This is not legal, investment, financial or career advice. I am not an expert on film financing, so please don’t assume it.
Nothing in this article should be construed as a solicitation or offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction. The information should not be construed as personal investment advice or financial planning advice. Please consult your accountant, and/or local and country laws before taking any action.
The information contained herein is for informational purposes only as a service to the public, and is not legal advice or a substitute for legal counsel. Please consult with your attorney before taking any action.
You are liable for your own actions and dealings. We are not responsible if something bad happens. If you’re not sure, or don’t agree, stop reading and don’t act on the information.
In Part Two we looked at how leverage helps you find an audience, which in turn will determine the budget you can afford to shoot with. In this final part we’ll look at real-world examples of how people have financed their films.
Before I get to it, though, I will make two distinctions and clarifications.
Difference between reach and influence
Just because you can reach a certain number of people doesn’t mean you can influence them. E.g., if Apple wanted each of their customers to pay $2.99 for nothing, they would get a less-than-%100 result. Even if they only targeted customers who have bought three or more Apple products in the last year, the result would still be less than a %100 response rate.
Nobody gets the whole pie. On the flip side, you can’t influence those whom you cannot reach.
The most popular way to solve this problem is to ignore it. A manufacturer will indeed send out messages to those it can reach, sometimes bifurcating the market (by demographics and profiling) to get better odds. It takes many years even for major corporations to better its odds. Even so, many factors ensure this knowledge doesn’t last forever. A disruptive technology, competitor, economic policy, global financial situation, etc., will wipe out years of research and experience.
Thankfully, for film, the window of opportunity, and the sales cycle, is pretty small. Only highly successful movies that have enriched the lives of its viewers remain in public memory years after its release. Filmmakers use this as an excuse to not look too far ahead – getting the damn movie in front an audience is pain enough.
As a budding filmmaker looking to finance a film, try to understand the difference between whom you can reach and whom you can influence.
Difference between making the movie and distributing it
One way to finance a film is by getting close friends or family to contribute to your movie. It is definitely the easiest way to get started, simply because these are the people in your immediate reach.
However, these are not the people you should reach, because they are not your audience (unless you and your friends or family put together $5,000 for a short that only you will enjoy in your living rooms). When I talk about reach, I am talking about reaching your audience. As I mentioned in Part Two, those who control the direct link to the audience controls distribution.
Therefore, even if there’s nothing wrong with friends or family paying to fulfill your desire to make a movie, you should understand that it is intrinsically a flawed business model. Even Spielberg commented on how tough it is to get movies financed these days. Now, everyone knows that Spielberg has enough money to make whatever movies he wants, and he also has years of goodwill and friendships he can draw upon. What he cannot do, is control distribution.
Here’s my honest advice: Do not make a film until you can control its distribution, and ensure it returns its investment (whoever’s it might be). It is the height of stupidity to think in terms of ‘raising finance’ and ‘getting money’ for your movie, without knowing who will be seeing it and how. Do not let the middlemen control your destiny, or you’ll end up like Spielberg or Welles or Kurosawa – so much respect, but no direct link to their audience.
The traditional models of financing
Let’s start with the examples. First, we’ll breeze through the traditional models of financing a film (source: Wikipedia), which are still valid. If you have access to these avenues of funding, there is nothing wrong with taking advantage of them.
These should definitely be utilized. It’s not easy to get your foot in the door and deal with bureaucracy, but you will be supporting the development of film in that region. Sometimes, governments grant financing or resources so you can show-off tourist destinations. You can see the catch, can’t you? There’s always a catch.
Tax incentives and shelters
These should also definitely be utilized. Why shouldn’t you take legitimate advantage of tax laws in your country or region? The catch is that you need good lawyers and accountants to do all the work, and there might be middlemen involved. You might lose a large chunk of your advantage to their bills.
Private equity and hedge funds
People put money into your movie, so they can get a tax-advantage. Or, people put money into your movie, because they believe in your movie. This second kind is nice to have, but as I’ve mentioned above, shouldn’t be utilized unless you have your distribution in place. They might fund you once, but rarely a second time. If you don’t want to build new relationships, that’s fine – just don’t go about destroying the ones that already exist.
Pre-sales or pickup deals
This is where you hop from one film market to another, selling your film territory by territory. In a pickup deal, you find financing for your film, make it, and then go begging to a studio or distribution god to buy your film outright. In the end, they’ll be known as the producers, and will own your movie.
Most ‘big budget’ low-budget indies ($1 to $40 million) aim for this pot of gold.
Get a major brand to show their stuff in your movie, at a price. The catch is, unless you have stars or a distribution in place that will target their market, there is slim chance they will even return your calls.
What is more likely, though, is the barter system. E.g., you showcase XYZ Game Parlor, and they let you shoot there for free; or you need a sculpture-prop for a movie, and the artist allows you to use his/her’s artwork in exchange for some publicity. Barters happen at all levels, so you should definitely look for such opportunities, except for one caveat – never over-represent your movie or fill someone’s head with false promises. In fact, you might be better off by promising low (which is hardly anything) and delivering high (if you’re so lucky).
Here’s my take on these traditional methods:
I’ve tried most of them personally, and though I know of many instances where people use them everyday to fund and get their movies made, I will never recommend them. To become good at finding finance through these methods, you’ll need years of experience and lots of influence behind you. Do you really have that right now? If not, you’ll need to invest time and money into acquiring these ‘connections’.
Hey, why not spend that time and money in building relationships with your audience? Why waste your breath on the middlemen?
I’m not going into details here, because there are endless articles on this. Crowd-funding isn’t the same game in every country. There are too many variables in law and land that make this an exercise in complexity.
Let me give you two examples of successful crowd-funded movies that I have personally seen happen from start to finish (one is completed and the sequel has been ‘funded’, the other is yet to begin).
In the annals of crowd-funding history, Iron Sky will be known as the movie that did the impossible. Not only did they start from scratch, but they also managed to go way beyond the crowd-funding model, find distribution, release their movie worldwide, and find funding for pre-production of the sequel.
They have probably used every method of financing known to man. They have elevated crowd-funding to an art form.
Here’s their original teaser that shocked everyone (me too) in 2008:
And here’s the official theatrical trailer released in 2012:
I do want to point out that it was 18 months of hard work that enabled my successful 38-day campaign. “Ten years to an overnight success,” as the saying goes – Ryan Koo, nofilmschool.com, manchildfilm.com
Ryan Koo has documented his success (raising $115,000) in these extremely inspiring and helpful articles:
He achieved his goals two years ago, but the movie hasn’t been made yet. Here’s an article on why he is taking it slow but steadily, and here’s a video Q&A with the man himself:
What’s common between these two methods? If you look at how much time it took them to build an audience prior to launching their campaigns, you’ll see that both of them took about 2 years.
So, it’s your call. Can you spend two or more years building your audience from scratch, with the ability to directly connect with them? No middlemen, just you and your fans – they influence you, and you influence them.
Building your own audience
The next way to build an audience is via Youtube, Vimeo, etc. Some are not as lucky or talented as Fede Alvarez, who went from this:
These avenues might seem like great opportunities, and they are. They should be exploited for every last view. But –
These are middlemen too. It is relatively easy for Google or Vimeo to pull the plug on your video or channel without warning. Furthermore, you must commit to these channels and their ways of working. The worst part is, let me repeat one last time – you don’t have direct links to your audience. You think you do (because there’s a comment section at the end), but if your video gets pulled, it’s all over.
Look, I’m not putting any of these avenues down. What I’m saying is: try to control distribution as much as possible. You must play it safe and not depend entirely on one platform. Always assume the worst, and you will never be caught with your pants down.
The only people who really matter are your audience. Everything else is just an expedient necessity. Don’t give these middlemen anything more than what they are prepared to give you. Leave your best for your audience. Only they will appreciate your efforts.
The toughest way to finance a film
Ha! There’s one more way to finance a film, and that’s through earning your money by selling your skills to an employer or business (even your own). I worked hard for two years to earn the budget for The Impossible Murder, and when it failed, it was roughly around the time that Iron Sky became a success.
This taught me the one invaluable lesson I’ve been harping about in these three parts – build an audience, and the money will come – continually.
Don’t take this continual money for granted, though. I won’t go into that here, but I’ll leave you with this sobering quote:
Indeed, I am one of those born clever enough at gaining a fortune, but incapable of keeping one; for the qualities and energy which lead a man to accept the first, are often the very causes of his ruin in the latter case – from Barry Lyndon.