Film Financing: Tips for Dealing With Investors in Movie or Production Companies
The Film Financing World
The film industry is an expensive business that often sees no returns on the investment. In general, more movies lose money than make money and this makes it a risky investment to say the least. If you are trying to get financing for your independent film project then have likely found that money is even more scarce here where the stakes are very high and the rate of failure is even higher. Here are a few tips on how to deal with investors in movie or production companies with a focus on how this can help your independent film project.
When you approach investors for movie or production companies you are going to have to pitch the film to them not just on its merits, but in a way that will indicate how it will make money on their investment. Film financing works in a similar to other investments, and this is going to be part of their financial risk portfolio for the year so you have to show how it may compare to other investments they are involved in. It is best to have a good sense of who your possible investor is and what kind of investments they are involved in, such as real estate, the stock market generally, or strategic banking investments.
The most important thing to show your possible investor is that you have the ability to execute the plan you are proposing. You are showing a film idea, how you would produce it, and how it will make money. All of this is standard when presenting it to investors, but you need to show them how you expect to make this project successful while others have not been.
The most important thing once the investors in movie or production companies have decided to finance the film is to propose full contracts to them so that their investment is charted perfectly. You have to have the investment outlined in a legal document and you cannot leave anything up to chance, otherwise this can destroy your production and your financial life.
Usually you will want to break up the investments into a few different types. One, you may want to have a standard form of investment where you promise them a twenty percent return on their investment after a certain amount of profits through the production. This is not an incredibly safe investment since it requires other people, such as Producers and production companies, to take money before them, but it shows a twenty percent return after certain conditions have been met. If they want to do a full investment in this contract that is great, but many will want to diversify to lower their overall financial risk. They may want to put half of the money into loans, which then promise that they will get their money back first yet they will only have the possibility of a ten percent return. These numbers are often averages, but are not set in stone and you can change them depending on your project and investors.
Photos: Dollar Bill, Public Domain (Produced by U.S. Government).
Source: author’s own experience.