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50% | Midway Money
There’s actually some good news about raising money for your project! It gets a lot easier when you have half of what you need – or at least convince people you have about 50% with letters of interest and intention. In fact, experienced financiers hear the magical 50% number so often that they rarely believe it anymore, so you’ll need to back it up in some way. At the halfway point, your project can secure additional funds through deals like pre-sales to foreign markets or an advance deal for distribution. However, a lot of the time, you’ll need a track record or a few notable names in the cast for these to even be on the table. And this type of financing can get complicated really quickly if you start looking into bridge loans or the timing at which the money actually becomes available. Oh yeah, these deals have also become less frequent in the past few years. But if your budget is kind of complicated too, then it might actually be worth looking into these options. The actual best part about having 50% is the access to SOFT MONEY, but that’s a whole other section (which you should definitely read after this).
Film Pre-Sales | Minimum Guarantee
Back in the heyday of independent film financing, mid-range budget projects thrived on pre-sales to other markets. There’s actually a whole subculture of foreign sales agents who flood the creatively named American Film Market and European Film Market, as well as Cannes. And these professionals really know what they’re doing and how their business model works. This means they will also know more than you do. But for filmmakers who do find themselves wandering around one of these places trying to strike a deal: take less money as early in the process as possible, as opposed to more money further down the road.
A distribution advance is basically a more formal pre-sale agreement. In these deals, financiers draft a contract to make them the distributor, at least in name. Nowadays, these types of advances allow equity stakeholders to leapfrog soft money subsidy funds that are trying to outmaneuver their position in the project. And you thought that choosing media as a career would get you out of the shady-sounding financial deals that happen on Wall Street!