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THE MOVIE FUND BLOG

FILM INVESTMENTS

Source / Author:  The Movie Fund Blog

MOVIE FUND BLOG : THREE WAYS TO RAISE MONEY FILM INVESTMENTS

I was working with a filmmaker once who wanted to make a movie for half a million dollars. Looking at his budget I saw almost nothing was allotted towards cast and they planned to shoot the film on mini DV. With this type of movie, a drama, shot on DV with no recognizable cast, it would be nearly impossible to recoup the $500K investment through sales. I encouraged them to double the film’s budget. This may seem counter-intuitive, but here’s the reasoning: Stepping up to a $1 million budget would allow the filmmaker to substantially increase production quality, shoot on 35mm film (but not produce a negative), and hire 2 or 3 A-list cast members for leading roles, and pay them for a few days work. A film with high production quality and an A-list cast has an infinitely greater chance of recouping several times the initial investment.

980x (9)In the end, the filmmakers first attached two A-list stars to the project (this took a few months but was well worth the time), then raised their budget accordingly (to $1.5 million) to pay for the actors, budgeted to shoot on High Definition, and eventually secured distribution.

In terms of financing, these particular filmmakers used private investors to fund their $1.5 million budget. But how do you jump from a $500K budget to a $1.5 million budget if you don’t have any private investors on board? And if you can’t manage to finance a $1 million budget or higher, how do you make the best of a $500K or less budget and still get distribution?

Since there are entire books dedicated to the subject of financing independent films, I’ll keep my suggestions focused on what I call distribution-related financing. Distribution-related financing options include:

  1. Pre-Sales

A pre-sale is literally a sale of your film to a particular territory before the film is made. For example, if you have a script with some actors attached to the key roles, you are eligible for a pre-sale. A U.K distributor might assess your film package and think that it has potential saleability, and offer to pre-buy distribution rights for their territory.

When a distributor pre-buys rights it is advantageous to them because if they know in advance that you have a hot property, they can secure the distribution rights up front instead of waiting until the film is completed and then having to compete with all the other distributors in their territory for the distribution rights. For this reason, distributors also tend to get a good deal when they pre-buy their territory because they are taking a risk that once executed, the film will be the hot property they thought it was and be able to recoup their advance through ticket sales.

Pre-sales have become difficult, if not impossible to come by in the last ten years because distributors have gotten badly burned by pre-buying into a film, and the film turning out to be a total flop. In many instances, distributors have lost their entire investment. As a result and over the years, distributors have tacked on more and more technical requirements for a pre-sale. In other words, instead of just having A-list cast attached as was once the case, you now have to have an experienced director and producer attached with proven track records. These extra requirements further insure that the film not only has the stars to attract an audience, but will be executed well and the film will actually be seen to completion, make it into the theaters, and garner ticket sales.

980x (8)For obvious reasons pre-sales are advantageous to filmmakers. For one thing, it’s a way to raise money for your film while securing distributors at the same time. Another advantage is that a pre-sale gives your film cachet in that if someone believed in your movie enough to pre-buy for their territory, it is very likely that other distributors from other territories will be attracted to a pre-sale as well. Pretty soon, by pre-selling off a few territories, you can raise all the money for your film, with the assurance that your film will be seen in those countries.

Pre-sales are generally made with the help of foreign sales agents since they are the ones that have the relationships with foreign distributors. However, you may be able to secure your own pre-sale by submitting to the distributors directly. Be warned though; this form of financing has become extremely rare these days and isn’t even worth considering unless you have an A-list cast and are a producer or director with a proven track record.

The one exception that I’ve seen happening over the last few years is if you have a film packaged with proven B-list straight-to-video stars, U.S DVD distributors have stepped up to the plate to pre-buy their rights. So if you’re not in a position to get any kind of A-list stars attached to your project and you want to explore pre-sale financing, then your best bet is to find 3 to 4 of those straight-to-video stars and attach them to your movie.

2. International Co-Productions

An international co-production is a form of a pre-sale where the distributor takes a much larger stake in the film, and in fact becomes a co-producer on the movie. International co-productions grew out of pre-sales, when distributors started getting badly burned, they decided that if they took a greater involvement in the film it could act as insurance that the film was executed properly. With this further insurance, at least distributors could somewhat rely on making their investment back.

 

International co-productions, like pre-sales are very rare these days and pretty much carry the same requirements as a pre-sale in terms of a saleable project and A-list cast potential. However, with the increase in demand for non-fiction programming by cable and satellite networks, I have actually seen an increase in international co-productions for documentaries and special interest films that fits a programming mandate. For example, when a new travel network began broadcasting in Germany, they were so hungry for travel documentaries that they entered into several international co-production deals to fill their programming pipeline and insure they would have enough shows in the coming year to air to their burgeoning audience.

 

Sometimes you can finance a film with one international co-production, or several at a time, and as with a pre-sale, a distributor also retains the distribution rights for their territory in a co-production arrangement.

Also, if you’re seeking an international co-production as a way to finance your movie, your best bet is to work with a foreign sales agent since they have the relationships and know the intricacies involved in a co-production deal including all the contractual issues.

Of course, aside from these two forms of distribution-related financing, there are the tried and true financing methods including seeking out private investors, raising money from friends and family, and maxing out your credit cards. However, with those forms of film financing, you do not have any guaranteed distribution as you do with pre-sales and co-productions, so remember it is money you’ll have to repay later, after you make sales of your film.

980x (6)If you get to a point in the process of raising budget where it doesn’t look like you’re going to raise enough money to hire A-list cast and really go for a high level production, you can take a Plan B approach and stick with a budget of less than $250K. In my opinion, that is a good number to adhere to because if the film turns out well, you can at least be sure to recoup that amount in a U.S DVD distribution deal over time. So at the very least, you can create a business plan based on a $250K budget and give realistic sales projections that will show any investor that he can make that amount back.

Creating a Trailer or Promo to Raise Pre-Sale and International Co-Production Money

In terms of raising pre-sale and international co-production money, one effective way to accomplish this is by cutting together a short trailer or promo of your film to show to potential distributors. You might be thinking…how are you supposed to cut together a trailer or promo if you haven’t shot the film yet?

If you are making a documentary film for example, one way to accomplish this is through the use of stock footage. For instance, if you are trying to raise money for a documentary film on the Gulf War, you could go to broadcast archives like CNN or the BBC, both which have footage licensing arms, and order screening cassettes of programs relating to the Gulf War. From these collections of tapes, you can easily cut together a professional-looking promo piece to illustrate to distributors the film you are going to make. You can even use the selling point that you will in fact be using this very prestigious footage in your film. Using stock footage from places like the BBC, CNN, and other archives adds credibility and a professional-look to your project. And it’s a great tool for raising pre-sale and co-production monies.

 

If you are making a narrative feature instead of a documentary, obviously the situation is a little different. Licensing historical stock footage doesn’t really pertain to making a trailer or promo for a narrative feature film. However, I have seen many filmmakers get their actors together for a day of shooting, and shoot a few sample scenes from the film, enough to edit together a professional looking sample of what you are going to accomplish with the full-length feature. You may have already made a short film of the feature you want to make.

Short films can be great tools in this capacity as well. As you can imagine, visual samples go a long way in communicating your capabilities to potential distributors and co-producers.

 

3. Deliverables.

Set Money Aside for the Last Mile

One other thing to keep in mind when financing your film for future distribution is to set aside adequate money for all your deliverables. Let me just touch on what’s important to think about in terms of deliverables while you’re raising money in pre-production.

Music and Effects (M&E) tracks, music clearances, prints and advertising – these are all things you need to make sure you set aside money for. The worst thing I’ve seen is that a filmmaker actually gets interest from a foreign distributor in his or her film, and has no money to go back and make the M&E tracks that they never made in the first place. Now the buyer refuses the sale – the M&E is how they make their foreign language dub. While a lot of films imported to the U.S. are shown with subtitles, this is not true for the rest of the world.
In most countries, any film in a foreign language is dubbed. This is pretty much the case in most territories. Without the M & E track the sale will be lost because a buyer will have a film they cannot dub and therefore the film is essentially useless to them. M & E tracks are expensive, yet necessary. Foreign buyers are not in the habit of putting up money for these tracks to be added on. When they buy a film they generally buy it “as is” save for the actual foreign language dub.

980x (5)I’ve also seen disasters centered on music clearances – if you get a distributor interested in your film using a screener with un-cleared music, they will not take kindly to your removing those songs. They will assume you paid the clearance costs, and if you cannot offer to pay them at this stage, sadly, the sale of your film won’t go through.

In the end, the two major ways of financing your film for distribution include pre-sales and international co-productions, both of which at least guarantee some kind of distribution when your film is complete. Can you ask for anything better than that?
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