September 18, 2013

Film Financing CliffsNotes: Top Tips from Industry Investors & Financiers at IFP Film Week

IFP Film Week has brought us a roundup of investors and financiers who spoke candidly about best practices for wooing the moolah towards low-budget feature films (<$1 million). Carol Ann Shine, Co-Founder of The Blackhouse Foundation, James Janowitz, Senior Partner at Pryor Cashman LLP, James Belfer, CEO and Managing Director of the Dogfish Accelerator, Michael Hansen, Managing Director of Three Point Capital, and Amy Hobby, Producer and "Instigator" of Tangerine Entertainment gave us their tips for attracting investors and keeping them satisfied long after the returns come rolling in. Their best advice after the jump.

Below are my favorite tips paraphrased from each expert's comments during the discussion:

carolannshine blackhouseCarol Ann Shine, Co-Founder of The Blackhouse Foundation:

  • Know about 181 IRS Tax laws (NFS coverage here).
  • Mitigate the loss of investors' money and they will thank you for it and return to you again after the first film is finished.
  • Pre-qualify for tax credits; tax incentives are supremely important to investors.
  • Make sure that your entire production team is aligned regarding what they want from investors.  Why are investors getting involved?  What are their expectations?
  • You have to be the foremost champion for your project.  You'll meet a lot of crazy investors, and you'll learn that "a red flag is a red flag is a red flag."

Michael hansen 3pointcapital

Michael Hansen: Managing Director, Three Point Capital:

  • Build investor base and use it over and over again. Incompetence may sell the first time, but definitely not the second time.
  • Find a partner to work with who has a different skill set. If you have little experience, attach a producer who has made a lot of films.
  • On Three Point Capital: When evaluating, we look at the production team more than we look at the creative content. Our projects range from $1 million on the low-end, to $15-20 million on the high-end. Most films fall in $3-8 million range. We lend against tax credits in the US and internationally, sales contracts, and expected sales contracts.

Amy Hobby: Producer, Tangerine Entertainment

amyhobby tangerine

  • When pitching, show us the pre-awareness relevant to your work. What will audiences recognize? What audience have you already established?
  • Agree to terms with an investor early on, which you can then put into a long-form contract.
  • Get your lawyers invested in the outcome of their work, and they will do better work. Know the law so you can ask the right questions.
  • On Tangerine: Last year, only 9% of films released were directed by women. Tangerine Entertainment is for women directors, to help women invest in other women. The Juice fund will work with 10 film festivals, giving out $1000 awards to women directors.
  • Tangerine is looking for that lightbulb moment when we see the entire trajectory of the film. I have to  understand how the life of the project will play out and get money back for investors.

James Belfer: CEO and Managing Director, Dogfish Accelerator:

dogfish accelerator

  • Show and prove the relevancy of your film. Track other films that are similar. Make timely films.
  • Build social interest, and produce the 'yes' because of your knowledge, the content of what you're producing, and the public's awareness of you as a filmmaker.
  • Investors should develop their own term sheets -- take on the legal costs in order to get the benefits. It happens far too often that the under-budgeted legal line item explodes. There is lots of liability in a structure with a single legal team -- investors should bring their own lawyers, and so should you.
  • On Dogfish: We're a film business development program that makes small equity investments. Lower budgets equate to lower exposure to risk. Producers get seed financing, perks and resources, and participate in a pitch day with a larger network of investors and industry professionals. Eight teams of producers were accepted this year. It's a mix of traditional film production companies and new media play.

James Janowitz, Senior Partner, Pryor Cashman LLP (Moderator):

james janowitz

  • Equity is the most important financing for films with budgets under a million dollars.
  • Narrow and identify the risk for equity investors.
  • Foreign sales agents and buyers are often interested in names over content.
  • When pitching to an equity investor, it's important to show typical return for your type of movie. Establish this territory by territory.
  • Show the potential for rebates, theatrical, digital release, DVDs, etc.

We'll get the panel's official video to you as soon as IFP releases it in the coming weeks. In the meantime, here's the Blackhouse Foundation Reel:

...and a crash course on Dogfish Accelerator:

Are these tips helpful? Any more advice for those seeking investments in new projects?

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Your Comment

5 Comments

Jon Kilik had a long piece about the state of the film industry (that is considerably contrary to Spielberg, Lucas, Soderbergh, et al) on Deadline.com.
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http://www.deadline.com/2013/09/in-ifc-market-keynote-producer-jon-kilik...

September 18, 2013 at 5:04PM, Edited September 4, 11:21AM

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DLD

Well the Dogfish Accelerator looked great . . . oh hang on, deadline passed months ago. Usually NFS is up to date but this one got through. Still interesting though.

September 18, 2013 at 6:48PM, Edited September 4, 11:21AM

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JPS

September 19, 2013 at 12:43AM, Edited September 4, 11:21AM

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Man, I wish there were investors who were more altruistic instead of needing all their money back, especially soon

September 19, 2013 at 7:32PM, Edited September 4, 11:21AM

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Cal

There seems to be a delicate balance between creativity and the business/control mechanisms, especially if you are the kindred spirit type more interested in making a film than being bogged down in business meetings instead. An interesting article.

September 24, 2013 at 12:52PM, Edited September 4, 11:21AM

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Saied