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Unless you’re shooting a Super 8 short, your film likely needs financing. It’s the difference between cinematic dreams and reality, so raising money may be the most important aspect of making movies. But how do you go beyond Indiegogo? The path to funded production can seem like one giant snarl. Here are a few key components to plan a professional indie film:
State Tax Incentives
Tax credits for production costs incurred in the state can be monetized to provide valuable production funding. Some are assignable, which means they may be sold to those who already have tax liabilities in the state (generating upfront dollars). Others can secure loans and thereby also put money to work on set. Consider tax credits as soon as you start breaking down your script.
Even in a media environment with a recovering theatrical market and tightening acquisition budgets, action, thrillers, comedy, and drama still interest international distributors. Packaging a strong script with at least one major asset (like known talent) and working with a reputable foreign sales agent can allow pre-selling valuable international distribution rights. Recently at AFM, for example, the Aaron Eckhart thriller Chief of Station closed pre-sales for Germany, France, Italy, Switzerland, the UK, Australia, Spain, and Eastern Europe. Offers for Guy Ritchie’s upcoming Second World War thriller The Ministry Of Ungentlemanly Warfare also made industry news. Like state incentives, guaranteed sales of foreign rights (payable when a film is delivered) can be used to secure loans that go toward the production budget. Sales agent fees range from 5% for larger films ($39M+ budget) to around 20% for smaller budgets ($5M-$10M).
Many feature films are financed entirely with loans, and most films of any significant budget include a loan in their financing plan. Typically, the production loan fills the gap left between the film budget and the amount of pre-sales.
Filmmakers with family, friends, and business acquaintances interested in contributing to a film budget in exchange for the possibility of a share of net profits should consider a private equity offering. Much more than A donation-based crowdfunding campaign, a pitch deck, or a film business plan, this is a complex securities transaction requiring strict compliance with federal and state laws. But it can also make a project possible.
Fortunately, DeepFocus Entertainment Law’s tools enable preparing independent film investment documents with greater efficiency and lower legal fees. If you have considered using equity to finance your feature or television series, or have other questions about financing independent films, now is an ideal time to schedule a brief complimentary consultation.