How to Raise Development Funds for your Feature Film.

Pretty much every filmmaker wants to find money to make their movie.  Unfortunately, many don’t quite realize that in order to raise the kind of money you need to make anything above a micro-budget movie, you’ll generally need a lot already in place.  It’s something of a catch-22.  Investors need name talent to market the film, and distribution to make it available.  Distributors need name talent and a tested team to give any meaningful commitments, and name taken need to know they’ll be paid.  There are ways around all of this, but generally, they require money upfront.  This blog is about how you raise it.

​Unfortunately, there isn’t a magic bullet on any level of film funding.  The best I can do is offer you tools and tactics to use to increase your chances of success.  You will probably need more than one of these tools to get the job done.
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Don't want to read? Check out the video on this topic below

​Crowdfunding

Let’s get this one out of the way fast.  Crowdfunding CAN be great for filmmakers not only as a way to raise partial funding, but also to engage yourself with your audience and provide market validation for both investors and distributors/sales agents.  That said, it’s not without its drawbacks.  Using crowdfunding as an early-stage race tool can cause your donors to question whether or not you’ll be able to get the whole film done.  If you can’t, it can lead to problems.  (Extra special shoutout to my patrons here, since we’re talking about crowdfunding.)

Friends and Family

I know, I know.  This is the oldest piece of advice in the book.  But, there’s a reason it’s still around.  Your friends and family are (hopefully) among the people who are most likely to back and support you in this endeavor.  If they’re like mine were when I was starting out, while they may be willing to help and actively want you to succeed, they’ll still need some proof it’s possible.  However, the proof they’re like to need will probably be something easier to get than an investor would need. These 

Equity

But Ben, didn’t you just say that you need more in place to get an investor?  Yes and no.  In order to raise a large round, you’ll need a lot in place, but if you’re only focusing on a smaller round you can get by with less.  It is important to properly structure this investment though.  You’ll either need to offer a more substantial stake in the company for the bigger risk taken for investing earlier, or you’ll need to do some other investment vehicle like Convertible debt.

Even at this stage, if you want to raise money from investors you’re going to need to create an independent film investment deck. You can learn more about it in this blog, or you can grab a template for free in my film business resource package in the button below.

Grants

Grants are great in that they don’t require you to pay back the money so long as you only use it for its intended purpose.  They’re not so great in that they generally take a long time to be approved for the money, and you’re generally facing significant competition particularly for development stage grants. 

Soft Costs and Deferrals

This essentially means calling in every favor you have to make sure that you have the best chance possible to succeed in developing a package for your film.  This isn’t going to carry you the whole way though.  Most people who do this for a living don’t work purely on a deferral or commission basis.  I’m including myself in this, although I do defer a large portion of my fees and take on as much as I can on commission. 

That said, while the higher-level connectors, Producers, Executive Producers, and the like are generally unwilling to work on a purely deferral or commission basis, the friends you need to make a great crowdfunding video, concept trailer, or something similar might not be.  Getting their buy-in might help you make it to the next level.
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Skin in the Game

Finally, we come down to the ever-present fallback of funding the development round yourself.  This is generally the fasted way to complete the round, but it has the obvious drawback of needing deep enough pockets to just shell out and pay the money you need to get it done. 

I know all of this is really hard to grasp, and quite frankly it’s a lot.  While I do consult on this sort of stuff, I’m not cheap. (with good reason.) I try to make a lot of information available through my site, but there are times that you just kind of need someone to answer your questions and re-orient you.  As such, I’ve decided to start a special mentorship group. 

This special training group gets you access to additional content, an exclusive discussion group, and most importantly weekly group video calls where I’ll answer your questions personally, and occasionally bring on people who would also be of benefit to the group’s needs.  Click the button below to go to a form and express interest in this group.  Spots are limited.

Also, don’t forget about the Free indiefilm business resource package to get your free Investment deck template, e-book, white-paper, and more. .

Thanks so much for reading.  Please share it! Also click the buttons below for more free content.

How to Write an Independent Film Business Plan - 1/7 Executive Summary

One of my more popular services for filmmakers is Independent Film Business Plan Writing.  So I decided to do a series outlining the basics of writing an independent film business plan to talk about what I do and give you an idea of how you can get started with it yourself.  

Before we really dive in it’s worth noting that what will really sell an investor on your project is you. You need to develop a relationship with them and build enough trust that they’ll be willing to take a risk with you. A business plan shows you’ve done your homework, but in the end, the close will be around you as a filmmaker, producer, and entrepreneur.

The first Section of the independent film business plan is always the Executive Summary, and it’s the most important that you get right.  So how do you get it right?  Read this blog for the basics.

Write this section LAST

This section may be the first section in your independent film business plan, but it’s the last section you should write.  Once you’ve written the other sections of this plan, the executive summary will be a breeze.  The only thing that might be a challenge is keeping the word count sparse enough that you keep it to a single page.   
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If you have an investor that only wants an executive summary, then you can write it first.  But you’ll also need to generate your pro forma financial statements for your film, and project revenue and generally have a good idea of what’s going to go into the film’s business plan in order to write it.  I would definitely write it after making the first version of your Deck, and rewrite it after you finish the rest of the business plan. ​

Keep it Concise

As the name would imply, the Executive Summary is the Summary of an entire business plan.  It takes the other 5 sections of the film’s business plan and summarizes them into a single page.  It’s possible that you could do a single double-sided page, but generally, for a film you shouldn’t need to.  

A general rule here is to leave your reader wanting more, as if they don’t have questions they’re less likely to reach out again, which gives you less of a chance to build a relationship with them.

Here’s a brief summary of what you’ll cover in your executive summary.

Project

As the title implies, this section goes over the basics of your project.  it goes over the major attachments, a synopsis, the budget, as well as the genre of the film.  You’ll have about a paragraph or two to get that all across, so you’ll have to be quite concise.

Company/Team

This section is a brief description of the values of your production company.  Generally, you’ll keep it to your mission statement, and maybe a bit about your key members in the summary.

Marketing/Distribution

In a standard prospectus, this would be the go-to-market strategy.  For a film, this means your marketing and distribution sections.  For the executive summary, list your target demographics, whether you have a distributor, plan to get one, or plan on self-distributing.  Also, include if you plan on raising additional money to assist in distribution.

SWOT Analysis/Risk Management

SWOT is an acronym standing for Strengths Weaknesses, Opportunities, and Threats.  For the executive summary, this section should include a statement that outlines how investing in film is incredibly risky, due to a myriad of factors that practically render your projections null and void.  Advise potential investors to should always consult a lawyer before investing in your film.  Cover your ass.  I’ve done a 2*2 table with these for plans in the past, and it works reasonably well.  Speaking of covering one’s posterior, you should have a lawyer draft a risk statement for you.  Also, I am not one of those, just your friendly neighborhood entrepreneur. #NotALawyer #SideRant

Financials

Finally, we come to the part of the plan that the investors really want to see.  How much is this going to cost, and what’s a reasonable estimate on what it can return?  There are two ways of projecting this, outlined in the blog below.
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Related: The Two Ways to Project Revenue for an independent film.

In addition to your expected ROI, you’ll want to include when you expect to break even and mention that pro forma financial statements are at the end of this plan included behind the actual financial section.

Pro Forma Financial Statements.

If you’re sending out your executive summary as a document unto itself, you will strongly want to consider including the pro forma financial statements. For Reference, those documents are a top sheet budget, a revenue top sheet, a waterfall to the company/expected income breakdown, an internal company waterfall/capitalization table, a cashflow statement/breakeven analysis, and a document citing your research and sources used in the rest of the plan.

Writing an executive summary well requires a lot of highly specialized knowledge of the film business. It’s not easy to attain that knowledge, but my free film business resource package is a great place to start! You’ll get a deck template, contact tracking templates, a FREE ebook, and monthly digests of blogs categorized by topic to help you know what you’ll need to have the best possible chance to close investors.

Here’s a link to the other sections of this 7 part series. 
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Executive Summary (this article)
The Company
The Projects
Marketing
Risk Statement/SWOT Analysis
Financials Section (Text)
Pro-Foma Financial Statements.

The 4 Stages of Indiefilm Finance (And Where to Find the Money)

Most of the time filmmakers seek to raise their investment round in one go.  A lot of people think that’s just how it’s done. As such, they ask would they try anything else. If you have a route into old film industry money you can go right ahead and raise money the old way. If you don’t, you might want to consider other options.

Just as filmmakers shouldn’t only look for equity when raising money, Filmmakers should consider the possibility of raising money in stages.  Here are the 4 best stages I’ve seen, and some ideas on where you can get the money for each stage.

1. Development

If you want to raise any significant amount of money, you’re going to need a good package.  But even the act of getting that package together requires some money.  So one solution to getting your film made is to raise a small development round prior to raising a much larger Production round. 

If you want to do this with any degree of success, you’re going to have to incentivize development round investors in some way.  There are many ways you can do it, but they fall well beyond my word count restrictions for these sorts of blogs.  If you’d like, you can use the link at the end of the blog to set up a strategy session so we can talk about your production, and what may or may not be appropriate. 
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Related: 7 Essential Elements of an IndieFilm Package

Most often, your development round will be largely friends and family, skin in the game, equity, or crowdfunding.  Grants also work, but they’re HIGHLY competitive at this stage. 

Books on Indiefilm Business Plans

2. Pre-Production/Production

It generally doesn’t make sense to raise solely for pre-production, so you should raise money for both pre-production and principal photography.  This raise is generally far larger than the others, as it will be paying for about 70-80% of the total fundraising.  It can sometimes be combined with your post-production raise, but in the event there’s a small shortfall you can do a later completion funding raise. 

It’s very important to think about where you get the money for the film.  You shouldn’t be looking solely at Equity for your Raise.  For this round, you should be looking at Tax incentives, equity, Minor Grant funding if applicable, Soft Money, and PreSale Debt if you can get it. 

Related: The 9 Ways to Finance an Independent Film

Post Production/Completion

Some say that post-production is where the film goes to die.  If you don’t plan on an ancillary raise, then too often those people are right.  Generally you’ll need to make sure you have around 20-25% of your total budget for post.  It’s better if you can raise this round concurrently with your round for Pre-Production and Principle Photography

The best places to find completion money are grants, equity, backed debt, and gap debt

4. Distribution Funding/P&A

It’s very surprising to me how difficult it is to raise for this round, as it’s very much the least risky round for an investor, since the film is already done.

Theres a strong chance your distributor will cover most of this, but in the event that they don’t, you’ll need to allocate money for it. Generally, I say that if you’re raising the funds for distribution yourself, you should plan on at least 10% of the total budget of the film being used for distribution.

Generally you’ll find money for this in the following places. Grants, equity, backed debt, and gap debt.

If you like this article but still have questions, you should consider joining my email list.  You’ll get a free e-book, monthly digests of articles just like this, segmented by topic, as well as some great discounts, special offers, and a whole section of my site with FREE Filmmaking resources ONLY open to people on my email list.  Check it out!

The 7 Essential Elements of A Strong Indie Film Package

Most filmmakers want to know more about how to raise money for their projects.  It’s a complicated question with lots of moving parts.  However, one crucial component to building a project that you can get financed is building a cohesive package that will help get the film financed.  So with that in mind, here are the 7 essential elements of a good film package.    ​

1.Director

As we all know, the director is the driving force behind the film.  As such, a good director that can carry the film through to completion is an essential element to a good film package.  Depending on the budget range, you may need a director with an established track record in feature films.  If you don’t have this, then you probably can’t get money from presales, although this may be less of a hard and fast rule than I once thought it was.
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Related:What's the Difference between an LOI and a Presale?

Even if you have a first-time director, you’ll need to find some way of proving to potential investors that they’ll be able to get the job done, and helm the film so that it comes in on time and on budget

2. Name Talent

I know that some filmmakers don’t think that recognizable name talent adds anything to a feature film.  While from a creative perspective, there may be some truth to that, packaging and finance is all about business.  From a marketing and distribution perspective, films with recognizable names will take you much further than films without them.  I’ve covered this in more detail in another blog, linked below.
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Related: Why your Film Needs Name Talent

Recognizable name talent generally won’t come for free.  You may need a pay-or-play agreement, which is where item 7 on this list comes in handy. ​
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3. An Executive Producer

If you’re raising money, you should consider engaging an experienced executive producer.  They’ll be able to help connect you to money, and some of them will help you develop your business plan so that you’re ready to take on the money when it comes time to.  A good executive producer will also be able to greatly assist in the packaging process, and help you generate a financial mix.
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Related: The 9 Ways to finance an Independent Film.

I do a lot of this sort of work for my clients.  If you’ve got an early-stage project you’d like to talk about getting some help with building your package and/or your business plan I’d be happy to help you to do so.  Just click the clarity link below to set up a free strategy session, or the image on the right to submit your project.

4. Sales Agent/Distributor

If you want to get your investors their money back, then you’re going to need to make sure that you have someone to help you distribute your independent film.  The best way to prove access to distribution is to get a Letter of Intent from a sales agent.  The blog below can help you do that. 
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Related: 5 Rules for Getting an LOI From a Sales Agent

5. Deck/Business Plan

If you’re going to seek investors unfamiliar with the film industry, you’re going to need a document illustrating how they get their money back   This can be done with either a 12-slide deck, or a 20-page business plan.  I’ve linked to some of my favorite books on business planning for films below. 

6. Pro-Forma Financial Statements

Pro forma financial statements are essentially documents like your cash flow statement, breakeven analysis, top sheet budget, Capitalization Table, and Revenue Distribution charts that help you include in the latter half of the financial section of a business plan.  

There’s a lot more information on these in the book Filmmakers and Financing by Louise Levinson.  I’m also considering writing a blog series about writing a business plan for independent film.  If you’d like to see that, comment it below. ​

7. Some Money already in place

Yes, I know I said that you need a package to raise money, but often in order to have a package you need to have some percentage of the budget already locked in.  Generally, 10% is enough to attach a known director and known talent.  If you’re looking for a larger Sales Agent then you’ll also need to have some level of cash in hand.

This is essentially a development round raise.  For more information on the development round raises, check out this blog!

Thanks for reading, for more content like this in a monthly digest, as well as a FREE Film Market Resources Package, check out the link below and join my mailing list.​

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Filmmakers! - 5 Steps to Successful Grantwriting

A few months ago I worked with the absolutely lovely Joanne Butcher of Filmmaker Success to put on an educational event about grant writing here in San Francisco.  Joanne has raised millions in grant funding for several non-profits over the course of her life.  While I can’t distill everything from her talk into a single blog, I can give the people who weren’t able to make it some of the key takeaways.  So without further ado, here are the 5 rules for applying for grants.

1. Research

This might just be a Guerrilla Rep Media Rule of life at this point.  If you understand the field you’re playing on, you’re going to be much better at whatever game you’re going to play there.  The only way you understand that field is by researching it. But I digress. 

When applying for grants, the first step is to research and find grants to apply to.  (Duh) Focus on grants that match the subject matter of your film. It’s best to only apply for grants you’re perfect for, even if they are not directly related to filmmaking.  

The fact is that no one can apply to the thousands of grants they are eligible for is why limiting to the perfect matches is going to greatly increase your success.  It’s almost always a bad idea to bend something to fit a grant application. The key here is to remove the mindset of scarcity, and instead focus on finding the right fit.

As an example, if we were looking for funding for a reboot of The Little Mermaid, Joanne would recommend looking into marine science foundations, climate change foundations, and local artist grants, local filmmaking grants, or since it’s based on a Hans Christian Andersen book, even Denmark’s Cultural heritage foundations might be worth applying to.  

This article is a good place to start for your research.

FILMDAILY.TV'S GRANT LIST

2.   Set a goal for applications

Set an achievable goal for grants you want to apply for.  A safe bet is one per month. This would put applying for grants as a heavy part-time job for you though.

It can be hard to find relevant grants to apply to get up to 1 per week, so you should consider applying to grants that are thematically related to your content, as opposed to strictly applying for film grants.  What I mean by this is if your film is about homelessness, then maybe apply for grants from organizations helping the homeless, stating how you can help increase the awareness and impact of their foundation through the power of motion pictures.  ​

3.   Answer the Questions

Now that you’ve researched to find relevant grants, and you’ve set your goals, it’s time to start grant writing!  I know that sounds super intimidating, but really it’s just answering a very long series of questions. 

Although when you’re answering your questions, you should remember that it’s more than just providing information.  Your goal here is to sell the grantor on why your project is the one that will get the most bang for their funders buck.  

Every funder’s primary responsibility is to fund the projects that provide the most value to the foundation.  Generally, this means the projects that get the most eyeballs on them, and offer the most benefits to the communities that particular funder serves.  Your job is to convince that funder that your project is the one that will do that. 

4.   Hit Send

I know this sounds rather obvious, but once you’ve written your grant you need to press send.  However, a lot of filmmakers get stuck at this step, and spend so much time perfecting their application that they either miss the deadline, or could have applied to a whole different grant in the time they spent making one of them about 2% better.  Hit send, and start applying for the next one. 
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5.  Apply Again Next Year

Finally, the first time that you apply for a grant, don’t be put off if you don’t get it..  Most funders get far more applications than they have money to fund, and competition is fierce..  That doesn’t mean you shouldn’t apply, it just means that you need to keep applying, and, over time, improve both your proposals, your projects and your relationships with the funders.  “After all, says Joanne, “you can’t apply a second time until you’ve applied for a first.”

IF you’re a filmmaker, you’re always likely to have some project that will require funding.  Thus, relationships with funders will be very important to your long term career. By applying for film grants, you start to develop a relationship with the grantor, even if your grant applications are unsuccessful.

Also, if you’re declined, you can actually call up the funder, and ask why.  Most times, grantors will share some insight as to why your application was declined.  Doing this can put you in a much better position to get the grant next year. Just don’t be rude when you do; the point is to build a positive relationship

Thanks so much for reading!  I’d heavily encourage you to check out Joanne Butcher’s website below.  Also, check out the free indiefilm resource pack for EXCLUSIVE templates and tools to help you finance your film, as well as a monthly blog digest to help answer any questions that you may end up needing to fill out your grant proposal.

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Indiefilm Crowdfunding Timeline

In crowdfunding as in filmmaking, preparation is key.  If you don’t adequately prepare for your campaign, then you’re not likely to succeed.  If you’ve never crowdfunded before, this can be a daunting prospect. Don’t worry, Guerrilla Rep Media is here to help.  This post is meant to give you a timeline to prepare for your campaign, starting further out than you might think.

It’s based around what I’ve learned raising 33,000 of my own in the early days of kickstarter, as well as what I’ve learned from speakers and advising clients running their own campaigns.

6-12 Months Prior to Launch

Begin interacting with online and in-person communities relevant to your target market

If you want to have a chance at people outside of your friends and family donate to your crowdfunding campaign, then you’ll need to become a part of those communities early.  If you show up and immediately start asking for money, you’re only going to lose friends and alienate potential backers and customers.  If, on the other hand, you become part of the communities you’re targeting early on then you may well end up getting yourself some new audience members who might just back your campaign.

Related: 5 Dos and Don't for Selling your Film on Social Media

It’s a lot of work, but the benefits may surprise you.  They’re likely to reach beyond your professional life, and into your personal life. 

3 Months Prior To the Launch

Begin to be really active in groups of your target market.

Essentially, this is an extension of the list above.  As your campaign approaches, spend more time engaging with people on those online communities you joined 3-6 months ago.

2 Months Prior to the Launch

Shoot Video

List All Potential Perks

Let People Know You'll be Running a Campaign

Get set up with your Payment Processor

About 2 months before your expected launch, you should get as much of the preparation out of the way as you can.  This includes things like shooting your video, listing your potential perks, and potentially even getting set up with the payment processor of whatever platform you’re using.

Many of those things take much longer than you expect them to, so doing them early will make sure that your campaign launches smoothly. ​

1 Month Prior to Launch

Start seeing what press you can get.

Create a Facbook Event for Launch

Finalize list of Perks

Organize Launch Party

A month out from your campaign is when your pre-launch should be going into overdrive.  You’ll need to issue a press release about your campaign to try to get some local press, make a Facebook event for the launch party to try to get some early momentum, finalize all your perks, and potentially organize a launch party to help get people excited about your project.  You may want to consider making your launch party backer-only, just to get the numbers up early on. ​ Let people donate at the door from their if you need to.

Related: Top 5 Crowdfunding Techniques

1 Week Prior to Launch

Do at least one press interview (if you can)

Promote Launch Day on Social Media

Confirm a few large donations to come in on lauch day: Ideally right at launch.

With your launch date less than a week away, you’ll want to see if you can get any press.  This can be anything from a local newspaper from the town you grew up in, it could be a friend’s podcast, or it could even be some old high school alumni newsletter.  The press will give you legitimacy and legitimacy means more backers.

While you’re doing this, you’ll want to spend a lot of time talking about the impending launch on social media and talking to some big potential donors about coming in in the first few hours of the campaign.  If people see more traction early on, they’ll be more likely to jump on board. ​

Launch Day

Follow-up with AS MANY PEOPLE AS YOU CAN to get them to donate.

If you have some large confirmed donors, then you need to follow up with them and remind them on launch day.  It matters a lot to get some big fish in right as the campaign starts. ​

First Few Weeks of the Campaign

INDIVIDUALLY email EVERYONE you can to ask them to donate.

Once you get your campaign started, you’ll want to INDIVIDUALLY email EVERYONE in your address book.  I’m not talking about setting up and sending out a mail chimp email, I’m talking about individually reaching out to follow up with EVERYONE who you have an email for.  One trick I’ve learned from a friend and Former Speaker Darva C. is that you should email 2 letters of the alphabet a day, over the first 2 weeks of the campaign.  Then email them again, starting on day 16 of the campaign. ​

It’s a grind, but making a film always required sacrifice. 

Midpoint of Campaign

Host an event to keep interested high.

It would be wise to have an event to keep your social media spirit high in the lull that is the midpoint of the campaign.  You have to keep the momentum going through the campaign, so having something like a midpoint event to talk about on social media is incredibly useful.  This event is one I would HEAVILY consider making backer-only, even if they’ve only backed you for 1 dollar. ​ You could also let them back at the door from their phone.

Last Few Weeks of Campaign

Individually email everyone you can AGAIN.

​Do the same thing that you did on the first 13 days of the campaign again. Thank the people who donated, and remind the people who didn't to donate again.  ​

Closing Night-Host a celebration (or commiseration) party!

Finally, at the close of the campaign, you’ll need to have a party, whether to celebrate your success or commiserate that you didn’t hit your goal. Either way, you’ll deserve a night of fun because you WILL be tired.

If this seems like a lot, it is. Even once you’ve finished raising, you still need to make the movie. My free Film resource package includes a lot of resources to help you make it and get it out there once it’s done. It’s got a free e-book, lots of templates, and a whole lot more. Click the button below to sign up.

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Why You Still Need Name Talent in Your IndieFilm

​In the age of easily accessible self-distribution, cheap gear, and the ability to make and distribute a feature film for less than 10,000 dollars it’s understandable to wonder why you would want to spend 10,000-100,000 dollars a day on recognizable name talent.  Many proclaim that hiring recognizable name talent is simply a waste of time and money.

Speaking as someone who makes most of their living from film distribution, these people are wrong.  Here are 5 reasons why.

Recognizable Name Talent Significantly increases the Profile of the Film

In an age where anyone can make a film, the challenge becomes less one of making a film, and more one of rising above the white noise created by others also making films.  Recognizable name talent can be a great help you set yourself apart.  The notoriety brought by recognizable name talent helps raise public awareness of your project and greatly increases interest from high profiles sales agents and distributors.  Also, if they have a large social media presence and agree to help promote your film, it will have a tangible impact on the profile of your film.

Recognizable Name Talent Significantly increases the chance of meaningful press coverage.

With the higher profile that names talent brings to your project.  Press coverage will compound the impact on the awareness of your film that name talent brings.   If your film gets enough coverage, then a lot of the marketing will be done for you, and you’ll be able to attract the pieces of the puzzle that you’d otherwise need to chase.   These puzzle pieces can be anything from additional tickets sold, to in-kind product placement, and potentially even completion funding once your film is in the can.  

Several of my pre-completion press articles have been due in large part to having recognizable names attached to the project.

Recognizable Name Talent Increases the likelihood of getting into festivals

I know this isn’t going to be a popular thing to say, but film festivals don’t solely look at the quality of a film in deciding which ones should be programmed.  They also consider the fit with the festival’s brand, the current political climate, as well as the profile of the film and what showcasing the film, would bring to the festival. 

​Given that the profile of the film is greatly raised by recognizable name talent, it’s something that festival programmers will consider when deciding whether or not to program your film

​Name Talent Increase Your Distribution Options

From my personal experience in distribution and sales, it is easier to sell a mediocre film with names than a great film without them. This is true regardless of genre, although certain genres absolutely necessitate recognizable names if you want any international distribution.

Recognizable Name Talent is a great way to make both sales agents and distributors stand up and take notice.  Getting a star in your film has a direct and tangible impact on your chances of getting a profitable distribution deal. 

Without recognizable name talent, it’s almost impossible to get a minimum guarantee.  Further, many of your international sales will be revenue share only.  With Name Talent, it’s far more likely that you’ll get a minimum guarantee from the sales agent, and the deals with international buyers will be license fees or MGs instead of revenue share deals.

Name Talent Increases Self-Distribution Sales

Finally, even if you plan on self-distributing your film, recognizable name talent will help you move units.  Raising the profile of your film by having a star in your film will help you place higher in Amazon and iTunes search results, which will have a tangible impact on your bottom line. 

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Why Film Needs Venture Capital

A lightbulb next to a chart outlining the allocation of venture funds in 2011 above a text blurb outlining the data source.

There’s an old joke that goes something like this.  Three artists move to Los Angeles, a Fine Artist, a poet, and a Filmmaker.  The first day they’re in town, they check out the Mann’s Chinese Theater.  When they get there, a wave of inspiration overtakes them.  The fine artist says, “This is incredible, I have to draw something! Does anyone have a piece of chalk?” Low and behold a random passerby happens to have one, and hands it over. The fine artist does a beautiful rendering on the sidewalk.

Watching this, the poet says, “I’ve had a flash of inspiration, I must write!  Does anyone have a pen and paper?”  It happens to be a friendly sort of Los Angeles day, and someone hands over a pen and paper.  He writes a beautiful Shakespearean sonnet about his friend’s artistry with the chalk.

​The filmmaker says “This is amazing, I’ve got to make a movie about it!  Does anyone have any money?”
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Even though the costs of making a film have been cut drastically, the joke remains true.  I mentioned in my last post that the film world is in need of new money, and that what the film world really needs is something akin to Venture Capital.  I think the topic deserves more exploration than a couple paragraphs in a post about transparency.

​Venture capitalists bring far more than money to the table.  They also bring connections and a vast knowledge of financial and industry specific business knowledge to the table.  Essentially these people are experts at building companies, and when you really break it down the best films really are just companies creating a product.

The contribution of connections and knowledge is just as vital to the success of the startup as the money is.  We have something somewhat similar in the film world, it’s generally the job of the executive producer to find the money for the film and put the right people in place to run the production and complete the product.

The biggest problem is that good executive producers with contact to money are few and far between, and there are very few connection points between the big money hubs and the independent film world.  Filmmakers often don’t only need money, they need to have an understanding of distribution and finance that many simply do not have, and most film schools just do not teach.  These positions are generally not full time positions, and most filmmakers just don’t have the money they need to pay people like this.  If a venture capital model were to be adapted in film, the firm could link to these experts, and included in the budget for the film at a cost far less than it would normally be, because the person could split their time between all of the projects represented by the firm.

​Most people understand that filmmakers need money, what many people do not understand is that there are very valid reasons for an investor to invest in film.A good investor knows that a diverse portfolio is far better than one that focuses solely on one industry.  Industries can change and the revenue brought in by any single industry can crash with little notice.  Savvy investors will seek to have money in many pots as it really helps to weather through downturns.  Film is considered to be a mature industry, and has grown steadily over the past several years, even in the economic downturn.  In fact, the film industry is moderately reversely dependent on the economy, so it often does better in economic downturns.

The biggest problem is that most investors just don’t invest in things they don’t know.  Investors need to understand an investment before they put money into it.

Film is a highly specialized and inherently risky business.  All the money goes away before any comes back, and that can scare off many investors.  Especially since they often don’t understand what a good use of resources for a film is and are often incapable of seeing when the project should be stop-lossed as to not lose any more money.

One solution a venture capital firm could bring to this industry that single investors simply cannot is stage financing. Stage financing is a system of finance that is widely used in Silicon Valley.  The concept is basically that the investors only release funds once certain checkpoints are met.  Single angel investors do not have the time or expertise to act in this way, which is a big part of the reason for the standard escrow model.   If a project that makes it through the screening process is only given the money they need for pre production up front, they must pass a review to have funds released for principle photography then it becomes a far more sustainable investment.

​Filmmakers may balk at the idea of review, but quite frankly so long as the production is being well managed, they should be able to complete the checkpoints and have the additional funds released with little difficulty, assuming that the right review panel is put in place.  The fund itself has every reason to see it’s projects through to completion, so it will only be filmmakers who are not doing their jobs that end up not passing the review process.

Edit: Additionally, there are deals that can be made to help agents and bankable talent feel more comfortable with such a process.  This may be a subject of a later blog, and is mentioned in the comments.

Why does the fund have every reason to see films through to completion?   Because if the films are not completed, then the fund will have lost all the money it put in with no chance of getting it back.  That said, if the production is a disaster, and it’s clear that additional funds would not actually result in a finished and marketable film, then it is far better to cut losses and move on with other projects that have higher potential for revenue.

As mentioned in the last blog, a lack of transparent accounting is also a big issue with investors.

A single filmmaker does not really have the ability to negotiate with a distributor, at least not to a level necessary to resolve the transparency issue. In the relationship, the distributor has all of the power and there’s really very little most filmmakers, especially those just starting out, can do to change that.

​But in film as in any industry, money talks. If there were a venture capital firm for film that only worked with distributors who have transparent books, and those distributors could then turn around and propose new projects to the venture capital firm, then some of the issues of transparent accounting could start to change.  Many distributors, especially those working in the low budget sphere, are continually raising money for their own projects.  So, having a good relationship with a venture capital firm is a big incentive to maintain good books and responsible business practices for filmmakers.

It got listed in the comments section of Black Box that filmmakers shouldn’t necessarily need to have that much business sense, since it takes their whole being to create.  Filmmaking is indeed a collaborative effort, and it’s not a director’s job to think about target demographics and marketing strategies.  The problem is the people in the film world that truly understand investment and recoupment are few and far between.  Many of them also take advantage of filmmakers, as evidenced by the stories of studio accounting from Black Box.  Part of what’s needed is the creation of teams that have what it takes to both tell quality stories with high production values, also get the films to market and figure out exit strategies, target demographics, and general budget recoupment tactics.

Many Film Schools just don’t teach this part of the business.  Film schools focus everything on how you can make the film, and what it takes to do it, but few of them really give you the ability to actually go raise money.  So what’s really needed is a new class of producer that understands the executive side.  What’s really needed is a new class of investor that understands what it takes to invest in film, the risks, the rewards, and how it’s diversified.  What’s really needed in film is a company that can successfully link the two together, and create a new class of media entrepreneur.  What’s really needed is an incubator for independent film with a team that can execute both of these aspects and create a sustainable business model out of it.

Right now no such organization really exists. Legion M has some elements of it, but they miss the new talent discovery elements in favor of risk abatement. Slated works similar to AngelList, but I’m not sure their track record is what it needs to be to justify their price point. I’ve been trying to start one between my various projects with angel groups, Mutiny Pictures, Producer Foundry, and other ventures.   It’s clear that the industry is changing, but quite frankly it needs to.  The best way to effect the change in practices that need to happen in the industry is to change the way the industry is financed.  The entrance of a film fund that operates on principles more akin to the aspiraations of a venture capital firm would do just that, and is exactly why it needs to happen.

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