Raising SERIOUS Capital

craigbowman

craigbowman

Veteran
I've now been told by a couple of different financial advisors that I'll stand a better chance of raising the capital I want, if I seek sums in excess of 10 million. Then they explained that it wasn't the percentage on return but the actual amount. Well I'm certainly willing to give it a shot, but has anyone else ever heard of this?
 
I have heard that for investment in other startups (technology, etc.) but not so much, if ever for film production unless its associated with getting a bigger name cast along with a track record director, etc. But with sales of films with name actors (Bradley Cooper for example) at festivals like Sundance and Toronto selling for $2M-$3M, I would be hesitant as an investor to go there, unless they have distribution in place.
 
It will be extremely hard to raise money like that for one single movie.

What has happened and continues to happen is rich individual investors and investor companies will invest tens of millions of dollars into larger independent production companies and mini majors for a whole slate of films, for example $50M for 5-10 movies in the next 1-2 years produced by company X.
I have been told that they don't care about ROI, in fact they want the movies to lose money, because they can somehow I guess just write it off. I don't know exactly how it works, but that's the gist of it.

Fact of the matter is, most of those $5M-$10M budgeted movies these larger indies and minimajors produce lose money, but they don't care, the producers get a hefty paycheck as do everyone else involved and the rich investors can just write it off.

This is actually how Uwe Boll financed his movies, there was a hole in the German tax law that enabled this to happen, Big Hollywood productions even used it, they recycled money through German companies and at the end of the day got "free money".
 
I agree, and if you pick to shootin a state that has hefty tax incentive, that also equates to free money. well kind of. But they are cracking down. There was a guy that shot a film here in MA. he cast Richard DRyfus as his name. Supposedly he burned dozens of local business, and then tried to inflate his numbers. He was audited. numbers didn't match. He's now in Jail. There was an article in the capecod times about it. His attorney was trying to get him out on bail, the judge laughed. NOPE. Not a chance. So one day he's (wont name) on the news and in every local paper, like a hero, the next he's in jail, and being called a scumbag. So you do need to be careful. Granted that was an indie, I think the boys in HOLLYWOOD have been doing it so long and have it down.
 
The film was called Lightkeepers - here is an article about it by the Hollywood Reporter: http://www.hollywoodreporter.com/thr-esq/movie-director-tax-rebate-massachusetts-272419 and his final sentencing: http://articles.nydailynews.com/201...m-tax-credits-film-industry-inflated-expenses

The issue is the state doesn't have the time to audit every movie that comes through and I am sure there is a bending of rules all the time - although outright offenses like Lightkeepers have been about a handful in different states with producers buying expensive cards as props and keeping them, etc. It's this kind of behavior that hurts everyone else trying to do it the right way and build a job base that adheres to the spirit of the law.

Certainly a slate of films is a wiser bet when working with indie filmmaking as it spreads the risk across multiple chances of one of them making enough money to cover the investment. Writing things down as a loss doesn't really provide an upside though, even 30% tax break back on a $10M film that makes nothing back is not a profit strategy.


Michael
 
MichaelP said:
... Certainly a slate of films is a wiser bet ...
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Yeah, that's exactly what happened. Although I have ten narrative features in development, just the first three, "Plastic", "H*A*W*S", and "The Bowling-Pin Salesman" are ready for financing.
 
Follow Up

Follow Up

Had a call from one of my financial guys. It seems like going this route is actually getting traction and now I have to get out of summer mode and get ready to meet with some folks in early Sept.
 
Very cool - thanks for the update! I'm considering shooting in Calgary for a movie we currently have in development. Been speaking with the Alberta Film Commission as well - seems like some great incentives over there.

Interested to hear how this continues to play out.

Kegan
 
This is what i've been told too.
A typical % return from money manager is only about 4-6%.
Lets say you promise golden mountain and say that your film will return 20% over the investment. Yeah sure it's over 15% then typical money manager can promise but ultimately it's still say $20k on $100k investment. Someone who has $100k laying around to invest doesn't really care about the $20k of return. On the other hand if you were looking for say $10m then the 20% return would be $2m - and i don't know ANYONE who would look down at $2m.
 
Patryk_Rebisz said:
This is what i've been told too.
A typical % return from money manager is only about 4-6%.
Lets say you promise golden mountain and say that your film will return 20% over the investment. Yeah sure it's over 15% then typical money manager can promise but ultimately it's still say $20k on $100k investment. Someone who has $100k laying around to invest doesn't really care about the $20k of return. On the other hand if you were looking for say $10m then the 20% return would be $2m - and i don't know ANYONE who would look down at $2m.
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Most investors, when they're actually looking for a return, are looking for at least 10 times (1000%) their initial investment.
 
Kevin Vega said:
Most investors, when they're actually looking for a return, are looking for at least 10 times (1000%) their initial investment.
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What do you base this statement on?
My bro is money manager of some soft and if you promised him 15% he would be all over you. Anything beyond and he would call BS on it.
 
15% would be amazing for a guaranteed return totally different - thats a loan - not a captial investment

Unsecured Captital.. Investing film, or other risky venture capital, a new widget that might flop, is a different game, probably 9/10 investements you will lose the lot, so 1000% seems to start looking low because you only profit when only 8/10 flop
 
morgan_moore said:
15% would be amazing for a guaranteed return totally different - thats a loan - not a captial investment

Unsecured Captital.. Investing film, or other risky venture capital, a new widget that might flop, is a different game, probably 9/10 investements you will lose the lot, so 1000% seems to start looking low because you only profit when only 8/10 flop
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Again, are we basing this on some real data or just what we imagine it to be (nothing wrong with it BTW)?
 
Patryk_Rebisz said:
Again, are we basing this on some real data or just what we imagine it to be (nothing wrong with it BTW)?
Click to expand...
Almost all venture capitalists firms and Angel Investors want between 10 and 30 percent times their initial investment...

Click through any one of the investment firms on this site and you'll see their "Expected Returns" set at between 5 and 30 times investment:
https://gust.com/find-investors
 
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Its real data that 15% will whack a savings account and its real maths that with a 90% flop rate a 1000% return only breaks even

I dont know the typical flop rate of venture capital Id say its 50-80% floppage

S
 
craigbowman said:
I've now been told by a couple of different financial advisors that I'll stand a better chance of raising the capital I want, if I seek sums in excess of 10 million. Then they explained that it wasn't the percentage on return but the actual amount. Well I'm certainly willing to give it a shot, but has anyone else ever heard of this?
Click to expand...

Are these "financial advisors" the ones who work for big banks selling mutual funds and work on the exchange? Or are these advisors who work with venture capitalists and other private "investors" looking to inject money into projects for returns?

I'd be careful who you get advise from, and unless you are Danny Boyle you have no business making a $10mil film.
 
Kegan said:
...
Interested to hear how this continues to play out.

Kegan
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Got some update news on this. There's a deal in the works for a large state owned company in China to buy Calgary's Nexen Energy for around $13 Billion. According to my key financial guy my funding is somehow tied up in how this plays out. The Canadian Govt. has not yet given its approval for the deal to proceed although it was accepted by the shareholders of Nexen. Since one of the movies in my package, "Plastic", has a budget of $14.7M most of this seems like its all happening to someone else, like so much magic pixie dust.

Anyways, so much for the update.
 
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