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The Context of Innovative Film Finance
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So What Does All This Mean For The Independent Moviemaker?
When talking to people about investing in your film, or what everyone knows is likely a very dumb investment, you’ve got to understand the context of film investment and the other investment opportunities afforded these investors. Be smart and know how to put together the right investment presentation that will give you the very best chance to succeed. The right presentation, for one, requires not just an understanding of risk and reward but also an understanding of the lessons learned regarding risk diversification—namely, that it can be “less” risky to raise money for a slate of independent films than it could be for one film. Yet, how hard is it to raise money for even one film? Well, it took the Coen brothers three long years to find the $250,000 it took to make Blood Simple—and it took more than 40 investors to raise it. The reality of anything on the level of a “true” independent film with a possibility to be sold is slim, simply because production values are not likely to be competitive in the marketplace. So manage your expectations and those of your investors, because any hopes of another The Blair Witch Project or El Mariachi will have to rest on the notion that you are trying to make a phenomenon, not a film.
Many dollars are spent by distributors to increase the production values of independent films to release level, and how many totally unknown independent films are there for every Blair Witch or El Mariachi released into the market? In today’s world it’s likely going to take you close to $1 million to give you the ability to put together a team of professionals both in front of and behind your camera to make and market a feature film with the chance at distribution sales to make financing a film more plausible, although not necessarily more easy.
There are other hurdles too, like dealing with the age-old question of “What happens to an investor’s money if you do not finish the movie?” Completion bonds are another discussion, but it’s safe to say it is one under the realm of risk diversification, making them an essential consideration for any moviemaker looking to make a serious independent film.
Raising private financing for an independent film presents enormous challenges but by all means, not insurmountable ones. There are many artists who are meeting these challenges every day—including many who lack the storytelling and moviemaking skills to fully realize the fruits of their labor. It’s these skills, together with an understanding of the context of film investment, that make the art of film finance all the more “scientific” to defy reason and continue to attract either smart or dumb money to the business. In the end, it will be the most imaginative and compelling stories that will attract capital and inspire moviemakers to develop the most innovative of ways to secure it.
Nelson Gayton is the managing director of The Wharton Media & Entertainment Initiative, a global “think tank” for knowledge development in the media and entertainment industries. In this role, he manages all industry relationships for the school, including the development of an experiential and interdisciplinary curriculum in partnership with industry sponsors. Gayton also continues to serve as a general partner for Crayon Ventures, a venture management firm with interests in entertainment, technology and education. He remains a frequent speaker, panelist and jury member at film conferences, festivals and universities, including UCLA and NYU.
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COMMENTS | POST A COMMENT 
- Comment by Flood Damage on 12/02/08 at 9:38 am
My 18 year old son is in film school right now. I wanted him to follow his dreams, but the thought of him having a viable career concerns me. I know he is talented and smart, but producing quality films and finding investors will be tough.
- Comment by Mortgage Advisor on 12/17/08 at 11:29 am
Its even harder to raise finance now we have had the world credit crunch. Creativity will always be curtailed by the cold world of business and finance. Good luck with the porject
- Comment by yuri rutman on 1/13/09 at 2:41 pm
With hedge funds and senior debt vanishing, more film makers will either have to rely on Robert Rodriguez-esue budget films (ala El Mariachi) or use CPPI and Section 181 benefits for larger private equity backers
- Comment by Council Mortgage on 8/13/09 at 2:34 am
Good luck with raising the finance.
- Comment by rentenversicherung on 12/02/09 at 7:24 am
Perhaps the city pension fund board came to the conclusion that the only way that they could make this work was to invest in risky investments. It probably would not have worked any other way. So basically they rolled the dice and are hoping that they win. However there is a much bigger chance that they will loose. I don’t think it is ethical since it is risky but business is business.
- Comment by Okey oyunu on 5/12/11 at 7:10 am
Okey dünyanın en zevkli oyunlarından birisidir. On binlerce üyenin bir arada buluduğu okey oyunu dünyasına katılmak, artık çok kolay. Ücretsiz olarak okey oyunu oynayabileceğiniz mükemmel bir site sizleri bekliyor. Sizde hemen http://www.okey-oyunu.com adresinden oyunu indirebilir ve muhteşem okey oyunu dünyasına katılabilirsiniz. Online olarak dünyanın her bölgesinden insanlar ile kıyasıya mücadele içerisine girerek, kendinizi ispat edebilirsiniz.
- Comment by AllanBrouwer on 6/30/11 at 8:24 am
Making a film is indeed a big investment but I always thought that it is a constructive thing to do since I consider it art. It takes a lot of time, money and knowledge on how to invest your financial resources. I have read some tips about making these kinds of investments, I have become very interested in it and found information on Online Forex Broker and other websites.
- Comment by SinCityFinancier on 7/19/11 at 11:45 am
It’s not that there is no money out there but the rules are shifting in favor of the P/E and other funding sources after taking a beating from sloppy “Hollywood accounting” practices. We list 400 finance topics/sources on http://SinCityFinancier.posterous.com
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This story was published in the Guide to Making Movies 2007 MovieMaker Magazine. The headline was:
Dumb and Dumber/The Context of Innovative Film Finance
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