The question of where to find financing for a feature film is the bedevilment of all producers past, present and future.
Luckily for filmmakers, lots of other people do invest in movies. Banks, movie studios, oil-producing nations, lots of corporations, wealthy individuals, investment funds, and individuals seeking tax advantages of various types have in the past and continue to invest in feature film production. (Short films are another category entirely, and even more difficult to approach from a financing standpoint. The short film is best self-financed or crowdfunded.)
Who gets financed and why – becomes the major issue for producers, who must accept the reality that anyone other than multi-conglomerate movie studios and well-heeled production companies with access to private or government investment money will have a hard time finding easy financing.
There are still plenty of investors who secretly welcome the opportunity to be star-struck, and if presented with a sound business plan complete with all required caveats, and some knowledge of either the filmmaker or an element of the production, may well want to buy a portion of a film’s potential profits.
To attract any investment, the filmmaker must acknowledge that his or her role is that of a salesman, selling shares in a creative venture whose outcome is unknown and whose odds of success are long. The most positive spin possible should be put on these circumstances, but the underlying reality is always there.
There are plenty of other sellers out there, too. One of the principal challenges facing the would-be producer is the intense competition for investment dollars, at least from the known, recommended and expected places. The money that is available is certainly not infinite, and the best-packaged projects with the best timing in assembling their productions are the likeliest to get it. A producer must find a way to stand above the crowd and surmount the clutter of scripts that circle financing sources.
There are only three basic ways to distinguish a project:
• a truly amazing script, whose quality is evident to all who read it;
• a strong cast element who is attached, or committed to making the film if deals can be made, schedules worked out, and many other contractual escape hatches;
• a visionary and passionate director, who either has an industry track record, preferably in the genre of the project being sold, or is a new talent who can be the next Orson Welles and stand the industry on its ear. (The latter is tricky at best, and with a first time director, for instance, a smaller budgeted film is far more likely to successfully find financing.)
A seasoned producer will often look to piece financing together from foreign presales, some debt, some equity, and these days, tax or other financial incentives from jurisdictions around the world.
The various means of financing are replicated each year in the hundreds of films at festivals around the world, each with its own unique saga of gaining dollar by painful dollar, or one euro at a time. The fact that so many people have achieved success in gaining financing should be inspirational; the difficulties facing a particular project have been surmounted by other filmmakers.
Attaching a prominent cast element is the next best thing to having a great story. Various names carry various levels of interest and budget guarantees. And in the feature film business, any market that can help recoup production costs is a positive development.
Most producers do not have personal connections to the kind of talent that helps draw financing. The best strategy is to work toward achieving that kind of connection, since a star is more likely to consider a potential project if it comes with a personal recommendation or the active interest of another industry personage.
Big movie stars make small independent films all the time, and their presence is precisely what allows those films to be made. They will usually take far less than their standard fee for these prestige or heartfelt projects, which were brought to them by agents and managers, or by directors or other actors they know and have worked with. The draw for a bigger name to do a smaller film is almost always the quality of the material, or the filmmaker attached to direct. Without one of these ways of attracting attention, the chances to getting a budget-guaranteeing name are unfortunately slim.
Directors, few of whom actually write the screenplays they make (the Coen Brothers et al notwithstanding), are always looking for good material, as is everyone else in the movie business. The ability to get a screenplay to a director, as in every case, is based more on personal relationships than the merits of the project, and without some connection or relationship to a director, this element too becomes difficult to attach in advance of guaranteed funding.
A carefully thought out and calibrated game plan is essential in navigating the pitfalls of production financing. A sales agent or producer’s rep (a consulting company that can help a filmmaker get financing and distribution, usually via festival exposure and subsequent sales) can aid enormously in this process. The cost can be a healthy percentage and initial creative control, if the process is successful.
Most filmmakers begin by forming a limited liability corporation – sometimes in the state or province where there are tax advantages, which there frequently are these days. But engaging the advice of an accountant is a good idea since there are other types of corporations, such as a “C corp”, which may actually be more beneficial to the given situations. But regardless, setting up a company gives investors a way to put in money without exposing themselves to broader financial risk.
A prospectus for investors is then prepared that outlines the story development, production, distribution and marketing plans for the project. A budget that takes all these considerations into account should be prepared and accompany the prospectus. Numerous templates of these abound on independent film websites such as Indiewire.
One of the few realistic promises that can be made in attracting investors to a film project is festival exposure. A decently-made independent film with some cast value should be able to get into at least some festivals, and the glory of seeing the film they financed get a U.S. premiere at a regional film festival can make all the difference in the world to some investors.
The frenzied festival marketplace that takes place at a handful of crucial festivals, principally Cannes, Berlin, Toronto, Sundance and Tribeca, also represents the best hope of distribution for most independent films, which otherwise languish in obscurity. Online outlets such as Netflix and Amazon have recently brought new life to festivals, improving the odds of getting distribution.
The Bottom Line
There are many more sellers than buyers, a fact that does not seem to discourage filmmakers from continually attempting to get their projects financed and made. All the financing that goes into independent and studio production, both fiction and non-fiction, American and international, is coming from somewhere, and the enterprising producer does his or her best to get to that money.
Other decisions have to be made, either from the outset or later on in the long and winding road that the filmmakers hope leads to production. Single source or multiple source financing? Do you sell all rights, or just domestic (the United States and Canada)? Can you make a direct to video deal, and still hope for a theatrical feature release?
Films will continue to get financed and new sources of capital and ego-driven financing continue to enter the marketplace. Scarcity of funding has historically been an issue in the filmed entertainment industry, and in this time of increased competition for the leisure-time dollar, fewer films that cost more will probably be made.
But the democratization of film equipment and the quickly-dropping prices of digital cameras and editing equipment mean that films can be made less expensively than ever. Because of the rapid success of YouTube and portable video, distribution possibilities are in a time of great expansion.
The smart investor steps forward in this time of flux, which is how the great Hollywood studios were formed to begin with. Investors and small businessmen such as Adolph Zukor saw the potential in a new medium, and staked their small fortunes on it. The result was companies like Paramount Pictures, and Zukor became the model for the pioneering Hollywood mogul.
Today’s moguls are former agents, managers and lawyers who answer to multinational entertainment conglomerates (GE, Sony, News Corporation, Disney).
Chance-taking is at a minimum, and usually only for Oscar prestige. Every financial risk is calculated in terms of potential theatrical, video on demand, digital download potential and merchandizing based on previous similar releases. These numbers tell the only story that matters, and to be a successful seller, the numbers have to add up in the plus column on the buyer’s ledger sheet.