Over the years of raising funds I have deciphered that there is a huge difference between getting money versus getting the right money to make movies.
Earlier in my career I successfully raised some of the wrong money, and as a sales agent I have seen many of the producers I represent battle the wrong investors.
Ideally you are able to raise money from investors who have two key characteristics:
1. They are qualified investors who understand the risk factors and can afford to lose their investment.
2. They are motivated to invest for the right reasons, all of which are above water and offer a clear benefit to them.
On numerous occasions I’ve seen investors represent that they understand the risks and can afford to tie up their money, then down the road circle back aggressively and negatively because they need the money back. This can create a massive headache for you as the producer, and can turn into a legal hassle that can affect the film’s release and any other investors involved.
This is why your investor contract needs to be vetted by an attorney and make the potential timeline and the risk factors extremely clear.
Choose Your Investor Wisely
I’ve witnessed and experienced investors whose financial sources are not transparent or above water as well.
Hollywood attracts a lot of nefarious individuals, as well as individuals who deal in cash businesses that need a method for washing money. This can be extremely precarious and endanger the film and other investors as well.
With both types of investors, you are also typically dealing with unreasonable people and expectations. Regardless of how up front you may have been with the pitch and strategy, having problematic investors can be as harrowing as having rogue filmmakers that you’re managing.
Vetting Your Investors
As the producer – the person assuming the majority if not all of the risk – you need to vet your investors to make sure that they are the right money.
Qualifying investors by knowing they are savvy, reasonable, and that their finances come from a transparent and straight forward source will eliminate any potential legal snags that can hold up your film’s release, ability to perform, and most importantly, assure you peace of mind. You will have so many challenges to overcome in the production and delivery of your film, the last thing you want is problems with the money, or annoying or even dangerous people with unreasonable expectations causing you legal headaches.
Also keep in mind that while you are vetting investors, investors are simultaneously vetting you.
Have a Solid Business Proposal is Crucial
You may have the ideal investor – someone reasonable, savvy and qualified – but if you under deliver based on a flawed or ignorant business proposal, you can also find yourself in trouble. Not every movie is successful. More independent films lose money than make money. But if the distribution strategy and projections are sound, and the risks are made extremely clear, then a savvy investor will commit without hesitancy.
As creatives who are passionate about getting our films funded and produced, it’s easier than you might think to fall in line with the wrong money and investor.
Desperation to get your film greenlit or trying to hit an over-ambitious deadline can easily land you in a precarious investor relationship.
Make Sure You Can Deliver
The best way to avoid this is to pad everything from the budget to the timeline to the expectation of return on investment. You want to make your project as appealing and investable as possible, but you also want to set the right expectations and ultimately over-deliver. If you’re able to accomplish that, then more likely than not your investors will be willing to roll the dice with you on future projects as well.
Much like vetting a director or sales agent or distributor, it’s equally important to vet your investors. Maintaining investor confidence will be a win one hundred per cent of the time. However, even if you deliver, but it’s to the wrong investor, you can still end up with a massive headache.
Deal With Investors Directly
Always be cognizant of who you are doing business with, especially if you’re dealing through a middle man instead of directly with the money. That’s another way you can avoid problems. To the best of your ability, deal with the money directly. Any real investor will want to deal with the source anyway. Make sure your investor has their own legal and accounting professionals, and are not relying on yours. Most of us producers and filmmakers are not lawyers or accountants, so it’s important to make sure that both sides enter the agreement with proper support and protection.
Associate with the right people, and never be afraid to walk away from the wrong money. Looking back on my career, there are several times I wish I had made different decisions about the people I partnered with.
In the end those experiences have made me a savvier producer, but learning the great lesson of walking away from the wrong money has definitely worked in my favor, and earned the respect of the right money and people.
If you’d like to learn more about how to create a killer business proposal and give your film the best shot at getting funding, consider joining in my free training, The Ultimate Film Financing Plan. In this training, I’ll share my Proven 9-Step strategy for building a compelling pitch deck that gets films financed. Click here to join.
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