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Marlett & Me: Film Finance IV—Gin-n-Tonics and Songs Your Cousin Sings

Marlett & Me: Film Finance IV—Gin-n-Tonics and Songs Your Cousin Sings

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Marlett & Me, this column/blog, is just getting started, so I am sure we’ll revisit film finance many times. But for now we’re wrapping up this fishing-analogized series on raising funds for your film. Over the past few weeks, we’ve lightly discussed a range of things on the subject: What kind of fish (investor) you should be looking for, where to find them and what type of lure (return on investment) you should consider using. Today we finish, still with the fishing, talking about how to use your rod, throw your line, make your presentation… you get the point. (Okay, stop giggling about me saying “use your rod.”)

The control of the fishing rod is extremely dependent on the type and location of the fish, and the lure being used. In other words, you don’t just chuck your line out when fly-fishing, you flick it just so to work in concert with the fly lure. It takes finesse. But you also must be consistent and patient and disciplined… especially in fly-fishing. For us that means being professional and honest. There are so many things we can talk about on the subject of presentation, so let’s just stick to those two for this entry: Professionalism and Honesty.



 

BE A FRIGGIN’ PROFESSIONAL!

Professionalism doesn’t mean boring. In fact, overworked, over-embellished crap is as boring as, well, as black-n-white misspelled crap. Think of it this way: Most of what makes a gin-n-tonic great is not the gin or the tonic… it’s the temp outside and just the right squeeze of lime. That means you need to stand out, sure, but for the right reasons: Because you are creative and excited about your very professional presentation, and you understand the environment—not because you’re a flake who’s trying to dazzle with bullshit. Extra limes ruin it. One more thing: Keep it digital. It’s cheaper, interactive and gives you the ability to make changes on the fly. Not talking about the drink of course… your plan. Focus, people!

Have Only One Gizmo

For more than 15 years I practiced law in the area of mergers and acquisitions… which is basically “deal-making.” Though I mostly represented the ones trying to raise the money or sell the business, I often repped the investor/buyer, too. When you’ve seen a jillion business plans (digital and print), you learn one key rule: You can only have one cool, creative gizmo. By “gizmo,” I mean graphics, themes, a giveaway. Don’t overkill them. But it is a balancing act and very difficult to tell you exactly what I mean. Have a cool graphic scheme, sure, but don’t have your cousin record a song about your film that plays when they click on your plan. (Yes, really, I saw one like that just recently.) Just as in your script you are allowed one MacGuffin; same too with this presentation. So take it easy!

The Three Keys: Numbers, Numbers, Numbers

Know the following, take it to heart: If you’re lucky, the investor will read the Executive Summary and click on your link to the financials—and that’s it. Oh, the middle part? The long part you struggled over? Sure, very important… but not nearly as much as the ES and the numbers. WhatchutalkinboutMarlett? What numbers are there to show for my movie?! Depends on what you are raising money for. If for a production company (like I am doing for BlueRun Productions), then those are company financials, way beyond the scope of this entry. But if for your one film, then you need your budget’s top sheet (with a link to the full budget), a summary of film comps and a spreadsheet showing how the money will flow in three performance scenarios: Minimum, expected and optimum. For all three, of course, the investor must be shown to be getting their money back, but their return on investment, or ROI, will vary (with varying degrees of J-Lo; see my last entry).

As I have said repeatedly in this financing series, I am NOT trying to write a comprehensive book here. Not by a long shot. So I am not going into the details of a business plan or private placement memorandum (PPM). Besides, now you’re talking about what I sometimes get paid to do. There are numerous good books on business plans out there. Read up.

The In-Person Pitch: Be Ready for the Curve Ball

In-person is always the best… wel,l usually. Your film is a work of passion and no one communicates that better than you. (At least that better be the case.) So talk to them in person if you can.  Even use Skype’s video connection if that’s your only alternative. Note: If in person, consider a printed version of your business plan… though I still prefer to show it on my laptop and keep it interactive, with just the key documents printed and spiral bound.

Constantly remember: This person you’re talking to is NOT a producer, NOT in the film biz and NOT fascinated with the details of story structure or the release date of RED’s Scarlet. So unless they ask about other stuff, keep that L.A. chat crap to yourself and your friends. (Don’t be offended. I am very guilty of it, too.) So, keep on the subject and continually touch base with money, money, money. All investors know the key to making money: Buy low, sell high. For you that means they want to hear how you’re going to manage the budget (buying low), and how you’re going to maximize the film’s income opportunities (selling high). Here you have to think outside the box and be current. Know all about alternative release opportunities, new distribution methods, locations with the best financing incentives and what they will mean for your film, etc. And by all means, have the answer to the following question: What about movie piracy? How can you be sure about these numbers, when the movie might get stolen and watched for free online? Touchy question… but if they’re good investors, they’ll ask.

BE AN HONEST BROKER

Quite simply, back up—or be prepared to back up—every number you present. For example, on our BlueRun Productions site, www.BlueRunProductions.com, you will see an investment page linked as “Join Team BlueRun.” There, you’ll see a graphic about how every major horse-themed film has made a profit. (I have copied it here below.) As we are making three horse-themed films back to back, this is a very powerful selling tool. But I am careful that those numbers are as accurate as I can find. (Different budget/revenue resources can vary for the same film, so do your research and be ready to defend it.) My first attempt at this chart implied that I meant profit to include the P&A (something I didn’t know for most of the films, so I had left it off.) Someone rightly jumped on me for it, and it made me look like a tool. So now you’ll see the caveat note at the bottom of the chart. Also note that I cited my sources.

So just be honest, even about what you don’t know. Perhaps even more so about what you don’t know. No one is expected to know everything. But being honest will set you apart from 80 percent of your competition, sadly enough (but true).

Another point from this chart: Include numbers that aren’t necessarily in your favor. Notice that I included Hidalgo. I didn’t want to. Touchstone Pictures let the budget go into orbit. I mean, come on, $100 million to film a horse running across a desert? But I did include it and so must you: Tell it like it is. Show them that you can handle the truth. To not do so is sloppy at best, and fraudulent otherwise—and in both cases leads to no investment.

Second, be reasonable about your film’s prognosis of success. When you want to talk about the dump truck backing up with money for the investor, be sure that is clearly in the optimal results column. In other words, when you’re high-hopin’, admit it! But DO DREAM BIG! Investors want to know there’s a tremendous upside possibility, regardless of how statistically remote. Planes flying to Vegas aren’t fueled by facts, or they’d never go. They’re fueled by dreams, man! Dreams! Don’t forget that. But call it what it is: The optimal result.

Be Flexible and Know When to Shut Up

This blog entry is a good example of two points I want to conclude with: Be flexible and know when to quit. Notice how the fishing analogy got stale, and really didn’t even work for this entry? Whatever. Just keep moving. When you feel that what you prepared to say isn’t working… be flexible. Make adjustments and keep going. It is much better to seem to have momentarily lost your train of thought than to plow on into a presentation that isn’t making sense just because that’s the only way you prepared for it. This is especially important if you’re planning to direct your film. Here is your in-the-room moment to show that you are good on your feet.

And finally, know when to shut up. Again this series of blog entries makes the point: I could go on and on here, but you only have patience for just so long of a read…. no matter how entertaining and riveting! Same with your presentation. Be sure you covered your points, but definitely leave them wanting more. It’s a performance. Get them where you want them, then…

Next time, back to my stuff: Juggling Films in Development while Hoping Not to Appear the Clown

David Marlett is a writer and director currently producing and directing the feature film, Of Kings & Cowboys. Marlett’s desire to direct and control his own work led him to create BlueRun Productions in 2007. He’s been acting for most of his life, and is also a non-practicing (“recovering”) attorney and CPA, with 20-plus years experience consulting and managing a wide assortment of companies in industries spanning from healthcare to entertainment. The Spring 2009 issue features his latest installment of his print column, Marlett & Me, with this sister blog on MovieMaker.com.

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