when putting together a budget.

You can also do the Film Festival route to get some press and word of mouth going - all of these strategies are discussed in the myriad of books available on the subject of film finance, distribution, and marketing.


Michael

 

[Cryogenic Filmworks]

it's my understanding that most movies lose money. so if that's the case why do you have so many people that continue to invest???

Losing money depends on what you mean. If you are talking straight box office, then yes most lose money. Box office today is for the most part marketing. The revenue that the film company makes via the distributer is mostly negated by the P&A budget (Prints and Advertising). Box office let's people know your product is out there and then when they see it in the rental, they might pick it up.

The other "windows" are where filmmakers can make money. PPV, TV, Premium Cable, Rental outlets, Retail sales. There is no guarantee of course. Also if you do not do theatrical then it makes selling your film to the other markets that much harder.

Another thing to look at to get better money and distribution options, is to make sure you have a recognizable name in it.

Investing whether it be stocks, film making, etc, should be treated the same way as gambling. Go in with your eyes open, research before you invest, but only invest what you can afford to lose. If they are wanting to know when they will get their money back, they might not be the best investor for you. They need to know up front there is a potential for them to never see that money again.

Just my 1/2 penny.

(the above info is knowledge gleaned from this and other boards, asking questions of director/producers and other resources such as the Dov SS Simmons film school).

 

[Bob Gruen]

This is a business, and you should treat is as such. You should have a full blown business plan and you should be able to detail the different profit tiers and illustrate how you will get distributed into those tiers and turn a profit.

For my film I have a micro budget (well under $1M) sketched out and I have a business plan that sells to the investors that at a minimum I can return their investment by selling to the rental tier. Of course I am selling the dream of distribution to the theatrical tier and the huge profit potential therein. (There are no guarantees, by the way.)

My own belief is that most people fail because they don't understand the business aspect and the industry as a whole. It is a marketing industry, so your film better be MARKETABLE. Can you put enough meat in a 60 second trailer without giving away all of the plot points? Will you be able to make a captivating poster and other marketing materials? You should have these things and you should 'accidentally' send them to distributor's AEs to juice them up to see your film at a festival.

In short, you have a lot of learning to do in terms of the industry. Start with "From reel to Deal" by Dov S-S Siemens, you can find is at most bookstores.

Best of Luck,

Bob

 

[Mickey Munday]

yea i'll go check out that book. i'm totally green about the business side of things.

 

[filmman]

ask your family to put up the 1st $1000.

ask your family to put up the 1st $1000.

Develop a project that's so good that a member of your own family will invest in it.

Then approach investors.

 

[Prodigi Pictures]

I recently completed raising the money for a micro-budget feature. I can 't disclose our budget, but it is enough to hire a movie star and make a great, small action film.

Because of this, I've learned a lot about writing business plans, the psychology of investors, how most artists sabatoge their best efforts and what it takes to transition from hobbiest to independent professional.

Here are some of my thoughts:

THE DEFINITION OF INDEPENDENT FILM
A 5K feature cast with friends and family with a terrible script, no business plan, no understanding of how films are sold and no game plan on how to sell the finished movie is not an independent film. It is an amateur film. It might turn out to be great and therefore stumble into a sale. However, dumb luck isn't what defines independent cinema.

Most professionals define independent film as a professional business venture outside the studio system with the intent of making a movie that can be sold for a profit. Like any business venture, it involves market research, creating a professional and compelling business plan, finding investors who are attracted to and understand the entertainment industry and quantifying what a film will sell for before any of the creative work has begun. Are the budgets smaller than studio films? Yes. However, Terminator 2, Batman Begins and Superman Returns are technically independent movies because they were financed by investors outside the studio system...and movies like Good Will Hunting are not, because their money came from an established studio. "Indie" doesn't mean small. It doesn't mean unprofessional. It doesn't mean its production quality is inferior to a Hollywood film. It simply indicates the source of its financing.

I would contend that movies like Clerks are actually hobbyist films that stumbled into a sale. They're the exception, not the rule. And I think this misunderstanding has lead an enormous number of hobbiest filmmakers to reach faulty conclusions about how to transition into becoming professional feature filmmakers.

What I'm defining isn't something new. This established path, from concept to sale, for independent films is at least 30 years old. And yet, most amateurs seem hellbent on not learning this path. Its as if their subconscious is forcing them to turn blinders on. They want to believe that all they have to do is shoot a black-and-white, out-of-focus film in a local convenience store and they too will join the Hollywood elite.

I'm pursuing a different path. It isn't my own invention. The following is the established path for independent films.

STEP ONE: WORK WITHIN AN ESTABLISHED GENRE
Many of the users on this site work within established genres. We've seen horror films, westerns, action films and science fiction films created by DVXusers. We've seen slice-of-life films, which is perhaps the least marketable but it certainly is an existing (if not financially rewarding) genre. We've seen slapstick comedies. From a business viewpoint, this is a great first step. They're willing to work within established genres, which means the value of their work can be quantified by non-creatives.

Despite this fantastic first step, I think most of the filmmakers here are doing it out of intuition. The genre they gravitate to when they see movies in a theatre is the type they are making. Therefore, its dumb luck...and they aren't exploiting this to its full potential. However, it is still a great first step. I'd suggest the only difference most DVXusers would need to make would be to DELIBERATELY work within a genre, study it and excel at that one genre (at least for one's first film).

Many artists cringe at the thought of choosing a genre simply because it is marketable. That's not what I'm suggesting at all. In fact, the worst mistake a person could make would be to mimic the latest hit film or work within the hottest genre, because by the time you finish the film that genre may be cold. The cyclical nature of horror films demonstrates this.

What I'm suggesting is that you simply KNOW what genre your working in. I'm about to create a spy film. It's a solid mix of action, drama and suspense. Those are established genre elements and I can quantify their value to international buyers.

What can I do in within that genre? Amazingly, just about anything I want...as long as the final result satisfies my buyer's expectations of a spy film. Why is this so important? Because the buyers are non-creatives. They are dealmakers, not filmmakers. They buy films that can be packaged with ease. They buy films that can be easily labeled. They buy films that superficially feel like other films so they can estimate how much money they'll make. They buy films that ensure they won't lose money. They could care less about art or expanding the possibilities of storytelling.

A genre film is easy to market. A genre film, with 1-2 movie stars, sells itself. It doesn't have to be explained to the audience. The audience knows, superficially, what they're getting when they sit in the theatre.

So, if you deliberately work within a genre you're off to a good start.

STEP TWO: HIRE AT LEAST ONE CELEBRITY
Celebrity actors are the easiest way to infuse your project with credibility. The first thing anyone will ask is "Who is in your film?"

Celebrities aren't nearly as expensive as you might think. The press writes stories about top tier stars and the amazing salaries they command for a studio film. The general public's impression is that all stars are paid 20 million dollars per picture, that they all receive flat-rates for a film and that their fee is non-negotiable.

None of this is true. I've negotiated scale deals with James Earl Jones, Dwight Schultz, Curtis Armstrong, Mark Hamill, Malcolm McDowell and John DeLancie. I've had hundreds of additional celebrities audition for a project knowing the project would only pay SAG scale.

If you're raising 100K for a film then part of your business model is to set aside enough money to pay a celebrity actor who buyers are familiar with but is currently inexpensive and between gigs. All of this information is easy to find. For my current film we've generated a list of 67 celebrity actors who are in "cold zones" and yet still appeal to the community of international buyers. If one of them says yes we've significantly increased our chance of selling the film...and we know these actors are willing to work within our budget range.

So, now our project is an established genre film with at least one celebrity actor. What's next?

STEP THREE: TO ENSURE A BOTTOM-LEVEL SALE MEET THE BUYERS QUALITY STANDARDS

Buyers do have standards. If they aren't met you can forget a sale. Personally, I find the standards to be very low. However, at least 75% of the movies presented to buyers fails to meet these standards.

1.) All shots should be in focus
2.) All shots should be lit brightly enough that the characters can easily be seen
3.) All dialogue should be easy to understand
4.) All audio should be clean, free of distortion and free of noise
5.) The story should be easy to understand
6.) The acting should be passably realistic
7.) Any effects work should be believable
8.) The movie should be free of any legal issues
9.) The movie's final audio must be delivered with the dialogue separated from the sound effects and music
10.) The movie has at least one professional poster and one professional movie trailer

Does one soft shot ruin your chances of a sale? No. Are buyers savvy enough to realize that your Se7en rip-off deliberately has distortion in the music? Probably.

But, this list isn't what most amateur filmmakers are living up to. Instead, they shoot a movie in their own home. They cast their family. Their audio is recorded with the mic mounted on their hvx200. They convince themselves that a couple home depot lights really are adequate. They spend minimal time in post production. They've signed no contracts with anyone. And they're audio is already flattened into two channels.

However, lets assume you avoided the pitfalls of the previous paragraph and lived up to the nine items I listed above. If you did this, you probably have a movie capable of being sold for the bare minimum.

The bare minimum is what buyers from each territory are willing to pay for your mediocre feature film. You've completed an action film with Jason Priestley as a guest star. It cost $200,000.00 to make. It's in focus, the lighting is even and bright, the dialogue is easy to understand. There is no distortion in the final mix. It is free of any legal issues. And you can give them a digital master with separated audio. And they liked your poster (which is a cliched close up of Jason Priestley's face along with the the rest of your no-name cast). Voila! You have a movie good enough to sell!

STEP FOUR: SO HOW COME I DIDN'T MAKE ANY MONEY?
The easiest way to lose money at this (other than making a movie that doesn't have the elements from Steps 1-3) is to spend too much on your film.

If you spend $400,000.00 and your sales only come to $200,000.00 you've lost money. That seems obvious, doesn't it? To me it does...and yet, there are hundreds of filmmakers every year who successfully complete steps 1-3 but fail at step four. They have no money-management skills. They're penny-wise and pound foolish.

STEP FIVE: BUT I WANT TO MAKE ART!
The good news is that steps 1-3 are a safety net, not a straight-jacket. Only step 4 restricts you...

...and guess what? All professional artists have dealt with restrictions. Why do you think Picasso painted only in blue for 3-4 years? It was the only paint he could afford. If you want to make art your profession then you need to accept your first movies will have limitations.

The trick is to know how to overcome those limitations. And this is what most people are really talking about when they mention "talent." Personally, I don't believe in talent...but I do believe in creative problem solving. Anyone of reasonable intelligence can complete Steps 1-3. A smaller percentage of people can successfully incorporate Step 4. Only a select few can incorporate Step 5.

Can you write a logical, gripping, engrossing story with only four actors in two locations? Will the characters be realistic? Will the audience be entranced? Will they be so engrossed in your story that they don't care about your budget limitations? Are you capable of coming up with inspired composition, lighting and camera movements that support the story and fit within your limited budget? If so, then I'd invest my money in your movie...you'll probably make a gem with a meager budget, and I'd profit from that. Hell yeah, I'd fork over my money to be part of such a project!

Although this thread was started with many questions, the central question was "Why would an investor want to invest in my micro-budget feature? Aren't I the only one who benefits?"

If you can successfully complete this list, then obviously everyone involved benefits...the investors make money, the celebrity actor gets a career boost, the non-famous actors are now (slightly) more famous, the buyers have a product they can show in their respective territory and you probably get to make another movie.

So, why are so many movies failures? Why are so many bad investments? Why is this industry considered a gamble? Because this list isn't adhered to. Even by the studios...

...stick to this list and you can't go wrong. Of course, I think there is a deeper question to be asked...

WHY ARE YOU MAKING MOVIES?
In my opinion, this is the real question.

I went to NYU, and I was surrounded by people who wanted to make movies. And yet, none of them were filmmakers. Why? They were there for the wrong reasons.

I'm not in this business so I can buy sports car, go to expensive restaurants in Hollywood, hang out at a club, get laid or have my face on a magazine. I fell in love with movies when I was four years old. I saw Star Wars in 1977 and it changed my life. I've been working at this craft for 20 years now...I'm 34 but I began making movies when I was 14. At first, I loved the magic of sitting in a darkened theatre and being engrossed in a story. However, my family was obsessed with the movies. My parents owned a video store. We watched movies all the time. We celebrated events in my childhood by going to the movies. We talked about stories at the dinner table. We had a stack of VHS cassettes in our family room. My parents owned a 16mm projector and ran reels of old Disney films on the wall...

...and my family was terribly disfunctional. My mother was monstrously abusive. But, she loved films. So, somehow as a young boy I got the idea that if I made movies then I'd be loveable. My father loved movies and he loved that I loved movies, so part of my motivation was to make movies for him.

I don't think those are the right reasons to be a filmmaker.

Luckily, over the years my motivations changed. I've discovered that I really love the nuances of storytelling. I have no interest in being original...I want to be quintessential. I'm solving puzzles when I make movies. Part of the puzzle is entertaining an audience. Money, fame, my past...those aren't my motives any longer.

What are your motives? Do you really know why you want to make movies? Are you sure the reasons you want to make movies are healthy ones? This is too hard a business to be making movies because you're insecure and think fame will fix you. There are far easier ways to become rich. This isn't a business known for healthy, balanced individuals, so its a lousy way to make friends. And if you have narcisstic tendencies, this business will only feed your worst personality traits and magnify them.

Why do you want to make movies? That's the question you should ask yourself before you raise money from someone else.

 

[taormina]

Great summary, Prodigi. Let's not forget to add that you need a great script as well. If more producers self diagnosed the health of their scripts, and were honest, fewer films would be made.

Look hard at your script before you go campaigning for money.

 

[Prodigi Pictures]

Great summary, Prodigi. Let's not forget to add that you need a great script as well. If more producers self diagnosed the health of their scripts, and were honest, fewer films would be made.

Look hard at your script before you go campaigning for money.

Taormina, you raise a great point.

Personally, I don't believe it is necessary to write a good script to sell a film. I think one only needs a passable script, one that I would reject as a piece of crap...at least if all one hopes to achieve in life is to sell crappy, second-rate b-films at major film markets.

However, that's not what I aspire to, so yes, I agree with you. We clearly both want the same thing...to make great movies. To make a great movie one needs an amazing script.

But, if we're talking about film as a business commodity and not an art, then a script only has to be barely passable. It has to be easy to follow, fit in an existing genre, probably be filled with cliches (because they're easy to understand) and have a tidy ending. Movies are sold all the time that have two-dimensional characters, paint-by-numbers plots, massive expository dialogue, unrealistic character behavior and an aversion to the laws of science.

I'd rather become an accountant than make such a movie, but I can't deny that hacks are making stuff like that all the time that sells at major film markets.

Let's simply beat the hacks at their own game by making better movies than they make and sell them at the same markets for more money!

 

[Luis Caffesse]

it's my understanding that most movies lose money. so if that's the case why do you have so many people that continue to invest???

Most gamblers lose money too.
By the same token you could ask that if most movies lose money and are poorly done, then why do people like us continue to want to make movies?


Remember - NO ONE sets out to make a bad movie.
Hard to believe sometimes, given some of the stuff that's out there, but its true.

 

[taormina]

Agreed. If we can put out a flick that matches the status quo in every way, and even surpasses them in story - we're golden.

Taormina, you raise a great point.

Personally, I don't believe it is necessary to write a good script to sell a film. I think one only needs a passable script, one that I would reject as a piece of crap...at least if all one hopes to achieve in life is to sell crappy, second-rate b-films at major film markets.

However, that's not what I aspire to, so yes, I agree with you. We clearly both want the same thing...to make great movies. To make a great movie one needs an amazing script.

But, if we're talking about film as a business commodity and not an art, then a script only has to be barely passable. It has to be easy to follow, fit in an existing genre, probably be filled with cliches (because they're easy to understand) and have a tidy ending. Movies are sold all the time that have two-dimensional characters, paint-by-numbers plots, massive expository dialogue, unrealistic character behavior and an aversion to the laws of science.

I'd rather become an accountant than make such a movie, but I can't deny that hacks are making stuff like that all the time that sells at major film markets.

Let's simply beat the hacks at their own game by making better movies than they make and sell them at the same markets for more money!

 

[Prodigi Pictures]

Agreed. If we can put out a flick that matches the status quo in every way, and even surpasses them in story - we're golden.

Taormina -

And clearly, you've demonstrated you get this. I've read about your recent success. You've proven everything we've been talking about...you secured a major star for a micro-budget movie. I can't imagine your film not selling. You're going to make a profit...hopefully a great one!

I hope people have been following both your Corrado thread as well as these, because it shows we've been talking about these issues for about 6 months. Now, people can see it wasn't luck...it was careful planning on your part.

 

[merc]

im a little confused Prodigi.

1st. why would someones dialogue not be seperate from their sound fxs and music? like if they played music in background ass they shot the scene? and did sound fx as they shot the scenes? is that what u mean?

also, wat u mean everything must b in focus? a great cinamatographer pulls things in and outa focus. my script calls for it repeaditly. are u talkin about someone who is very amatuer and just shoots things outa focus on accident. not meaning to for artistic reasons?

please clear this up 4 me, im just wondering.

 

[taormina]

Hey Prodigi,

I learned very much from you. Thank you, sir!

 

[Prodigi Pictures]

im a little confused Prodigi.

1st. why would someones dialogue not be seperate from their sound fxs and music? like if they played music in background ass they shot the scene? and did sound fx as they shot the scenes? is that what u mean?

also, wat u mean everything must b in focus? a great cinamatographer pulls things in and outa focus. my script calls for it repeaditly. are u talkin about someone who is very amatuer and just shoots things outa focus on accident. not meaning to for artistic reasons?

please clear this up 4 me, im just wondering.

Merc -

On a low budget movie created by inexperienced filmmakers it is common to mix down all sound elements to a stereo mix (two tracks). This means the sound effects and music cannot be separated from the dialogue. For international sales the dialogue track must be separate so it can easily be replaced for localization (dubbing into local language).

As for focus, of course I'm not talking about pulling focus in a shot. The purpose of pulling focus is so the subject stays in focus or the focus is shifted to a different subject. What you want to avoid are soft shots (shots in which the nothing is truly in focus).

And someone could say "Hey, I watch The Shield and they have soft shots all the time!" Yes, they do. And I watch the show DESPITE their crappy cinematography.

 

[Prodigi Pictures]

Hey Prodigi,

I learned very much from you. Thank you, sir!

I'd love to compare notes with you privately regarding your project. As you know, I'm doing a feature film as well. We've completed our non-celeb casting and are about to lock are two celebrities. We shoot in 6 months.

As I read your thread I was stunned to see how similar our choices are. However, my team is now reading your thread daily and I've asked my producer to make note of anything you're doing smarter than us. The whole point of this site is to learn from others!

 

[askmediaproductions]

Hey there is alot of great information on this site. I am about to produce a 30 minute short. As of now we have know budget but we have acccess to all the equipment we need from the school I went to. I also Own an HVX. Having an investor would help us and we have a few people in mind to contact here in jthe south florida area, but we are kinda lost as to what we shold be presenting to this potential investor. We can make this film with 20 grand easily. We woul djust like to pay for some heardware and food for the crew and cast and possible a glidecam for my hvx. We already have lights, Jib, Dolly, Monitor, a few HVX's & HPX's from the school as well. Does anyone have an example of exactly what an investor would want to see?? If so if you wouldnt mind emailing me some information I would greatly Appreciate it. my email is info@lastdayinmiami.com.

Thanks everyone for contributing to this forum. I always find it very useful.

Adam
www.askmediaproductions.com