Finding Film Investors: Dos and Don’ts for First Timers
CinesourceMagazine.com, May 25, 2018
SO BEFORE YOU GO RUNNING OFF TO
chase a bunch of people with money to invest in your first or next film, there are some definite dos and don’ts. And, before that, there are some important terms that need clarification:
The Merriam-Webster definition of the transitive verb “to invest” is: “to commit (money) in order to earn a financial return.” An investor is a person who invests money in—in this case, in a film—in order to earn a financial return.
An investor is not someone who donates money—the correct term for that person is “donor.”
An investor would expect to be both thrilled to be involved in your film AND to receive the legal documents outlining A) how their investment will be used, B) what their return will be, in addition to the return of their investment, and C) when those monies will arrive.
These documents are legal documents that will most likely require that you retain the services of a lawyer. When you have the correct legal documents for your film, then you are ready to approach investors.
On the other hand, a donor is “a person or group who/that gives something (such as money, food, or clothes) in order to help a person or organization.”
Donors are people who give money to a film in order to support the cause it addresses, e.g. homelessness. Or they are those who give money to fund a film because they want to support the person making the film.
This final group usually comes under the heading:
3. Friends and Family
Many filmmakers look down on the idea of raising money from friends and family. However, until you have made one or two feature films, friends and family are most likely going to be your main source of support.
There is nothing embarrassing or strange about this. It’s just realistic. If you do not have a track record of making films that make money, then you really have no business looking for investors.
4. Evaluate of the Value of your Film
If you are making a film starring George Clooney that will cost you $5 million to make, you can take your business plan to a Sales Agent and get a Sales Evaluation of the income-generating value of your film. I really have no idea how much value George Clooney would add to your film, but for the sake of easy numbers, I’m going to say, $10 million.
So, now, with your Sales Evaluation letter in hand saying that your film is worth $10 million, you can begin the round of business building, including choosing the state or country where you will shoot and what tax credits you will receive.
You can also take your Sales Evaluation letter to a bank and get a loan. You can go with it to investors and show them how you will spend $5 Million and make 10.
So, let’s say this is your first film and you don’t happen to have George Clooney. In fact you have no names at all. Now what? How are you going to get the money to make your film?
So, first of all, how much is your film worth? If you don’t have name actors in your film, you are not going to get a Sales Evaluation letter from a Sales Agent. So how are you going to figure out the value of your film? This is the first step.
If you are a first time director, making your first film, I’m going to suggest that you use the number of $100,000. In order to make a first time film that is worth $100,000, you have to be able to make it for less than this amount, but you also to have high enough production values to be able to enter the marketplace with your work.
5. Evaluate your Fundraising Capacity
In our world, everyone has access to fundraising through crowdfunding. However, every filmmaker has a different capacity to raise money. I had a young, shy client in her early 20s making her first short film. When she came up with a list of every single person she could think of to ask to support her, she had 22 names.
As we get older, our networks build. For example, I have friends and family in several countries around the world, in a variety of communities I have spent considerable time in—sometimes in a volunteer capacity, in a number of professional communities, and I am active on social media.
My capacity to fundraise is dependent on my network of “friends and family.”
I also have experience in various additional types of fundraising from grant-writing for millions of dollars to finding corporate sponsors. I have even raised money for capital campaigns to build buildings.
Every filmmaker has a network of friends, professional associates, family members and so on. That network can be assessed and evaluated in order to land on a number that defines the filmmaker’s capacity to raise money.
6. Don’t Raise Money Based on How Much You Need
It’s common to hear filmmakers say that they need a certain amount of money to make their first film. This is a mistake. If you decide you need $500,000 to make your first film, you can find yourself in years and years of wasted time because you do not have the capacity to raise $500,000.
As you build your network and your history of business success as a filmmaker, your ability to raise money will grow. In other words, raise money based on your capacity.
7. Don’t Spend Too Much Money on Your First Film
It’s easy to imagine prizes and accolades, Sundance Awards and Oscars, and becoming famous—all from your first film.
But you know what? That’s a lot of pressure. How about you raise a modest amount of money, make your first film, and sell it? That’s already a LOT! Ask anyone who’s done it!
In my opinion, anyone who completes a feature film is a hero. I mean that! It’s a huge leap to transit from making shorts to completing a feature film. It’s a heroic enterprise to take a small amount of money in filmmaking standards—$25, 30, 40, 50K—and making a feature film.
Making a feature film at a standard that can sell and make money in the marketplace is another feat. If you set these as your goals and you succeed, you have completed a great accomplishment. No film you make after this will be as much hard work. You will have done it all before, and you’ll have more money!
$25K, 30K, 40K, 50K may be a microbudget for making a feature film of high enough quality to sell, but if it’s your own money or money you’ve been gifted and entrusted with by friends and family, you will quickly find that that is a LOT of money!
When critical moments come that make you think you should quit production, you’ll realize that no matter how micro people think your budget is, $25-50K is a LOT of money to lose. And losing it is easy to do.
So take as many precautions as you can—write the best script, get the most cost-effective producer and developed the best strategy, then go for it.