Getting investors on board your film is perhaps one of the most difficult aspects of the filmmaking process, and also one that can be fraught with many risks. Indie filmmaking lore is full of stories of filmmakers who begged, borrowed, or proverbially stole the money to make their films, stories, which of course end in box-office gold or Sundance glory. But for every âBrothers McMullenâ, âEl Mariachiâ, âClerksâ, or âBlair Witch Projectâ, there are at least 10 miserable failures; stories of filmmakers who poured heart, soul, and comparatively plenty of cash only to be left with an expensive tin of celluloid that nobody wants.
Placing money in independent films is a risky investment. So when you are looking to get investors on board your project (particularly people who are outside your circle of family and friends) itâs essential that you take a professional approach and set realistic expectations for the potential risks and rewards. The best way to do this is to prepare a business plan or prospectus which outlines what is required to produce the film and how you are going to generate enough money from it to repay your investors (hopefully with a little profit too).
When preparing any kind of business plan, itâs essential that you take realistic view of what is achievable and what the likely return is. Donât include information that you arenât fairly sure is true (e.g. donât suggest you might get Tom Cruise to do a cameo if you donât have his personal phone number), and never use figures that canât be substantiated by a credible third-party source (i.e. box-office figures). If you get your investors on board using misleading information it can simply result in a world of pain later down the road when they find out (particularly if your film generates any significant revenue). There are plenty of examples of filmmakers being sued by their investors, either to recover profits they believe theyâre owed or to return the original funds due to a belief that they were mislead into providing them (e.g. check out the results for this Google search on two filmmakers who were sued by their investors over the commercial viability of a documentary on 2005 US presidential candidate John Kerry).
In terms of preparing a business plan, there are several good books on the subject, some of which include sample plans and discuss ways to approach investors and the potential pitfalls in full detail. Itâs worth remembering that while itâs absolutely fine to approach potential investors privately, in many countries itâs actually illegal to publicly solicit for investors for any commercial enterprise without going through approved channels. For this reason, and those previously discussed, its always advisable to get a qualified entertainment lawyer (like yours truly) to look over your investor plan and agreements prior to anything been finalized. While this may feel out of keeping with the indie filmmaker spirit, the reality is that if you canât afford some minimal legal fees you probably shouldnât be trying to get investors involved in your project.
Additionally, please review my article on Film Financing Basics.