Learn Movie Financing from a Former Netflix Exec

Look, most of us in film are in it for the creative side. Unfortunately, filmmaking involves a lot of business and marketing, too, which (yuck) means numbers and finance.

That's why it's good to get familiar with the business side and learn from experts like Zac Reeder, who knows what it takes to get a film financed.

The Emmy-nominated producer and former Netflix executive recently broke down the realities of raising money for independent films in a Film Courage interview, offering a roadmap that scales from $100,000 projects to multi-million dollar productions.

Check out the interview and takeaways below.

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Starting at $100,000

At the lowest budget level—around $100,000—filmmakers are primarily on their own.

"You are typically not involving state tax credits or location-based incentives," Reeder said. "So you're probably doing that mostly on just straight equity."

This means cobbling together investments from friends and family, maybe $5,000 or $10,000 at a time, without the leverage that comes with bigger budgets.

This is usually the level where crowdfunding is the focus. You ask directly for the money and make your project at a lower budget without involving outside firms.

Getting a Tax Credit

The game changes once you hit the threshold for state tax credits, which typically start around $200,000 to $300,000 in minimum spend.

"If you know you can make a $300,000 film and get back $100,000 in estate tax credit, you've already got a third of your budget raised," Reeder said. For investors, this creates a safety net—they know they'll get 20 or 30 percent of their money back, guaranteed, which "lessens their risk."

What's the turnaround time on tax credits?

"It depends on the state. It's kind of long. I think it's anywhere from a year to almost two years, I think in some cases," Reeder said.

But filmmakers who need the money upfront can monetize these credits through specialized banks that will discount them and provide immediate cash, he said.

Each state offers different incentive structures and percentages, so it's worth researching which best fits your project. Resources like the Wrapbook Production Incentive Center and FilmLocal's state-by-state guide can help you compare current programs and requirements.

The Rule of Thirds at $5 Million

However, a bigger shift occurs at around $5 million and above, where Reeder describes a "rule of thirds" that governs financing:

• Tax credits
• Pre-sales and gap financing
• Equity investments

"A third of your budget would be covered by tax credits, and then a third of it would be typically done by pre-sales and gap financing from various debt lenders," he said.

The final third comes from equity investment, usually from more sophisticated sources like venture capital companies or wealthy individuals investing in films.

In film financing, "pre-sales" means selling the distribution rights to your film in different territories before the movie is actually made.

So imagine you have a script and some big-name actors attached. A sales agent can approach distributors in Germany, Japan, Australia, wherever, and sell them the rights to distribute your film in their territories. These distributors pay you upfront based on their confidence that the film will perform well in their market.

So if a German distributor thinks your film will do well in Germany, they might pay you $500,000 for German distribution rights before you've shot anything. You can then use that money to help finance the production.

The challenge, as Reeder mentions, is that pre-sales have gotten "harder and harder" to secure.

Gap financing in film is a funding strategy where filmmakers secure a loan to cover the difference between the production budget and funds from other sources, like pre-sales, tax incentives, and grants. It's riskier, which is why gap financiers charge higher fees and interest rates.

Advice to First-time Filmmakers

The challenge for first-time filmmakers is getting the talent that makes pre-sales possible.

"A lot of the names take into account the director that they're working with," Reeder said. "And so a lot of them want to work with known directors, ones that they've admired their work before."

For newcomers without a track record, the script becomes everything. Many first-time directors write personal letters to actors explaining why they're right for the role, though Reeder acknowledges these often get stopped by agents and managers who act as gatekeepers.

What's his advice?

"I think if you're an unknown director, it helps to get a known producer who has the connections to talent or to at least agents and managers where you can get their attention," he said.

Organizations like Film Independent offer programs specifically designed to help emerging producers build these industry connections.

Let us know any other film financing advice you have.