1. What’s in it for me, the film investor?
You better be damn sure you know exactly what the ‘deal’ is for the investors. By that I mean what slice of the cake are they going to receive for the cash they put into the film. Remember, there are several different ways to carve up the spoils. Choose the one that’s the best for your project. It will mean speaking to your accountant and lawyer plus any financial adviser you might have on board. My advice would be to keep it really simple. Nearly ten years ago I was raising money for a project and chose to do it under a plc structure, which was painfully time consuming and expensive to organize. And you know what? It was really a simple vanity project that has cost me dearly. And all because I couldn’t answer the simple question: “What’s in it for me?”
2. How much am I going to make from my film investment?
Beware of this question, and remember that it is far better to over-promise and under deliver. Rather than answering this with regards to profit, why not turn this question on its head and ask a question straight back:
3. How much is this project de-risked?
There are 3 different ways you can de-risk your project. a. New Mexico Film Incentive guarantees 25% refund of total production spend. b. The power of genre. This is a faith-based family adventure film. This category is very low-risk. c. Distribution. Aggregators. All of these strategies can be combined.
4. How are you spending my money?
We have a detailed business plan and schedule worked out. This is often the first piece of paper an investor will ask for. Of course, the first sheet is the one sheet or top sheet (summary) with all the supporting figures behind. Use industry standard budgets – don’t start inventing your own. Even if your investor has never seen a film budget, the rest of your crew hopefully will have.
5. What is your film really about?
If you have got an investor to call you, they aren’t going to be asking you what your film is about, are they? They will call you when they already know what your film is about, and then will want to jump on the bandwagon. Here is when you really need to be able to hone your pitching skills, and know how to get the real message of your film across.
6. Is this film going to play in movie theaters?
It’s far better to be realistic here and admit that the chances of theatrical distribution are really slim unless you have an incredible movie with tons of marketing and PR behind it. Relate to your investors how film festivals (like Raindance) are the new theatrical platforms, and how a series of festival screenings can really help stoke the fires of PR and enhance the other distribution windows.
7. What is the sales and marketing strategy?
This is a tricky one, because the answer you give is going to depend on the basic film knowledge your investor has. It’s probably good to prepare a basic tutorial explaining the different windows, as well as the likely sales territories for your film. If you are lucky enough to get a sales agent on board, they likely will give you a sales estimate of the value of your film before you start filming. This is another way to de-risk your film to your investor.
8. What are the perks you are offering a film investor?
Investor perks are the non-finance related perks: set visits, small acting roles, and tickets to the premiers are typical investor perks. Be very aware that every time you let an investor on set or near the production office, it’s going to cost you heaps of time. On the other hand, your investors will bring skills to the project that perhaps you don’t have, making you both better off.
9. How can I be sure you will give me my share of the proceeds?
This is quite a common concern. If you don’t have the right answer, you won’t be able to close a deal. It’s not that the film investor mistrusts you – it’s just that they don’t want to have to chase you for their money. The sensible thing to do is to hire a film collection agent – a specialist accountancy firm that collects the money on the film’s behalf, and then distributes it according to the terms of the investor’s agreements. A subset of this is paranoia that another investor is getting a better deal. It’s best to keep all these deals the same, or else you will go crazy trying to keep everything straight. Protection of Revenues We will have a “Collection Account Manager” (CAM) in place. The benefit of a CAM is that none of the parties with a financial interest in the film controls the receipt, allocation and distribution of revenues as this is carried out by the neutral, third party CAM. The funds in the collection account do not belong to the CAM and are not part of the CAM’s assets. This is arranged in the collection account management agreement (“CAMA”), if and where needed together with security documentation entered into with the bank at which the collection account is opened. This way the assets – the revenues belonging to the beneficiaries of the film – are in a save place and protected from the usual financial risks in the audiovisual industry (like, for example, bankruptcy whereby the revenues received directly by a bankrupt party would be part of such party’s assets). Avoidance of conflicts The funds received in the collection account are allocated and distributed by the CAM in accordance with the recoupment schedule which is included in the CAMA. This agreement is typically signed by all parties with a major financial interest in the revenues of the film. By having all the parties signing of on one single agreement that supersedes all other agreements and deal terms (like the sales agency agreement, finance agreements and talent agreements) with respect to the allocation and distribution of revenues, it reduces or eliminates the risk of disagreement and conflict between the parties. Transparency The monthly, quarterly or yearly statements issued by the CAM typically include periodic and accumulative overviews of allocation of revenues as per the recoupment schedule and a gross receipts report, showing all sales made per territory and distributor, and minimum guarantees payable in connection therewith, against the revenues received in the collection account. This creates transparency with respect to the allocation and distribution of the revenues which is vital to keep all beneficiaries of the film properly informed about payment or recoupment of their investments, fees, expenses and other entitlements payable from the revenues. Outsourcing of administrative work Through clear and periodic reporting a complete administration of the film’s sales, exploitation and revenue management is created which can amongst others be used by the parties for accounting and audit purposes. Often the parties involved in the film project do not have the back office to administer this and by outsourcing this task to the CAM there is less of an administrative burden for the parties. Today there are many independent film productions using a collection account. There are several benefits of having a collection account in place, of which the most important ones are: protection of revenues, avoidance of conflicts, transparency and outsourcing of administrative work.
10. What is your social media profile?
The cool thing about social media is that you can keep in touch with your investors. They can also follow the production through your various blogs, tweets, Facebook messages, and video updates. Far from being the proverbial pain in the backside, it’s a great way to build your social media. Investors are likely to be telling their mates about their investment, and now you will get lots of new followers.
11. Can we get product placement?
One of the first things a brand considers for product placement is: “what is the marketing budget for the film?” If you have no marketing budget or hot new marketing strategy, then there is virtually no chance of getting cash money from a brand. You will, however, have more luck getting product. I once secured Kettle Chips and was quite pleased with myself. The delivery lorry showed up with 7,000 sample bags, which filled nearly half the office. I had badly underestimated the amount of room they would take up.
12. Can my daughter direct?
Lots of parents try to help their kids by buying their way in. Other variations are: “Can my girlfriend act in your film?” Unfortunately, it rarely works. When this happens to you, remember that no amount of cash investment in your film will compensate you for loss of creative control. The trick is to firmly say ‘no’ without blowing them off, and also letting them know that there are other more appropriate learning experiences for their off-spring.
13. What else have you done?
Hopefully you can point to a series of theater work, shorts, web series, or other related award-winning work that your investor will be satisfied with. What if you haven’t done any previous work? Investors in films want to make sure that first and foremost, they won’t look like an idiot in backing a total loser. Hopefully your personality is so strong and enthusiastic that your investor will overlook your lack of pedigree and be swept away with your vision. Have you been meeting with investors? What questions have they been asking you? Please share these questions as well as your thoughts and opinions in the comments box below.