Friday, September 25, 2009

Where do you find money?

One of the questions asked most, is "where do you look for money?". 

The easiest answer is "find someone who has lots".

The harder answer is to look everywhere you possibly can. 

This post is probably the most frustrating and yet necessary topic.  Finding money.  It's so tough that it will spill over into two posts as it's pretty much how anyone can find money for their movie. When I say anyone, I mean anyone who's determined to spend weeks and months doing this, compiling lists, emailing dozens of people (I am ever so thankful for email and cut/paste which makes this job so much easier than calling by phone or writing individual letters. 

While I use mostly real names in my posts, probably 95% are actual names, I won't do it when it comes to my investors as I respect their privacy as would you.  But I will tell you what they are, and what they do, because that is not really anything new.  They can be the people next door, or relatives, or the local guy who owns 2 Subway franchises, or your accountant. 

All of them could surprise you when you say you're looking for money for a movie.  Our movie is budgeted at $902,000 and generally these types of investors tend to be more uncommon in that many are from outside the film industry.  But they are there, regardless.

I start with 10 questions;
  1. Who has money they want to invest?
  2. Who wants to invest in a movie?
  3.  Who do I know that has money?
  4.  Who do I know who can refer me to somebody who has money?
  5.  Who else has money they want to invest... into a movie?
  6. How can I get to them?
  7.  Can they refer me to their friends who have money?
  8.  What tax credits and incentives are available.
  9.  What do I need to get people to want to give me money?
  10. At what point do I start sounding like a maniac?
Now let's look at each of these a little closer.

Who has money to invest? Well, people who have a lot of it. You're saying, yeah, but I don't know a lot of rich people.  

The easiest money to get, of course, is family money.  Many of the indie films made for less than $2 million are funded by mom and dad and uncle and grandfather.  Yes, $2 million movies have been funded by family. Not my family, that's for sure.  My mom offered $500 but I couldn't take it. 

Then there's private investors, usually businessmen, like accountants, lawyers, dentists, doctors, restaurant owners, shopping mall magnates, car dealers,  churches, political groups,  oilmen and women, and just about anybody else.  One woman read every magazine she could find where there were stories of successful women. Then she wrote to each one of them, more than a hundred or so.  And she found $600,000 to make her movie.

Now even I wouldn't have thought of that.  And don't laugh, all of the people I mention above have invested in movies. 

But why?

This is where it gets interesting.  Financing a movie outside the studio system is harder then hell, but at the same time, is a lot easier in some ways.  Mainly that these investors pretty much let you do what you want with the artistic side of the movie. You even get the much obsessed "final cut".  In fact you probably will get to edit your movie how you see it.  Because they don't really know how to edit films and also they have given you their trust and faith in that you will make the movie you pitched to them.

That still doesn't answer the question why they would invest in your movie - or mine.  When I made my little horror film Ghostkeeper in 1980, I had 6 investors, mostly oilmen and all individuals whose abilities to make money were outstanding. They each wrote a check for around $100,000, giving us about $650,000 in 1980 money (maybe about $1.2 mil today). And the checks were just like mine, pictures of bears or mountains or lakes on them. 

Okay, the big deal here is that they had a 100% tax shelter credit, meaning that they could write it off their taxes.  But there were better investments and besides, if the movie made money, they still had to pay taxes on that.  So why did they invest?

Because they wanted to be part of a movie. 

They could tell their friends they had put money into a movie.  In fact, one of them even joined the crew and drove vehicles,  shoveled snow and played poker.  And he was a millionaire.  There is something there that I never quite understood, maybe it's as simple as being part of a movie, "like those Hollywood guys" one told me.  

I even told them that most movies never make money, that their chance of making money was remote at best. They didn't care, this was a movie, and it would always be around. Movies stay forever, you still see movies from 1910 on TV.  And I'm not being hard on them, or certainly not mocking them.  They know perfectly well that's why they invest in movies. And they're happy with it. And Ghostkeeper made money in spite of bad reviews.  But recently 3 reviews have shown up on IMDB, regarding it as "a lost gem". 

See. If you wait long enough, someone will say something nice about you.

There's other kinds of investors as well.

These are the professional investors, these include bankers, stock brokers and investment counselors.  Hedge funds were a boon to the movie industry and hundreds of features, even big ones with budgets of $50-100 million were done with hedge money.  Mostly it was a bunch of clever producers who made dozens of $5-10 million dollar movies with big stars like Kevin Costner, Kurt Russell, Robert DeNiro, Al Pacino and many others.  

Why would they make a $10 million movie when that was usually their salary on bigger ones?  Because they would take a few million, the money guys would take their share and there would be maybe $5 million left to make the movie.  The screenplays were usually action movies which sold well in the rest of the world and the producers presold them on the big names.  In fact many of those movies bombed in the US, but made profits overseas.

Bankers of course are the hardest, unless its for derivatives,  you know, those bets they made with your money and then lost it all and nearly caused America to fall apart financially. They have loaned money, but it is primarily for people who already have the money. Stockbrokers are there as well, Keith Gordon, a former actor and now director has a project with Ethan Hawke in which they are selling stocks to raise the funding. But this requires a public offering which can cost a lot of money, their budget is around $8 million so they can afford it. 

But most of us are pretty much stuck to the first method so I'm going to focus more on that for the next post Monday.

Have a good weekend and the next time you're at your dentist's, ask them if they've ever invested in a movie, or if they know anyone who has.

Or if they want to now.  You never know.

(Next: Where do you find the money Pt 2)


  1. The past isn't dead, in fact it isn't even past - - William Faulkner