One Simple Tool to Reopen Talks with Investors

8/19/2014

Taking a little bit of a break from the visions of the film industry and the direction that it should go in, this week I'll be offering a piece of useful advice for all the producers out there. I should start this by saying that I am NOT a financial planner. I am IN NO WAY qualified to evaluate a security. I am also not qualified to give professional advise as to what stocks to buy, how to manage a portfolio, or anything even remotely related to that information.

In my time at the Institute for International Film Finance and Global Film Ventures, I’ve heard many people speak on various tricks to get Films Financed. One of the single most valuable tools in my arsenal is one that I will share with you now. I will say this was not developed by me, but rather by a speaker for one of my events a while back. I will start by saying that in order to be a producer, you need to understand your competition. Not just in terms of other movies and entertainment that are up against yours in the marketplace, but also how your investment stacks up against other potential investments that High Net Worth Individuals may be considering. This requires that a savvy producer understand the stock market, as it is the most common place where investors keep their money.

It’s important to understand that just because someone is worth 7 or 8 figures doesn’t mean they have millions of dollars to throw around. Most of their money is “Tied Up.” Pretty much any qualified Investor you’ll talk to will have a rather large stock portfolio. A lot of their stocks they’ll have been holding for quite a long time, and they’ll have grown quite a lot in value in the time they will have held them. Given the amount of Capitol Gains Tax they’d have to pay on selling those stocks, getting them the liquidity needed to invest in your film can be a difficult sell.

If you’re talking to a wealthy friend or relative, and they’re interested in your project, the little voice in their head is likely saying things along the lines of, “Hmm… I like it, it’s got potential, but I’d have to sell this, this and this, and my capitol gains tax would be this…” That alone is often enough for them to not invest, sometimes simply out of the hassle and paperwork involved in the transaction, not to mention the loss of money. That, my dear readers, is where portfolio loans come in. A Portfolio Loan is essentially a mortgage on a stock portfolio. It allows the investor to keep the stocks in their portfolio, but also free up some money to invest in other projects, such as yours.

It’s extremely low interest, often below 4%. The interest varies week to week, so for precise rates have your Investor contact their broker and/or financial planner. It’s lower interest than borrowing on margin, and while there are many risks involved, the repayment terms are very flexible, and the interest can often be offset by stocks that pay dividends. Also, if you’re borrowing on Margin, you really are only allowed to invest in other stocks, at least according to the SEC. Although that is admittedly not all that well enforced. This tool can be a great excuse to call up some of your potential investors who have all but turned you down, and can help to reopen conversations with them. It has done just that for me.

Again, I’m not a financial planner, or a lawyer. Contact one of those people if you really want to know more about this, but just knowing what to ask about can be a huge leg up. As always, be well and thanks for reading!

This tool is great when used properly. However, it's far from the only thing you need to know about independent film finance as well as finding, and talking to angel investors if you want to be a successful Executive Producer. Luckily, I've just started offering an Executive Producer Expressway Program. In it, all you'll learn all you NEED to know about Packaging an independent film and attaching talent, Film Financing, Marketing your Independent film, and Film Distribution deals. It all starts with a FREE Strategy session, directly with me. In the session, I'll help you figure out where you are, and chart the steps to where you want to be.

Book your FREE Strategy Session Today!

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