One of the most frequently asked questions I get asked is about money. Most often it is those looking for funding and this I attempt to answer on my Funding page.
Sometimes I get asked by investors outside of the industry my thoughts on a project and would it be a good investment and that's what I'll endeavor to cover on this page here. Although fortune-telling is not an ability I posess (although I can be accidentally and randomly psychic on occasion, the accuracy sometimes astounding those around me - which I believe is actually just a mixture of intuition, sensitivity, experience and an ability to think 'outside the box', rather than actual psychic ability!)
Now, I have to make it clear that I am not directly involved in the financing of films and it's pretty much a closed shop when it comes to information (which is probably why this question is most frequently asked!) The world of finance is to me like visiting a foreign country and not really knowing the language well. The basics are familiar and know enough to get by, but one can get a bit lost! The film industry on the other hand, I know very well - literally born into it - which is has imbued me with a deep sense of knowing. I am happy to share with you what I do know and what to be aware of.
The first thing you need to know is Film-making is a high risk investment. Anyone who tells you otherwise, is lying and probably can't be trusted. Risk is part of the attraction as if you do invest in a hit, the rewards are huge, not only finacnially, but being part of something amazing and all the trimmings that go with it,... and boy, does the entertainment industry know how to trim! =)
The important lesson to learn about investing in movies is to minimise risk and there are several ways to do this. I will go through this is brief, then in detail.
- Large budget
- Undeveloped script / none or little development
- Long script (over 120 pages)
- Lots of special fx/period drama/locations/animals/animation (expensive outlay)
- Unknown, inexperienced writer/producer/director/H.O.D.'s
- Unknown cast
- No distribution deal
- Producer with no track record
- No 'package'
- Strange or obscure, distant locations
- Art House or non-commercial, obscure & niche ideas
- Little or no paperwork
- An unknown producer that's also the writer and director and main actor
- No script, budget, schedule, storyboards or this information isn't ready when requested.
- No marketing strategy or understanding of target audience
- Main cast and crew with no imdb listing
- Ensemble pieces with no main character/too many different characters or lead character(s) difficult to identify with
- Producer is cagey about other investment/investors
- Something you wouldn't pay to see yourself in a cinema
- Low budget
- Original script in a familiar genre
- Script is completed and well developed
- You hear the pitch and can already see the movie, poster and trailer in your mind
- The production seems well organised and your questions are answered quickly and can be backed up with paperwork
- It is already packaged and details are provided
- You have heard of at least 2 members of the cast
- There is a part or cameo with an A-C Lister
- at least two out of: The Producer, Director, Cinematographer, Editor, are established and well known. i.e. an inexperienced or crap director can usually be balanced out by a decent Cinematographer and editor, if the script is good.
- There are pre-sales in distribution, either as a theatrical release (cinema) or DVD.
- HD - HD or High Definition is a much lower cost way of making movies. Lower budgets mean lower risk. On low budgets or indepenents, this is a good thing to consider - on medium budget movies, film is still the first option, although this will probably soon start to change. Research this option to see if it's suitable for the project, it may or may not be.
Questions to ask a producer
- What stage of development you are at?
- Is it packaged?
- Who's attached?
- Can I read the script?
- What's the budget?
If any of the above questions can not be answered, decline the investment until they can. Take note of the Higher and Lower Risk points above. You can read more information about script reading on my Hollywood Readers Checklist page which contains a list of things that professional Readers look for in a script. Use your instincts.
The Funding Process:
Raising money for films all starts in one place - the screenplay. It is the bait. The better the bait, the bigger fish you will attract. The quality of the screenplay is the most important aspect of raising money. Although this seems obvious common sense, it is surprising how few maximise on their most valuable commodity. It is the script that attracts the better actors and a good director, especially if you have a limited budget.
If you want to lower the budget without compromising the script, concentrate on pre-production - although experienced screenwriters and film-makers will know ways to 'cheat' budget restraints without adversely affecting the script. If you want to raise the budget, concentrate on the script. It is the quality of the script, that raises the value of a movie and attracts the bigger names which add more value to 'the package'.
To have any chance on attracting finance, a project needs to be developed and 'packaged'. Development is the process where the script is developed to it's best, making sure it's both commercially viable and meets all the technical and artistic requirements to suit it's medium.
This process leads on to 'packaging' the project, which means attaching a named director and at least one or two named actors. It would also help to get a well known producer, director, actor attached as an Executive Producer to help raise funds. The Executive Producer may then use their contacts and kudos to improve packaging which raises value, or they may help with investment. Some Executive Producers just lend their name and status to a productions, while others are more hands-on. This is especially important if you have an unknown, or little known producer or director, as they have basically got a seal of approval from 'above'. The title Executive Producer is also sometimes given to large money investors that have no practical producing experence or input, but their cash made the movie possible.
Many investors invest not just for money returns (although these can be pretty lucrative, especially if you maximise on tax breaks and incentives), but also for a credit with cache like Executive Producer. It holds a lot of kudos and admiration to be involved with the glamour and glitz of showbusiness, which can be great PR. Some investors are very interested in self production - not just investing but becoming film producers themselves. My only advice here, is that you should be as aware of the risks as you would be if you were just investing - be as discerning with the script and get a good production team around you and do actually try and learn as much about the business as you can. Definately start reading the Trades and get to know the business, what is selling, what isn't, who's hot, who's not and look for scripts that will sell. Low budgets that are marketable are the best place to start.
Anyway, back to packaging; It is also good to get well known department heads, such as cinematography, art direction and editing as part of the package.
You also need to know what you have, how you plan to market the film, the target audience and references to similar films that have been successful, profit estimations, full budget and schedule, cast and crew attachments, location deals, funding deals, tax breaks etc. This has to be used to create a business proposition that finance people can understand. How much money is needed, other funding sources, use of locations to gain concessions - such as filming in the Isle of Man.
The 'package' is used to get pre-sales and distribution agreements and from that funding follows. Pre-sales is a way of raising part of the funding by selling the rights to distribution companies in advance of the film being made. Distribution deals can be done either worldwide or as separate territories.
You will also need Completion Bonds to finance a movie. No serious financier will consider investing in the movie without one. If you find a financier who hasn't heard of completion bonds, they are unlikely to be experienced in film finance. A completion bond is the insurance that a movie will get completed, so makes the project extremely desirable to investors.
When this is all complete it is time to raise finance - raising finance without all these elements in place is extremely difficult as it is a seriously risky investment - the more you can do to minimise risk, the easier it is to get investment.
There are several places to go for finance (although this seems to be the most top secret information - and there can be difficulty in finding 'serious' private investors - many are all talk and no money) Some opt for several private investors (the more investors though, the more headache) specialist banks and companies or local film funds also loan/invest funds. I list many funds on my website under Funding. This is the stage my information gets blurry - probably as I don't hang out with enough billionaires!... yet ;)
Another place to look is the film markets. A list of the major ones are listed in my Festivals and Markets page.
Some links which you may find of interest: skillset.org/film/stories/development/article