Film Financing: Where Do You Start?

Just like many filmmakers, there are plenty of ideas that run through my mind, plenty of stories that I would love to tell, plenty of characters I can see so vividly in playing out dramas in my head, however then comes the producer side of my brain: financing. You can have an incredibly script, however, finding funding is still quite the daunting task for any filmmaker. First, one must figure out what are the different options out there for funding my film, and how do these options work? Recently, NoFilmSchool published an article by Buffalo8’s Matthew Helderman breaking down the different kinds of film financing. In short, the independent filmmaker’s options are:

1.     Equity: These are cash investments that require the investor own a stake in the film and must be paid back before a profit can be seen by the filmmaker. 

2.     Pre-Sales: With pre-sale fudning, a contract must be made with distributors before the film is produced; these deals are based on how marketable the film is viewed to be, and how high the sales potentials are. In this, a distributor will generate a value that will allow you to take out a bank loan, using the pre-sale as collateral. 

3.     Gap: When you have part of the equity raised, you can seek gap financing. Since you already have some financing, there is more security for the investor in this situation. 

 

4.     Tax Incentives: Certain states offer tax incentives that are sell-able and transferable tax credits if a producer uses a number of local services, crew, vendors, etc. 

5.     Deferred: This agreement says that crew, cast, vendors, locations, and services are all rendered up front at no cost until the film makes money – avoid this! 

6.     Crowdfunding: Crowdfunding has risen to popularity, especially among student filmmakers. Through sites like Kickstarter and IndieGoGo, filmmakers are able to raise funds without selling equity. 

7.      Private Equity: The private equity market, or venture capitalist, are currently flooded with opportunity, however, they are still a great resource for filmmakers.

Now that you have a little bit of an idea of what your options are, it is important to remember that your pitch, presentation, and plan of execution are paramount if you hope to ever raise funds for your film. When approaching investors, remember, they do not care about this being your magnum opus, they want to see a good investment deal that will yield them profits. Just as in all facets of business, you want to increase your value proposition, making sure there is a promise of value in your product! Approach funding your film as you would funding a company. Consider yourself a film entrepreneur, each project in your early career is like a new start-up company. You have to prove to investors why this project will be successful, that you have a plan of execution for how to use the funding, and how to pay them back. In summary, in Matthew Helderman’s words, “Pitch smart, often, and confidently knowing that you’ve done your homework and that the investment is well-structured for a return.”