Tips for Obtaining Film Financing

Imaginate

Imaginate

Well-known member
Film Financing Strategies

Would anyone care to write some notes, advice, war stories, mistakes, lessons learned, about raising investment finances for your films.

I found an online mp3 from Suzanne Lyons of Snowfall films to be extremely helpful. She was very transparent about her strategies for raising money.

http://www.filmspecific.com/members/298.cfm

I'm planning on raising about 250K. As a Canadian film maker there are the obvious tax credits to take advantage but am looking for other helpful advice like Suzzane's.
 
These days, it seems to me, it's virtually impossible to raise a decent budget for an Indie if you have no names attached to the project. Of course there are people who do, but I think it's a lot harder than it once was to find investors willing to put money into a film that doesn't have some form of a guarantee of a return.

In the U.S. it used to be, you could use losses from an investment in a film, but as far as I know this is not allowed anymore.

From what I've seen, I'd say a filmmaker looking to make a first feature should be SURE they have a great script (anything less is a waste of time), then use any money they can get their hands on (most likely their own) and hire a casting agent to help lure in a name actor or two. With a letter of intent from a name actor (or more) you can then go out and try to raise your film budget.

All an investor wants to know is - will the project have any value in the marketplace? Often times, they won't even read the script, so if you have names attached, you're WAY ahead.

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Hi

Yeah that's the CATCH-22. Agents won't even talk to you unless you answered their one question. "Is the Financing in place". And it's kind of close to impossible to get a NAME with a LOW/MICROBUDGET. You might be able to get a B or C-LIST celebrity or talent but in terms of getting good names. It's close to nill unless the talent REALLY loves the script and is willing to do backend.
 
If you have contacts that will enable you to sign on a name actor, then by all means use them. Perhaps then you can make a viable movie your first time out. Making a movie that finds distribution the first time out is very difficult; I'd say impossible, except there are people here on this user group who have done just that.

For your first movie, it's much more safe to make a non-union, no-name picture. There is so much to learn about filmmaking and especially distribution that it takes at least one movie to teach you the inside scoop. Many experienced filmmakers will advise you to make a small movie your first time out, because they all started out that way.

If you're making your first movie and it's non-union, then I'd use my own financing, no matter how meager. Bring down the level of the production to your budget or perhaps I'd say match it. Try to make the best movie for the money.

If however you're an ambitious and aggressive person and you are going to go for it anyway, write the contracts and get all the insurances that give you an escape route if the movie doesn't recoup the investment, because you'll either get sued or you'll not likey work again as a movie maker.

Best of luck and happy hunting :)
 
True I'd say just that for first timers. However if you are not a first timer you could use for example to your investors; records of your previous films that have earned some form of a profit or another so to speak just to show that your films do make $$ when marketed. Perhaps this will give them reasurance that they are dealing with someone who is bussiness savy and their projects will make a return. Also in terms of distribution it depends on the genere. Action, horror, thrillers are always in demand and are easier to market than comedies or dramas unless a well known name is attached to them. For example look at Eli Roth's first film CABIN FEVER. The cast was maily a bunch of unknowns but it scored beyond exceptionally well at the box office. Another film was THE SIGNAL, limited release yes but again impressive box office records a last example was a french film HIGH TENSION impressive box office returns. So basically distributors are looking for the next big thing, something that stands apart from the rest.
 
filmman said:
If however you're an ambitious and aggressive person and you are going to go for it anyway, write the contracts and get all the insurances that give you an escape route if the movie doesn't recoup the investment, because you'll either get sued or you'll not likey work again as a movie maker.
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It's my understanding that soliciting investor funds for a film requires an LLC or some similar corporate structure to be set up. You can't just go out and ask for money without a legally proper entity being set up which generally makes the risk clear to investors (among other things.)

Of course, either way, if you borrow money and your film does not allow the investors to at least break even, you'll have a hard time raising money for another film. This even happens with established Indie directors with previous hits under their belts. If you lose big, then it's back to the minor leagues (with a tiny budget) until you can prove yourself again.

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Chris Santucci said:
It's my understanding that soliciting investor funds for a film requires an LLC or some similar corporate structure to be set up. You can't just go out and ask for money without a legally proper entity being set up which generally makes the risk clear to investors (among other things.)

Of course, either way, if you borrow money and your film does not allow the investors to at least break even, you'll have a hard time raising money for another film. This even happens with established Indie directors with previous hits under their belts. If you lose big, then it's back to the minor leagues (with a tiny budget) until you can prove yourself again.

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It's a lot of work to keep up with the laws regaurding raising funds for a movie. You do not have to have an LLC to raise funds from a few investors but you will personally hold all the risk / liability, if someone gets hurt on your set they could sue you and take your house. If you solicit something like 50 people or more it is a felony unless you cleared it with the S.E.C. as an IPO.

In thier eyes it becomes a public offering and you need to go through all the ropes to make it legal.

Most hollywood movies even with budgets over $100 million only have one or two investors for a reason. It's gets into a different catagory when the studio has many investors but the studio is considered 1 investor for the movie. Hint, Hint, Hint...
 
...it's virtually impossible to raise a decent budget for an Indie if you have no names attached to the project.

...it's kind of close to impossible to get a NAME with a LOW/MICROBUDGET.

....Making a movie that finds distribution the first time out is very difficult; I'd say impossible,
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This word IMPOSSIBLE is coming up a lot here.

Lets assume that everything that we are talking about in this section is going to be extremely difficult, but there is wisdom out there to make these somewhat impossible things possible.

Thanks for that link Zak, This kind of information is really helpful...

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THREE KEY COMPONENTS by Justin Evans

1.) Proven expertise verified by an independent third party

2.) Thorough, silicon valley quality business plan

3.) Ethical accounting practices

That’s it. You might say “But, you didn’t say where to find investors.” You are surrounded by them…however, if they aren’t investing in you it isn’t because they lack money. It is because you haven’t given them a reason to invest yet.
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and the ALPFD business plan is also great material.

I think as filmmakers we can improve our filmmaking skills by seeing other peoples work and adapting it to our own circumstances... unfortunately the creative side of of film financing seems a little harder to find.

There is an art to creating great investment packages, and an art to pitching them.. and an art to finding potential investors.

Sometimes in the case of low budget film financing its a very unmystical process that looks like... " My Aunt and brother are going to lend me 10K each and I'll put another 10K on my credit cards". The next level of investment planning goes beyond that and is attracting a different kind of investor.


My hope is to coax some of that wisdom out of hiding.

One side of the Investment strategy would be in the actual preparation of your project like the ALPFD business plan:

A project's minimum value can be quantified if it contains the following elements:
The subject matter is a traditional exploitative genre (crime, action, horror, erotic thriller, etc.)
The project contains one celebrity actor with minimal marquee value, preferably with some level of
international recognition.
The project is completed with a modicum of production value.
The project's story is comprehensible, even if formulaic and uninspired.
The project's audio is properly separated for easy dubbing in foreign languages.
The project's financial and legal obligations are clean, simple, complete and therefore invisible to the buyer.
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The second part of the investment strategy might be more to do with the actual presentation to the potential investors... what does that look like... when and where? what is the best number of people to pitch to at one time... in groups? How big... how many is too many? How long would those meetings last ... what would the agenda look like at one of those meetings?

Has anyone ever video taped such meetings?

What kind of materials besides a business plan would you create for potential investors?
 
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