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Financing

So you know how much money your project needs. Now you just have to go out and find said money to actually make it. However, the goals you’ve set out will affect this process. Do you expect the project to make money for your investors? Or do you simply want to earn enough money to maintain your current level of food and shelter (and maybe the luxury of automotive transportation)? There’s no right or wrong way to go about it, and we know very little about what actually makes money in this industry. But being honest about your expectations will help both you and your financiers in the long run.



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To put it simply: if people invest money in your project, they expect to get it back. But not all investors are created equal – more money means, well, more everything. On top of that, there are different types of investments for media projects that determine what role the investors play and how much they might be willing to sink into your dream.

TOPICS COVERED IN INVESTMENT (HARD MONEY):

  • TOUGH MONEY | Studio, Media Hedge Fund, Branding, Passionate (crazy) Patron
  • EQUITY STAKE | Private Equity, Angels
  • 50% MONEY | Soft Money, Film Pre-Sales, TV Pre-Sales, Distribution Advance
  • DEBT | Gap, Completion, Mezzanine Debt, Bridge, Negative Pick Up, P&A Funding, Credit Cards

Do you like free money? There is a way to raise funds for your project that don’t necessarily need to be returned. It helps if your project is categorized as a nonprofit, which is more common for documentaries. Still, there are various sources of financing that many filmmakers overlook when hustling for budget money – and they’re not all Kickstarter campaigns!

TOPICS COVERED IN DONATIONS (SOFT MONEY):

Shockingly, there’s a business side to financing as well! Accountants, lawyers and all those other jobs your parents wish you were doing instead play a big role here.

TOPICS:

  • BUDGET | Financial Proposal, Marketing, Bonding & Tax Implications
  • LEGAL | Chain of Title, LLC’s & Collection Account Management

Are you better at creating interesting character conflicts or balancing equity and debt financing? If the first part of that sentence sounds like more fun, then consider how you can compensate for this through your team. Of course, this doesn’t mean you should go all Occupy Wall Street on your project’s number crunchers when they tell you something is too expensive. After all, that’s their job; yours is to find a creative solution. Even better, bring them into the brainstorming meetings, so you know what’s possible. Maybe you’ll be surprised by the left brain powers hiding behind that math nerd exterior.

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More on Financing

Believe it or not, media projects can be nonprofits too – so tell that to all your socially responsible friends working for Greenpeace. However, there is obviously a lot less financial reward in a nonprofit endeavor. If you need to make some kind of money from this, then you’re looking strictly at for-profit. However, if you can afford to just scrape by, you can try to aim for a nonprofit status, which opens the door to certain forms of alternate financing like grants and fellowships. It helps if your project has some kind of issue or message to promote, but you don’t always have to save the world. Art for art’s sake is certainly a valid case for nonprofit status, or at the very least an artistic statement that doesn’t boil down to "kill ‘em all and let God sort out the rest." However, it doesn’t make you any less of a good or terrible person to want to earn money from all your tireless labor on behalf of this project. Just understand this means talking to investors and financiers, many of whom will be very interested in how you intend to get their money back – and then some.

Back in the day, patrons like the Medicis were willing to pony up a lot of cash to support the artistic vision of a Michelangelo or Leonardo. Media moguls in this day and age care more about the return on investment than the cultural worth of a project. As a filmmaker, you might get lucky and run into a newbie financier who likes your story well enough, but really just wants to hang out with celebrities at the premiere. However, an experienced media investor knows there are serious risks that make most projects about as good an idea as lighting a pile of money on fire for the simple pleasure of watching it burn. The side benefits of hanging out with actors and going to film festivals do have some value, but the numbers still have to work. Sometimes this means changing your story, but other times it means paying for a lesser known actress than Jennifer Lawrence. However, it’s important for both sides to understand the balance of risk and reward involved, and what all parties involved hope to gain.

You’ve probably heard something along the lines of this before: plan for the budget you want as well as the budget you’re likely to get. But most financiers aren’t interested in hypothetical scenarios (including those that might be the basis for your story). Forget the fantasy budget and go for the minimum viable budget (MVB) along with a realistic production schedule. Financiers only really care about two things: how much does it cost and when can they see it. The MVB and a good timeline are ready made answers when those questions come up in an investor meeting. Don’t be hurt when your investors show more interest in those numbers than your main character’s emotional journey to self-awareness. If cut and dry budgets and production schedules aren’t your strong point, hire an experienced producer or unit production manager to help. It’s also a good idea to keep the old production triangle in mind: there are three sides (quality, speed, cost), but you only ever have two at the same time.

Resources

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