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Some advice when raising money for movies, etc.
This isn't really a thread for how to raise money, rather it's some GOOD advice I highly recommend you all follow. I'm a brash young filmmaker like many others, thinking I know it all. After 8 months of research, I realized I know a lot about filmmaking, but next to nothing about raising money.
Here are some tips you should follow. And trust me, "I know a good accountant" isn't a good excuse. No accountant would let us make some of the common mistakes made (like asking for donations for a for-profit film, or asking for money on a website, which is advertising, without filing with the SEC). And my accountant usually refers me to my lawyer most of the time, because of the money raising and dispursing (hopefully as profits come in). 1. File with the SEC, because they're the ones who make sure you aren't ripping off investors. 2. If you are taking money from investors ONLY located in your state, you don't have to file with the SEC, but you have a limited number of accredited and unaccredited investors. Then you can't advertise at all. I'd STRONGLY recommend reading over SEC's site: www.sec.gov particularly: http://sec.gov/about/laws.shtml (You are selling shares or units in your film.) Many indie filmmakers don't follow those guidelines and end up in SERIOUS trouble. I've heard and read about horror stories. One guy couldn't sell his movie to a major indie studio, because of the way he raised money. And PLEASE don't ask for donations unless you're a non-profit. I read people doing this all the time, and the next thing they know, the SEC is all over them like they're a HUGE corporation that ripped off the world. It's ugly and can end in jail time (remember Enron? There's now a zero-tolerance policy). I'm tired of hearing indie filmmakers say their accountant will take care of it. Really? No accountant I know will ever recommend that. Lastly, you want to designate (incorporate, LLC, LLP, etc.) a SEPERATE company with a Federal Tax ID number, because of the extra protection. Also, you'll soon learn that having a seperate company secures the fact that investors are investing in your indie film, NOT your company. Or at least the seperate company making that particular film. A friend of mine made a film without a seperate company producing it, and one of his investors said he now owned a part of my friend's company. And guess what, he did. So my friend let the company expire to get out of it and created a new deal for the film investors. And don't do the "we're non-profit now, but we'll be for-profit when the movie comes out." That statement usually equates lots of trouble, believe it or not. And if you anger your investors, they can report you to the SEC. I'm not 100% on all this, but there are plenty of books in the library that can help out, esp. ones on creating corporations, etc., in your home state. And plenty of books on raising money and more for films. Check the net. Ultimately, I let my accountant deal with a lot of that, then she refers me to my lawyer, who helps out with the rest. Protect yourself, then make great films! It may sound like overkill, but I've known filmmakers and read about others who got into SERIOUS trouble. Even over a $5000 movie. heath |
Thanks for taking the time to post such valuable information Heath. It's the most valuable type of information any filmmaker can get. I think infinately more important than regular camera tech talk! You can get that information anywhere...it's this stuff that seperates the boys from the men. (I've always wanted to say that!)
I'd like to also point out that before you start making your film a business plan helps with attracting investors. Heath touched upon filing with the SEC, incorporating your business (film) seperately than your business you use to do videos for cash (like my Willow Studios is a video business...not really a incorporated film entity) etc. If your business plan has all those elements in there - it's much more professional than "I wanna make a movie!". It must read like you've paid some professionals to help you out (account and lawyer to start). Heath has the two key components and he seems to have everything lined up. Also, don't be afraid to call an entertainment lawyer and ask for free advice. They'd rather give you tips up front for free and get you as a paying client than possibly never at all. Plus, they usually love "entertainment" so they will pick up on your passion if you show it to them. I really like these types of threads more than any other! I'm always reading and talking to people about these issues. It's the missing link to making a film for a lot of people...myself included. |
Business is HARD, I admit it. Trust me, I do. And a GREAT business plan can help. I wish I wrote one for my first one--I probably would've raised more cash...
Just stay cool, be honest and make great films! And sometimes you can find someone else to help with the business, but at least sell yourself! heath |
If you'd like to read enough about this to scare you into doing it the "right" way, check out the book "From Reel to Deal" (I'm sure you can find it on Amazon). Dov gives a good overview of all the legal/business/insurance issues and then provides a TON of resources for additional info.
I happen to have an in-house Attorney (Jamie my wife) and my co-hort in this business (Matt the Director) is an Accountant so I guess we're doubly blessed. Between the two of them they keep me on track. From a "professionalism" perspective the post above is dead-on. Nothing makes the talent take things more seriously then having to sign numerous pages of legal documents. In our case we're shooting a documentary with many old friends and going through the signing process actually helped get them focused and take the project seriously whereas without this I doubt we would have gotten the same level of commitment and effort. Plus it covered our assets... |
That is indeed a good book. I wish I had an attorney and accountant at my disposal like that! <g>
heath |
hi
My strategy for financing films so far has been to keep production costs low (very low-about under $1000, in fact). This I do by thinking about it while writing a screept and deliting every scene that would cost me a lot.
Hopefully I won't have to rely on this type of budgeting for long. My question is - what length films do you usually offer to your possible investors? and how investors react when they hear about producing a short film - are they less reluctant to invest? |
Shorts--usually it's done as support to the filmmaker to get their name out there. I've made shorts for free with crew donating time and others coming to help.
heath |
My first hope is to hit some important festivals and get awards (although I have very little respect for Film Festivals in general, I think for the begginers it's a great way to start).
Another thing I could do is to get some money here (in NY) and make a film in some Eastern European country... |
Film Fests seem to be a dime a dozen, but they're important and considered not just an honor to be in one, but necessary for the move into "bigger" things. People will respect you.
heath |
I'll start my 5-7 minute short sometime soon in february(shooting should not take me more than 3-4 days.) Week or two in post production than IFP and festivals....
Talking to my accountant and lawyer seems a good idea anyway... I'll see what they offer me. |
International?
Does anyone know of a book or a bonafide site that has film financing information that applies to countries beyond the USA? Film financing has, after all, gone global. Our current major production is potentially receiving funds from seven countries.
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Cemill, your production is receiving funds from 7 countries... that's impressive.
You see, financing works very differently in many other countries(I personally know about some counries in the post soviet space.) Sometimes movie-making is less money oriented over there... My sudgestion to you: go to the lokal book store and look for books in the film section, you'll probably find something. |
Good advise for people wanting investors to finance your films.
I must admit I have mixed views on this aspect if it involves first time short film or doco makers. I was amazed when I went to film school and the first thing the instructor said was, Never use your own money, use someone else’s. Now I found this hard to swallow after running my own business and never relying on handouts to get ahead. I found that this doctrine convinced a lot of the students that the only way to make a film was to sit around waiting for a government-funding grant. As we all probably know, artsy fartsy types staff most of these government agencies. With this in mind its almost impossible to get funding for something the general public might enjoy, the funds nearly always go to films that suit the obscure tastes of these controlling minorities. My point is, that after a year or so filling out forms and waiting around for funding, these once enthusiastic students get totally disillusioned and most just disappear back into regular work force. I think all film schools should screen Steve Martins, Bowfinger (I’m not sure if that’s the right spelling)? at the beginning and end of each semester. This would give the students the inspiration to go out and just do it. It’s amazing what can be achieved by being determined and resorseful |
Good advise for people wanting investors to finance your films.
I must admit I have mixed views on this aspect if it involves first time short film or doco makers. I was amazed when I went to film school and the first thing the instructor said was, Never use your own money, use someone else’s. Now I found this hard to swallow after running my own business and never relying on handouts to get ahead. I found that this doctrine convinced a lot of the students that the only way to make a film was to sit around waiting for a government-funding grant. As we all probably know, artsy fartsy types staff most of these government agencies. With this in mind its almost impossible to get funding for something the general public might enjoy, the funds nearly always go to films that suit the obscure tastes of these controlling minorities. My point is, that after a year or so filling out forms and waiting around for funding, these once enthusiastic students get totally disillusioned and most just disappear back into regular work force. I think all film schools should screen Steve Martins, Bowfinger (I’m not sure if that’s the right spelling)? at the beginning and end of each semester. This would give the students the inspiration to go out and just do it. It’s amazing what can be achieved by being determined and resorseful |
This IS indeed a useful post and really bums me out thinking about it as well (in some ways). I have recently come out of a technology startup where we were pitching for VC constantly. I'm located in OH which is near the bottom of the VC foodchain. Anyway, a few tips I might add in ADDITION to what was said above -
A business plan is important to any business but if you're all about a single film youre trying to finance I would break that down every which way possible - thats what you're trying to finance. Show cost breakouts, targeted audience and why its hot or will be (market research), show exactly how the production and post will be handled and build in contingencies. Have AS MUCH preproduction done as possible - if not all. Storyboard it. See if you can get your talent onboard ahead of time. Invest in it. The more you have in, the easier it is for an investor to take the risk. That also obviously includes your past experience. Demo reel and whatnot. I know a competitor we were up against that recieved $23m in round A funding bc they had a ton of proven experience on the team and they didnt have a product close to ours in the pipeline. How much you can do yourself is key. No matter what business it is - the more people that become attached on top of you, the more you risk losing control of your baby. Be creative with business - I think the one thing that a lot of business people do not have at all is creativity. Creativity applies to everything we do thats human. Most people call it innovation though. But what I'm saying is a ton of this side sucks yet it can also be facinating, fun and pretty intense. Enjoy it but make sure you have everything done within your power before you go after outside money in my opinion. Figure out how to keep it from becoming a burden so you dont risk burnout at the parts you love! Enjoy. |
The thing is that, lot of people involved in FILM BUSINESS have very limited!!! knowledge of FILM and more knowledge of business, as usual. The result is evident in movie theaters showing mainstream cinema and even in independent film screenings(every screening I attended lately in NY was a disaster).
For me... I know, I suck as a businessman so all I have left is to bet on my creative side and hope to win. Best luck to all of you who's trying to get their movie made. |
Best thing I can say is, get out there and sell yourself. Make people notice you. Otherwise, you're making expensive gifts for friends and family.
heath |
...or, make a grate film(short or not) and attract a seroius attention from the potential investors. I mean who's gonna invest in my $500 00+ project that I have on paper, if I have not proved myself in small, lets say
$1000 - $10 000, film. Of course, I could sell screenplays, but that's anoter topic all together. |
helpful link
hi,
i found this link particularly helpful regarding the issue of raising money: http://www.moviemaker.com/issues/50/nobudget.html dan |
Thanks, dan!
heath |
6:00 O'Clock News
Don't jump the gun to take on investors - see my next post.
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6:00 O'Clock News
Several years ago, I formed a corporation and started on a movie package of six short films. I contacted an entertainment attorney in Vegas and started the process of a private offering for filing with the SEC so I would be able to take on investors. My attorney suggested we get the feelers out by announcing the films and letting investors know we will soon be legal to take on investors. To my surprise, the SEC, what seemed like every television station in Las Vegas, and SAG were at my door for a story that ran 3 days on the morning and evening news. Welcome to the world of jumping the gun. After getting a cease and desist order served to me by the SEC, I contacted my attorney and to my surprise his office had moved out of state and no private placement, which by the way was $10K to have drafted and never recorded. I had already invested about $50K of my own money for a casting call to get the six feature films underway, giving away that money to television stations for TV commercials, and to a facility where Oceans Eleven had casted in Las Vegas. SAG (Screen Actors Guild) jumped into the picture and shook their fist at advertising for non-union talent to discourage the public from showing up to the casting call. After the dust settled, I spent the last several years recording music at a professional studio in Summerlin (see http://myspace.com/rosaleecarpenter and http://myspace.com/airwavz to get my mind off the losses and have been building a studio with 3 film production editing suites, several HVRZ1U Cameras, lights and equipment, as well purchasing a professional Pro-Tools HD II suite for sound now costing another $100K or so between recording and equipment. I have again started on a private placement offering with a firm in Florida that has specialized in the offerings for feature films. The offering should be drafted in several weeks and filed with the SEC so I can start taking on investors. At some point in the next month or so I hope to be in production on my first feature film, see Film Treatment at http://myspace.com/treehouseproduction called "Crossing Paths". Several posts in this section got me thinking that it's smart to keep the equipment in one company or separate entity, and the film it self in another company that investors are part of. With the post production company separated, I can competitively bid on post through the separate post company which produces ligit income, and at the same time keep the film in budget. I will post again on investment matters and the shoot. Stan Rimer
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Interesting post Stan,
That's why, at this point I'm mreluctant to dial with SAG yet... I'll do that in the future, when and if I'm dialing with higher production budget Vic |
If your budget is low enough, SAG's new Ultra Low Budget agreement is friendly and won't paralyze you.
heath |
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Plus you can bump up the budget by lets say not taking pay as a writer, director, etc... in other words you could defer costs like you own the equipment but won't get paid until the film is sold... |
Be careful with deferalls--they need to know about them.
hwm |
Quote:
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I haven't looked at it recently, but doesn't SAG's Ultra-Low contract REQUIRE deferred salaries?
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Cool. Like I said, I hadn't read the contracts in a while. And the new SAG.org makes it kinda hard to find the alternate contracts.
That's definitely good to know. |
"how investors react when they hear about producing a short film - are they less reluctant to invest?"
lets say i'm a investor ( and i have invested in some projects) . INVEST usually means i have some risk and i may get a return ( more then i inevested) .. bottom line for all investors RISK vs. REWARD ... so from my POV .. there isn't much of a market for shorts .. so my RISK of losing my $$ is great .. because there isn't much of a market for shorts the REWARD would be small ... so exactly what are you offering a investor ? seems for shorts - ask friends, relatives for $ ... moving over to features ... feature with no name actors , no name producers have about a 99+% chance of never making $$ .. so a investor is pretty much never going to see their $$ .. BUT for some reason persons are attracted to MOVIES and many are willing to put up their $$ for a chance to mingle with actor/actresses, spend a day on set , have their name on big screen ... now some investors don't mind a loss - you can write off a investment loss in current year EXCEPT from what i remember you are limited to X % per year writing off a investment in a movie loss ... i can't remember the % ( seem to recall 6-8% a year write off) anyway the percent is so low it isn't worth the extra accounting time you have to do every year... now i only give to projects that are set up as non-profit or they are under a non profit umbrella (donations are made to non profit and non profit gives $$ to filmmaker at a 5-10% fee of donated $$) i then write off the total amount of $$ in current year = i'm happy - filmmaker is happy ... i got to give - they got to receive |
[QUOTE=Don Donatello now i only give to projects that are set up as non-profit or they are under a non profit umbrella (donations are made to non profit and non profit gives $$ to filmmaker at a 5-10% fee of donated $$)
i then write off the total amount of $$ in current year = i'm happy - filmmaker is happy ... i got to give - they got to receive[/QUOTE] Oh sucks Don... I was going to ask for you to invest... just kidding... |
Here's the thing, any time someone invests in something, the USA has to make sure there are no scams. Go to www.sec.gov and you'll see a TON of laws and such from the 1930s because of the scams, etc., that helped lead to the crash of 1929.
A former student of mine's investment firm had more reviews by the SEC than most companies who DON'T do investing. heath |
ineresting information guys,
well my short is so ultra low budget(under $5000,) that I'll try not to deal with sag at this point. The reason is, that I've invested a lot of money in the equipment and if there is a little profit from the short, I'd like to share it with my crew members, but on my terms, not on SAGs. Vic |
Nobody
hello,
I'm new to the forum, I introduced myself in the HDV section. One of the reason I am involved in amateurish videomaking is because one of my dear friend tried to be a filmmaker. To make a short story even shorter I'll say this. NOBODY will ever give you money to make a money if you never made one before. I've see an amazing man with one sold script, one published novel, waste away trying to raise money for one of his script. He's a good writer, makes a living out of it, so it's not that he doesn't know how to write. As far as I'm concerned, and he acknowledges it too, he wasted 10 years of his life trying to raise money. Now finally he has gotten it. But the energy he wasted cost him a lot, professionally, in stuff he didn't write, emotionally, in his relationship with his girlfriend, she's talking to you. Unless you have a contact, a real one, an actor that can attached himself to your projet, you know a producer, whoever, do NOt waste your life trying to raise money. I still wouldn't do the following, but I believe that emotionally it's better to borrow 50K and shoot a very low budget movie and go without a car for 10 years than try to waste away raising money. This is not a place where I came to talk about this problem, but living with somebody who tried to find movie money was tough and destroyed a little part of my life and his, a lot. Please, have fun with shorts, save 50K, use your own money, but if you wait for somebody to give you anything, oh my god, you will waste your life, and please, do not bother coming back at me with TWO examples you know. what matters is the number of people who failed, not the TWO that succeeded. You have a script? Try to get an agent, try to post it on INKTIP.COM, but don't waste the precious hours of your life asking millions to people who don't need you. |
Great post Andrea,
I don't know the details of your story but I think alot of filmmakers, especially ones who are talented in a particular department (in this case, writing) don't realize that there are other people out there with their same level of talent in different departments and feel the same way. That they could make a great movie if they could only come up with the $5M to hire a writer, director, etc. It's really amazing, or at least it was to me that in the course of a month I was able to find a confident, competent cast and crew to shoot a film who were willing to work for nothing more than the experience and credit. I think if more people realized this we'd be seeing alot more great films come out of the independent cinema space and alot less dependency on money from people who's only vested interest in filmmaking is a return on investment. |
Andrea, you have a good point. Lots of inspiring filmmakers have great ideas, but those ideas never leave their heads because they are afraid to just go out and shoot - this is the key. Go out and shoot, write the pen and write, take the brush and paint. No matter what the budget, no matter what the conditions.
People sometimes mistake pretty images in their heads for great films. They guard those images like nuns guard virginity and after a while they are simply afraid to take a stab at those images, because it feels like offense to their sense of artistic integrity to "film" those images without the "necessary conditions" - most of the time these illusionary "conditions" inlude huge sets, titanic budgets, top crews, etc.. Sometimes, those beautiful images people conjure in their heads seem so "beautiful" that one can even doubt accomplishing them without these "conditions"... This is the worst nightmare for an artist and it is the beginning of a nightmarish journey that Andrea wrote about. But we forget one very important factor: the idea of any great work of art is SIMPLICITY. If your image is truly "pregnant" (pardon for this expression) with essense, it doesn't matter whether you shoot it on DV or 70mm film. Somehow, when you go out and shoot - camera becomes the best judge of your ideas you'll ever have (keeping in mind that you have at least a slight sense of self-criticism and self-evaluation and most importantly taste or alternatively friends whose opinion you trust) I truly believe that if you have talent, taste, vision and a unique story and if you are "pregnant" with that overpowering wish to tell a story in images - you WILL succeed as an artist... no matter what. And if you don't succeed in financial terms, so what...? You are "pregnant" - you can't help it :) Right? If you just do it to make money, then unfortunately, we are on different pages. Keeping in mind legal issues is very important, but but building a fortress without first having an idea where to get the soldiers to fill the fortress won't get you far. I must absolutely agree with Don Donatello in all his remarks. P.S. I didn't mean by "you" anyone in particular :)) |
I recently read the first half of Independent Feature Film Production by Gregory Goodell. (Been too busy to read the 2nd half...) I recommend this book to anybody who is interested in the financing/business/legal side of filmmaking.
http://www.amazon.com/Independent-Fe.../dp/0312181175 The author makes a strong point about a "no man's land", where you are bound to lose - it's not big enough to be a blockbuster, but you spent more money than you can make back with the average documentary/slasher/gang flick. The author also makes a point that sometimes another million bucks actually reduces risk - if you can hire a name actor with that cash, and/or up your production values, your likelyhood of making your money back (and then some) increases. The risk goes down, even though the investment/exposure goes up. That's the sweet spot. A short film is definitely outside of the sweet spot. You can't release it in theaters, or to DVD. The only things left are the festival circuit or the 'net. Only so much return available there... The middle ground is TV, but then you're probably looking a HDNet, Discovery, or PBS, and they want documentaries. Maybe there's an opportunity for a 22 minute dramatic short with a sports-bent on ESPN2. Or a comedy about homebuilding on HGTV. Or a food fight film on the Food channel. With 500 channels, there's certainly a need for content aside from serials/sports/news/reality/documentaries. Goodell recommends doing research on your market, and finding out what your competition typically earns after release. Budget your production so that you make money even if you're just under average earnings for your genre. That information tells you what kind of a distribution deal you will need, and will help you in convincing investors that they can make a profit on the deal. The bottom line is that shorts don't make any money on the back end. Given that, the only investment on the front end that makes any sense is "as much as you are prepared to lose." |
guys.. just quit. you're never going to be big shots anyway.. i mean come ON.. Seriously!... wake up! you wont ever BE a big shot director.. a big shot whatever.. cuz there are other tens of millions of guys who want to be one... so just forget it. take some accounting, nursing, business admin class... be a goooood boy and comb your hair.. and go to work like every other guy.
hehehahahaha... THAT is the first thing i say to ANYONE who comes up to me wanting a job or looking or to hook up to someone/something. i'd then give him/her the EVIL laugh. s/he'd walk away feeling so disheartened.. as if theyve wasted their entire life on a silly dream. you just ain't good enough. when you walked in. i didnt feel that breeze.. maybe cuz its a closed room.. LOL.. but i dont care.. there was no wind. ahhh.. what an ass i turned out to be huh?! =P i'm kidding.. hehaha.. i'm in a crazy mood. but i've literally been there.. and my reaction to the guy who said that to me was giving him a BIG GRIN. today, he's outta business and no one hardly even recognizes him. they really despise him now. and ive worked with many production companies.. ive seen companies with management being extremely rude.. spitting on their employees.. throwing papers into their faces and calling them f-words and names... and the employees would still work with their mouth shut. ive also seen production companies who are so kind.. soooo kind.. and very helpfull.. they truly love what they do and really care for others and teach the young ones. but the key is.. hanging in there.. get facts.. the info.. the contacts. etc.. ------------------------------------- ONE OF the best ways of raising money is by working for a production company or a film quip company.. check the market out..pick a good one.. that you know has alotta good contacts. start out as the ass that picks stuff up.. make ure boss laugh.. BE COOL. you get shouted at.. cursed at.. BE COOL. slowly work ure way up.. it'll take you a while.. u'll get to know some clients.. and a better idea on how it all works.. once uve got the info on contacts... and become ure boss's little (the guy who does everything done) and it starts with the letter B. show your professionalism.. that ure capable. you DO stuff. be a do-er. be the man who gets things done. when ure at that stage.. my man.. uve got contacts.. you automatically get discounts on quip rentals.. and when ure working with a renowed prod company.. and for a prod company.. ure name is better known. so that when you decide to use some of your contacts.. they'd go like.. yeah.. that fat guy with glasses who works for.. oh cool.. yeah whats up.. he wants a meeting.. alright ill give him a shot. from then onwards.. you are seen not only as a dude with a sdream.. a wannabe.. but as someone who KNOWS his shit, who knows the drill.. who KNOWS what the market wants.. a fixed perspective is already established of you, you are looked at differently.. and u've got ure boss, ure peeps to support you, to guide you.. to help you out with whatever you want and have got. that's the way ive done it.. it was always who i knew that really shot me up.. everyone knows their stuff.. every tom dick and harry can edit, shoot, come up with brilliant ideas.. whatever.. its like cheese sandwich.. you get it from ure mom.. it tastes normal.. you eat it at a 5 star hotel.. it Feels different , and cuz it feels different.. ud think that it is better..when they are all basically the same. so.. production companies have got contacts of clients with alotta dough.. contacts of dop's, actors, etc.. they've got the solutions.. and theyve got tonnes of reels for you to look at and decide the quality you want to acheive.. to lead, you need to follow. |
I know this sort of scenario doesn't happen, (or as frequently as winning the lottery)
Let's say... I run into someone who loves the film I'm working on, and offers to write a check for $1,000. I have an LLC setup, but I'm not qualified to take on investors. I am working on getting fiscal sponsorship with some non-profits, but I have no sponsor yet. Should I tell them hold off, wait til I have fiscal sponsorship.... write the check to me personally (if they're willing) and then I put the money into the LLC's account, so it looks like my personal funds? Would that be money laundering? Pretty unlikely scenario, but you never know. |
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