Selling a movie to investors is basically all about “selling confidence”. The investor needs to be confident with you and trust your knowledge and track record as a producer – and the project you’re pitching. Trust that you will deliver what you promise, on time and within budget – and that it all will be as profitable as you say. This process of building confidence is all about reaching for that moment where the investor finds him comfortable with trusting you with his money, with investing in your project – in you! This takes time and the process of financing a movie usually takes anything from eight months to years. However, there are some things that you can incorporate in to your business plan that will make the process somewhat easier.
Team up with a more established producer
The first and most obvious is to team up with a more established producer and a more established production company. This is of course most appealing to new producers that might not have a solid track record which speaks in their favor. More experienced producers can in these cases act as executive producers and work as advisers to the producer. This usually also means that the producers gets access to much better networks which might leverage the project on all levels. This kind of collaborations usually strengthens the investors confidences in the project, not only because more experienced people are tied to the project – but also because this signals that the producer is aware of his or her limitations and weaknesses and has done something about them, by asking for help from more those with more experience.
Use an experienced line producer
Another big concern that many investors have is cost control. No one wants to invest money in a project and then see the budget escalate and risking a collapse. This concern can be eased off by engaging a line producer, who has the qualifying experience to handle large scale productions and bring them in at cost and time.
Completion bond
One of the biggest concerns among investors usually is to pay put any money in advance. Before the movie is completed or even shot. This fear can be reduced by arranging with a completion bond – so the investor doesn’t bear the risk should the budget escalate, the production fall behind schedule – or anything else that might jeopardize the completion of the picture. You can further decrease the investors’ worries by allowing them to deposit their investment in a secure escrow account that is handled by an independent third party that will not make out the payment until the picture has been delivered and passed quality control, as agreed upon in the “list of delivery”. However, the producer then must cash flow the money during production – which might not always be desirable – but sometimes necessary.
Collection
Something that investors with previous experience with film investments most likely will focus on is what’s called “collection”, which basically means how the revenues from sales and distribution are managed. What account is used for billing? Who have access to this account? And who gets copies of sales agreements, and so on. One way to handle this is to have the distributor set up a “collection account” that both the producer and can see, and then have all revenues go into this account (instead of going through the distributors or sales agents own account) – then you could also agree to have all expenses withdrawn from this account pre-approved (like P&A costs). This makes everything more transparent and the producer will easier discover if any costs not related to this picture are being withdrawn from the account. If the producer would like to take this even one step further, there are companies like Fintage House and Freeway Entertainment that specializes in Collection Account Management (CAM) – and setting up a CAM-agreement might be the fastest way to build a trustworthy collection.
Management
One important aspect of film making, that often is lost in the creative process, is how the movie will be managed and operated? Who handles accounting, disbursements, payrolls and taxes? Where will all legal documents be stored and what insurance are needed? These are important questions in all businesses – and experienced investors are cautious with their money, but need to make quick decisions – and a projects management can be a quick way to reveal which ones are the real entrepreneurs and which ones are the “dreamers”. To have a well thought out and working management and operation agreement is therefore a very important step towards making the investor feel confident with investing in you and your project.
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