Last week I laid out a glossary of general use film financing terms, but the blog ended up a bit too long and dense to be a single post. So, I broke it into two. Last week was the basics, this week is more of the next level, and focuses entirely on investment terms. Some of these may seem tangential and unnecessary, however if your goal is to close an investor, you’ll need to thoroughly speak their language. If there’s something you don’t see here, check out last week’s blog here.
While many types exist, it most commonly refers to money.
Money that can be spent immediately, or near immediately. Non-liquid capital would be considered something like real estate holdings which would first need to be liquidated in order to sell.
In finance: it’s general the initial capital investment or the remaining balance on a debt.
A percentage fee added on the the principle.
Interest on the principle of the loan and interest.
Simply: interest on interest.
An investment where an investor may lose most or all of the money they put in. Independent Films are always high risk investments
Securities and Exchanges Commission (SEC)
The main financial regulatory agency in the United States. It oversees most forms of investment.
The investor or household must have 1 million dollars in net worth OUTSIDE of their primary residence.
High Net Worth Individual (HNWI)
Outside the obvious, this term is generally a financial industry term for accredited investor
A database of high risk investments maintained by the SEC that is only accessible to Accredited investors and licensed brokerage or investment firms.
A round of financing or funding that is large enough to take an organization or project to the next major milestone. For how this works in film, check out the youtube video I’ve linked below, and the blog linked below that.
Related Video: The 4 Stages of Indiefilm Financing
Related Blog: The 4 Stages of Indiefilm Financing
A document written by an entrepreneur or filmmaker outlining their investment. In the film industry, this document will also often educate the investor on how the industry functions as a whole. This document is also known as a prospectus, but that term is not as commonly used as it once was.
Private Placement Memorandum (PPM)
A document that’s filed with the SEC for investors to consider investing in your project. Frequently an attorney will base this document off of the filmmaker or entrepreneur’s business plan. In most cases, a PPM will be registered with the aforementioned Edgar database for a modest filing fee.
Pro-Forma Financial Statements
Financial documents consisting of an expected income breakdown, cash-flow statement, and top sheet budget to be invaded in the business plan and function as the basis for many of the financial sections of other documents
A secured loan backed by something like a tax incentive or pre-sale agreement.
An unsecured loan, or debt without backing. Generally very high interest.
The space between what you are able to raise and the amount you need to finish your project.
A market where stocks, bonds, derivatives, or other securities are bought and sold. Common examples in the US would be the DOW and the NASDAQ.
A convention where films are bought and sold primarily by sales agents and distributors. For more, check out the link below.
Gross Domestic Product (GDP)
The total value of all newly finished goods in a given country during a set timespan. Most commonly calculated on an annual basis.
A macroeconomic term signifying a period of significant decline in economic activity. It’s generally only recognized after two consecutive quarters of down financial markets.
A severe recession that lasts longer than 3 years and corresponds with a drop in GDP of at least 10%
A market that’s strong and growing. It’s called a bull market as the upward trending graph looks like a bull nodding its head according to some people on Wall Street.
My name is Ben, I'm an Entrepreneur, Producer's Rep, and Author. I'm the founder of Guerrilla Rep Media, Co-Founder/CMO of ProductionNext, and founder of Producer Foundry. Together, the organizations seek to help make filmmaking a more economically sustainable endeavor. I am dysic, I have capitalization issues, and the blogs are often unedited. opinions all my own.
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