Monday, June 30, 2008

Dear Indie Producer

A follow-up question from Kat in Austin, Texas:

Dear Indie Producer,

How do you find financing?

Doggedly. Persistently. Tirelessly.

Oh, Readers, we'll be talking about this one A LOT. Forever.

The answer is, it depends. On about a billion factors. But, let's just start with a couple.

Do you anticipate a theatrical release for your film? Whether to aim for a theatrical release for your project is a whole subject in and of itself (there are many, many paths to audiences, and theatrical is WAY expensive and absurdly competitive). But, if so, it further depends on whether you're aiming for a Hollywood indie budget (and their notice/possible acquisition), or a truly outside-the-studios indie budget.

There's a big shakeout happening in Indiewood right now, with studio specialty divisions being shuttered or reabsorbed into the mother ships. In his LA Film Festival June 21, 2008 financing conference speech, The Film Department's Mark Gill offered that to be viable in the marketplace, an indie film's production budget needs to be in the $15-$50M range to stand a chance (more money equals more "name" elements, like actors, director, producer, and/or special effects). In other words, if you've only got $10M to work with, you're looking at sorry chances to recoup enough revenues for your efforts.

Isn't that just nutters?

On the other hand, if you're working outside of the studios, I've read that a $100,000 budget (not including distribution and marketing costs) is the sweet spot for a tiny indie film to possibly recoup its money. Even if your budget is merely $500,000, and you've shot a genre movie (horror, action, sex-comedy, urban), you're still facing a stiff challenge these days to sell your film to distributors and audiences. This info comes from an experienced international film sales rep I know who produced an indie horror feature late last year. Even with his knowledge of the markets and his contacts, by the time his nearly $600K horror film was completed, the market had finally reached its saturation point. Any way he looked at it, his film would likely lose money, given what it could sell for. He wished he'd made it for $250-$300K instead. And, this was his second outing as an indie producer.

ADDENDUM - checked my anecdote above with my friend and he replied, 'What you wrote about our movie was correct in terms of emotion, the numbers were just a little bit off. We spent $2.3 million, and would have been in great shape if we had spent something in the neighborhood of $1.2 (ish).'

So, finding financing depends upon what you anticipate your budget will be, that's a big thing.

For the sake of brevity in the rest of this posting, let's assume you'll be producing a tiny, truly indie project for $200,000. You know who your audience is (and don't say "everybody," because you're not aiming to make Shrek IV, are you?), and you know who will pay to see your movie. You have to have a grasp on the endgame of your production, before you raise a cent, before you shoot a frame/pixel. Since you've done your homework, while you're raising money for your project, you really should be raising at least $400,000, in order to support a small theatrical release yourself (or be able to pay a distributor a service fee to release it, plus provide all the marketing money for its ads, etc. yourself), and/or to pay the deliverable expenses of presenting the finished film to a distributor that acquires it.

So, $400,000 smackeroos.

Got a rich uncle? Got a trust fund?

If not (even if so!), make a list of all the family, friends, and family friends you can think of whom you believe might be game to invest in your film. Identify any grants, endowments, fellowships, etc. that you might qualify for and apply to with your project. Identify all the distributors that might be interested in your finished film, as well as any domestic and international film sales reps, too.

Be sure that you're working with an entertainment attorney who can help you frame your solicitation in proper legalese before asking anyone for money.

Briefly --

Make a spreadsheet of all your contacts and start calling them. Practice your pitch so you sound polished and confident and informed. Tell them you're seeking investors for your project. Ask them if they might consider making your minimum investment (determine this with your attorney), and if they'd like to review your business plan. Make a note in your spreadsheet what their response is. Whether they say 'yes' or 'no,' ask for referrals. Do they know anyone else who might be interested? Would they be comfortable with you mentioning their referral when you contact that new person? Be prepared for 99 out of 100 people to say 'no.'

Set a deadline for yourself to meet your financing goal -- this won't be an open-ended process. You'll have to state in your investment memorandum (among the necessary legalese) what the time frame of your solicitation will be, and what effect on the project's future there'll be if a certain minimum number of funds are not raised within that time frame.

Do as much homework as you can about each contact before contacting him, her, or them. Keep in mind, "what's in it for them?" when you're communicating with them.

Don't give up. Okay, give up for a day. Go have a mocha. Then go back to not giving up.

There's so much more to say about this topic, but I'm going to leave this post at that.

Like I said, we'll talk financing, money, legalese, and more in future postings!

Thanks for the questions, Kat!

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