ALL PLEASE READ: Would You...

Phil,

The problem I see with this idea is that you are trying to appease two distinctly different groups of people without fully considering the needs of both.

Let's start with "investors." These are the people in the business of investing money to make a ROI. These people are very likely uninterested in your offerings of credits, cameo appearances, and the like. Their bottom line is the ROI. At this point, your ROI model is too under-developed to gain serious attention. For example, let's say I have $1000 to invest. I can safely put that money in some type of low-to-moderate risk investment fund and expect an average of 5% annual ROI. With a monthly interest compound, after two years I should have earned about $105 with almost no risk. So, let's apply this to your proposal--assuming it takes you 6 months to earn your investment money (which to me seems optimistic), another 3 months of pre-production, another 6 - 9 months of shooting and post-production, and 6 months to secure a distribution deal -- we are already at almost two years on the project and I am not yet close to earning any ROI on your project. PLUS, there are the following risk factors:

You may not earn enough money to start the project
I do not know you well enough (and your reputation is not proven for investment ROI) to trust whole-heartedly that you will return the money
Even if you do complete the picture, it is not guaranteed to make money
If the finished picture does end up making money, it may be years before the profit from the movie is enough to pay back every investors' ROI.

Therefore, as an investor, you would have to offer me something to compensate me for all of these risks...and I'm not talking about movie credits. High risk investment portfolio funds, if managed properly, can earn 20+% ROI. BUT, even those are managed by trained investment professionals, so even THOSE offer a lower risk than your project. How can you top that? Can you offer a 30% ROI? That might attract some investors...maybe. But can you afford that?

Well, you say that your first movie cost only 10,000 and has already has already made "some" money. If you want to attract high-risk investors, you will need to offer more specifics about how much you have actually made on your project. It is not important to offer that information here, but you need to be prepared to give that answer if someone is holding a $5000 check. Next question...has your first movie earned enough to pay back all of the investment capital PLUS a 30% ROI? If not, I'd be safer investing in a high-risk portfolio managed by Merril Lynch.

(to be continued...)
 
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Now let's think about the "artists." These are the people who might be willing to invest in your just for the sake of the art, helping out the small guy, "being a part of a sucessful movie project," etc. Doubtful that they would be willing to part with $1000+ for your project. $10? ...maybe. To them, who cares about ROI? Hypothetically, say I give you $10. After 3 years, what are you going to do? Mail me a check for $11? Big deal. Mail me a check for $13? Still, who cares. I'd rather dump that $10 into my own projects and have with it. Have you looked into your administrative costs for issuing such a massive re-payment? How much will the postage cost you? Will your bank charge you for issuing (and then processing) 30,000 checks? How much per check?

In summary, I applaud that you are trying to think "outside the box" for raising capital, it just seems like this idea needs to be better thought out. Research all of your expenses before making such an offer. And then, make sure you are able to offer something that is genuinely feasible for you and attractive to investors at the same time.
 
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Here is a hypothetical suggestion (and please forgive me--I am not familiar with UK/Euro currency and pricing, so I will set up this example in US dollars):

Offer a tiered investment system.

minimum investment is $40. In return for my investment, I will receive a DVD copy of the movie when released. Also, my name will be added to a special list of donors added to the Bonus Features section of the DVD. (As I see it, if you get 5000 investments at this level, you could get a decent price on the bulk production of the DVD -- say around $4-$5, plus another $2-$3 for cheap mail shipping -- that leaves you with at least $30 per investment to put into your feature project.) No other ROI is offered at this level, but HEY, you do get something for your money...the DVD. And its already paid for.

Offer higher investment levels that DO qualify for an actual ROI, but make sure you prepare an ROI projection that will allow you to pay everyone back.


(edit--adding disclaimer: Of course, you should consult with an attorney before making any offers such as this, in case there are legal liability rammifications of which I am not aware.)
 
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Reply

Phil asked me:

" When was the last time you managed to raise finance through offcial channels?" Answer: Right now, as a matter of fact. I presented a Treatment for a pre-approved synopsis for a low budget $850K feature to be shot here in N. Texas. The investors are a "hedge fund" for an $11M, 12 picture deal with a Dallas based production company. If the deal goes through, and my Treatment gets the thumbs up, I will write the script for a Greenlight this fall. The investors are familiar with indie films and are "hedging" their bets by investing in more than one film so they can get a better return out of 12 films than just one, in case one or more fail, the odds are in your favor if you follow a predetermined business plan and stick to it.

You need specifics when it comes to a ROI, not just "a %". If an investor invests $300K on your film and risks the entire $300K, he will expect a 50% share of the profits after he has recouped his $300K. Any deferred pay taken out of the profits after the initial investment has been repaid will come out of your 50% of the profits. If you have a distribution deal, you will be lucky to get 35% of the box office returns when the distributor takes out all his monies, inlcuding P&A (which comes off the top of the first box office receipts). Those costs are deducted first before any funds come back to you.

This is not a hostile answer. It is merely stating that I don't buy your "bones of an idea." Again, go back to basics. You have given me all the good things for you and your film, but if I was the investor here, I'd want you to tell me what I can gain out of my investment. If I have to share the returns with 1,500 more people, I will get lost in the transaction. If it is your intent the lessen the degree of risk for a single investor to invest $100, you have done the opposite: You have lessened the degree of ROI as well and watered down the returns. Your model simply doesn't hold water.

If you are "thinking outside the box", do it with your script or with your film, not your investment model. If you want to attract monies from investors, give them the reasons why it is good for them. Don't hit them with trying to lessen the risks to a point where you only can raise $500 and you need $150K.

In business we always ask a question, "Is this the hill you want to die on?" That means, are you willing to put all your cards on the table with this idea, knowing full well that if it fails, it's the end? You asked for opinions, not just blessings. You got my opinion and no blessing. Only a big red flag of caution and a suggestion to re-think the entire approach.

This is the "business" end of show business.

In any event, good luck.

The "amateur" remark was in reference to the business plan, or lack of at this time, not your ability to produce a film. Your "bones of an idea" would need to be run past an investment attorney, whowould be concerned of it's non-professional approach to possible investors. You are going to have to show us your "tough skin" if you propose such a limited idea for a business plan. Don't get bent out of shape when the word amatuer is used to describe the business approach. It was never used in the context of filmmaking.
WC
 
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Keep in mind that at this point, the project changes focus from a movie that needs to get put on tape and edited to a commodity that is *required* to make money by your investors.

This is the reason specifically that most hollywood movies are format movies with mass appeal and very little in the way of new ideas!

This is straight business and is risky. but you'r not risking your £££, you're risking other's £££. If it doesn't sell to the expectations you've setup at the fore-front, you personally...or your production company...is liable for paying back the investors based on the contract you signed with them. This risk is the reason so many indie films are self funded by the producer/director, the risks are high.

If these are risks you can afford/are willing to take...take the caveats put forth here and adjust for them, then start getting £££ from investors/excited public and make your movie that way. When you raise your funds this way and it succeeds, relay that info here along with what worked and what didn't so others can benefit from your experience. Noone else has funded this way before...and while you may hear "don't do it" or "you're an amatuer", the subtext to me reads; "We don't want to see you fail, so stick to a lower risk - established means of fundraising".

Fact is, until you make a paycheck from these endeavors, you are an amatuer...I'm an amatuer and damn proud of it. I didn't go to film school and didn't work my way up from the bottom of the studio system. I made a film as an amatuer without a clue what I was doing and I started at the top. That was my film school, that was my mail room. Wear the amatuer moniker proudly...it pisses off the pros ;)

Throwing ideas out for critique is good, it can only help you succeed, especially if sailing uncharted financial waters. How much more do you know from this thread than when you first posted about the idea...how many things were raised for you ponder about it that you hadn't before starting this thread?

We have missed and hit things from the original posting:

ALL For £5/around $8-9. Forgetting the legal issues, contracts etc at the moment as this is all hyperthetical at the moment.

So my question is simple... would this be something people would be intersted in ? Would you DONATE a small ammount?
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We all jumped immediately to the legal/contractual/financial ramifications of the problem exactly as you had asked us not to (myself included). And the answer to the question posed seems to be no...although for $10, I might just throw in for the kick of it, it depends on what bills I have looming over me at the time.
 
jhisa,

I went to the website. I am shocked that a "FIlm commission" would do something so stupid. I actually used that term several times in my email to them. Selling a casting role to someone whom you have no clue as to whether or not they can act themselves out a wet paper bag. Fortunatlely that doosm their project to, at best mediocrity, and at worst, to embarrassing the Monterrey Film Commission. One can only hope that the entire staffthat signed on to such crap will be fired. I'd love it of someone from the local county's DA's office filed charges against them for charging for employment (which has been defined in the state of CA as charging for acting roles in films and television).
 
Not all of us jumped to the legal issues. I didn't. I think this is an interesting concept.

Phil - Again, just playing devils advocate: So you can't offer a credit in the film or offer a part in the movie. I'm assuming #4: the Certificate of donation signed by the cast and crew, won't be a actual signatures. I mean are your cast and crew actually going to sit down and sign 15,000 to 25,000 Certificates?

So 3 of your 6 offers won't really happen. True, 10 people or .05% of the investors will be in the movie (IF they live close enough and are willing to pay for transportation, etc.), all will get a copy of cast and crew signatures and a special section of the DVD where the credit will appear, but is that really an incentive to invest? So we can get a discount on the finished movie?
Seriously though for what amounts to a pack of cigs 'you' (meaning everyone) get a chance to actually be appart of a feature film, with a SUPERB cast and crew, that stands a good chance of getting a worldwide DVD and (in some countries) theatrical release...
Seriously, investing £5 or £10 doesn't really make one part of your film. Being one of 20,000 investors doesn't even guarantee one can get a part in the movie. You're going to choose only 10.

I can see how it's exciting for you - but your sales pitch doesn't make it seem very exciting to be 1 of 20,000. As an investor of 2 shares I get nothing, really. I don't get to hang out on the set, I don't get my name in the credits, I'm not involved in anyway.

And the return? A 20,000th share of even £1,000,000 is £50. I know. You're thinking, "That's a profit of £40. £40 more than you had before you got involved in this great movie." But we all know the reality of this business. How long before your movie sees a net profit of £1,000,000? Could be years.

How many units of "Left for Dead" have been sold? Is it the neighborhood of 20,000? I ask because (as you point out) you will need to attract at least that many people to invest. If you couldn't sell 20,000 units of a finished movie, I wonder how difficult it will be to attract 20,000 investors.
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WOW! I went away for an hour and look at everything I have to respond to! As I stated in my first post and as Knightly restated this is a hypothetical at the moment and that no concrete plans have been made. The idea was to sound it out here and see what people thought.

Now John@Bophe whilst you make good comments on investment, I think a lot of people are missing the points here.

The idea is not to market this as an investment. Legally that is very tough. It’s to be marketed as a ‘donation’ of which you will get a certain few things back.

The other point is that whilst you guys are part of the target audience, you are only a very small part. The key audience here are people who aren’t making films, who aren’t in the business but see the glamour in being part of a feature film project that they will see on the shelves in HMV or Blockbuster.

This is who the main target audience will be. Sure I want as many people as possible but I don’t want to solely target film maker types as has been proven here they can often be far too prickly and (on the occasion) damming of any idea they didn’t think of or may be competitive to what they are working on.

To answer a few direct points:

Writeum:

My point was that you came in a bit strong for what was needed. Whilst you may have developed a treatment and seen it green light, at the same point I too took a film that had no investment, got money on board using unconventional methods, produced it, took it to Cannes, sold it, got awards and seen it make a return. I’m not crossing swords here but I feel I have a good grasp of the UK Indie scene, of sales & of distribution.

The reason the business plan was vague was that as I have pointed out above it’s the bare bones of an idea that isn’t backed up by anything you can look at. When all this goes live feel free to tell me it sucks or it’s shite. But at least see the whole first…

RIK:

1. To keep costs down the certificate would have to be a web based cert that you download. We had an idea of ‘BUY A CELL OF FILM’ working out that in a 85 min film there would be around 122,400 frames of film but the practicality of printing out each one etc was too much.

2. Okay thinking on this a new version of the offer would be this.
Bronze: £5 -£50 Silver: £51-£250
Gold: £251-£1000 Platinum: £1000+

With different levels of reward and credit for each role. For example if we got 25 people donating a £1000 they would all get exec producer credits but will get back to you later with the exact details of each idea.

The basic premise is to make each level of investment worthwhile. The package we have for the film really is second to none, with a great script and a superb cast. We have a track record of selling films and turning a profit (Rik – as far as I know the US release sold around that so far but haven’t had the latest sales figs) and getting paid for it.

What I want to to make this model work FOR ALL OF US. Set up a site that can be used for different film projects and then use than concept to help others. Bigger plans are at foot…
 
Okay so here's the idea. Donate into one of the following areas and get whats listed. The gold & silver are a bit weak so any suggestions...

Bronze: £5 - £50

1. Discount voucher for DVD purchase of the film
2. Certificate Of Donation, signed by cast & crew
3. Credit On The DVD of the film & Website
4. Online retailer discounts (tbc)
5. Access of Special section of website with comps & news
6. Discount on Film Merchandise.
7. Returned donation when film hits profit.
8. Free Film! DVD version of cult action film ‘Pure Vengeance’ (downloadable from the website).


Silver: £51-£500

As above plus:

1. Chance to appear as an extra in the film (1 in 30 chance)
2. Chance to win an all expenses paid visit to the set and appear as a speaking role in the film
3. Name In a full page advert in a international film magazine.


Gold: £501-£1000

As above plus:

1. Credit On The Film (End Credits)
2. Opportunity To Visit the film set
3. Returned donation when film hits profit + % return on donation.


Platinum: £1001+

As above plus:

1. Personalized signed cast & crew Picture
2. Invite to Cast & Crew showing Of The Film
3. Returned donation when film hits profit + % return on donation.


Platinum +: £5000+

As Above plus:

1. Executive Producer Credit On Film
2. Guaranteed appearance in the film
3. Signed copy of the final DVD of the film
4. Returned donation when film hits profit + % return on donation.
5. Interviewed on the behind the scenes documentary to go on DVD
6. Crew T-Shirt, signed by cast & crew.
 
Phil,

Good luck. I've given you all the opinion I have or you really want to hear. The rest of you will have the ball from here. I hope this has a good conclusion.

I'm outta here.

WC
 
Hi Phil

I don't see this working simply because the bottom line is that you are trying to find 15,000 people willing to give you $10.

It'll never work, unless you can offer them something right now that is worth the $10.

I also think you're going in the wrong direction with your attempts to fund this -- it'll be easier to track down one private investor who can stump up the whole amount than trying to tie down 15,000 suckers.

If I was producing your film I'd be looking for a UK name actor who had a bundle of cash and was looking for an opportunity to make a break into Hollywood action movies. I'd pitch the script to him and ask him to come on board as co-producer. I'd pitch the film as a show reel opportunity.

£150,000 isn't a lot of money and if the script is good enough and you've got a good show reel to show him, he might even stump up the budget himself. If he couldn't, his name and contacts should be enough to bring on board the investment.

The mistake you're making at the moment is not believing in either yourself or your project -- there is money out there for productions, you're just not talking to the right people.
 
Clive, believe me when I say that despite one of teh best cast and crews to ever work on a UK indie action movie, experienced sales agent and more we have had shit all luck with private inmvestors. Everytime you get somewhere you end up loosing something. Think about a house of cards... that's what it's been like, everytime we get the cards stacked up one falls from teh bottom.

With 15,000 investors/donators if we loose 1 or 2 then the whole project doesnt fall appart. With 1 or 2 or 3 it does. The UK funding sources are gash and this is one film I can't fund myself.

Whilst you say £150k isnt much it's far too little for any of the offical funding routes and too much for the local funding agancies.

Clive - I have belief TRUST me but the money is not there in the UK and especially not for action lead films. That's why so many action films are being done on card so to speak.

The problem is too many people are approaching funding teh same way and no one is trying to break the mould. This can work, and has (Nick Love did it for his latest film). I guess I just need to work out the best way of incentifiying people.
 
I dunno Modern- when I looked at the options, the only one I wanted was the 5000+ level... but I don't have $5000 dollars. The lower levels seem like chicken scrap in comparison, and the mob mentality will come into place with people saying "I don't feel important enough to invest in this".
It's an interesting idea, but I don't think you have a hook that makes them want to invest. Give them something tangible and it'll be a better deal.
Also- getting 15,000 people to invest small amounts of money in a short amount of time is insane. Please go for it and make it work so everybody here will be like "Holy crap, it was crazy, and he pulled it off. What a guy."
 
Clive - I have belief TRUST me but the money is not there in the UK
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My ex-business partner just started production on a £3M UK action movie, all financed with money from new UK investors. So I don't need to trust your information... I know that you're wrong about this.

Whilst you say £150k isn’t much it's far too little for any of the official funding routes and too much for the local funding agancies.
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Then either up your budget, or slash it.

Or if you really want to get this film made and you've got a half decent script offer the lead role to Bob Hoskins, who loves to work with indies and is an investment magnet. Or find a production company with a production budget who have a hole in their slate and offer them a co-production. Or bring in a more experienced producer with a track record of bringing in investment. Or switch your attention to distribution companies and pre-sell the movie and then use the pre-sales to get funding from one of the four major film banks in Soho. Or, put this script into turnaround and move up a script that you can afford to self finance or that falls within funding budget ranges. Or, pull together a slate of scripts, take the slate to a investment advisor who deals with film funding as a tax right off and offer the slate up via their company. Or, place an advert in Private Eye offering a major role in a movie for just £150,000. Or, pitch the concept as a series to a UK TV company and offer the movie as a pilot.

I've now given you eight different ways to resolve the situation -- that's without going back to the budget and slashing it -- so let's call it nine. The problem is that with every single one of them you're going to have to sit in front of people in the industry and pitch.
 
Clive - the issue is it has been pitched, the money has been in place and it has fallen through. The money we need is what we need for what we can do. I'm glad your collegue has found the budget. We have not. Some projects get money some do not. And I guess on how you describe action.

I had a script in development at Miramax a few years ago and ended up pulling it because they wanted to change it too far from what the concept was. That is what we are trying to avoid here.

What I want to do is break the rather dull mould we are forced to use and try something new. It has worked, has been proven and can work again. The options you give whilst good for some projects are not for this one. The TV option could never work due to the concept of the film, the pre-sales is fair enough but a hard game these days (most companies wont even pay for completed films and you be looking at a min of a year to get even close to what we need), the film to make a film well we are doing that but that again is months off finishing and the main role well that can work but again its the money to do that.

Okay so you guys aren't fans of this idea, i guess it goes that way sometimes but it does suprise me.

Either way this is the way we are going, so I guess in six months we'll know who was right.
 
It's fun to see this evolving. Now you are closer to a fairly standard model - an investment group. The different levels might work. You aren't promising anything to 15 to 20 thousand people.

Even so, as a producer I see this as a logistical nightmare - 2,000 to 5,000 investors. Just as an example:

5 Platinmum Plus (£5,000) - £25,000
20 Platinmum (£2,500) - £50,000
30 Gold (£750) £22,500
50 Silver (£100) £5,000
95 people for a total of £102,500
You will still need 1,900 people at £25 or 4,750 people at £10 to meet the budget.

How much of the £150,000 is going into managing a group of investors that large? It seems like a big, full time job managing all these donations and all the perks. It's difficult keeping a small investment group happy - say 30 people investing £5,000 - I can't imagine keeping in contact with 2,000 to 5,000 people who all feel they now are part of this movie. Even if only 5% want to be kept informed, someone has to keep 100 to 250 people happy. It's hard to tell someone who is a part of the movie to stop calling, or to only communicate via e-mail without upsetting them

As an "investor" I just don't see any real advantage to being part of this. The £1,000 to £5,000 level is a serious investment. Few people checking indie film sites and messageboards are willing to go that high. I wonder if that level of investor is really interested in signed Certificates and T-Shirts or having an appearance in the film?

The £100 to £500 level is even more troublesome - that's a serious amount of money for your typical non-investor looking to be part of a movie. How many movie makers are willing to donate that kind of money for someone else's project? How many movie buyers are willing to donate that much to be listed on the DVD?

And in the "pack of cigs's" level, people aren't getting much. Can you make 2,000 to 4,000 people really feel a part of the movie?

I kind of see how attracting 30,000 donations at £5 would be an interesting marketing hook but I don't see how that helps all of us or even how it would make the "investor" feel part of the film.

I hope you keep us informed during the next six months.
 
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