PPM - Investors - Help

[stephenlevi]

Hi everyone,

So I have a question regarding investment do's and don'ts.

I am looking to raise 40k for a feature film from passive investors.

Do I have to have a PPM in order to sell shares for my film? From doing research, PPMs cost 10 - 25k for an attorney to draft up and even though there are examples out there on the internet, it seems a bit steep for a film of such a low budget.

I've heard of filmmakers simply doing an investor agreement and nothing else. Is that sufficient?

Thanks and looking forward to all of your responses!

 

[Sweetie]

You'll still have to check your laws in your country, but I do believe you'll need a PPM for passive investors.

I believe there is nothing to say you need an attorney to draft one, though, if you draft one, it's a good idea to get an attorney to look it over.

PPM's protect both you and the investor. Would you like an investor to put a lean on your future income (I think I used the term correctly) since you don't have a PPM documenting the potential risk of the investment.

I'd also expect the attorney would also be able to guide you away from using incorrect wording causing the investor to have incorrect assumptions about your investment.

Good luck.

 

[directorik]

The reason it costs so much is because offering shares to passive
investors can bring on huge, expensive, time consuming issues
down the line. Are you prepared to address every issue form the
investors as they arise?

I've heard of filmmakers simply doing an investor agreement and nothing else. Is that sufficient?

Sufficient. Potentially difficult and costly, but sufficient. If you
want (or can only afford) sufficient, then draw up an investor
agreement yourself and hope all goes well. You have heard of
filmmakers doing this; have you heard of the outcome? Were
they successful?

 

[stephenlevi]

I know of people that only did an agreement, with no PPM. And from further research I understand why a PPM is in place. It's a further protection. But on flip side, with budget being so low, along with the fact that the same information can be put into an agreement, it seems to be overkill. For the filmmakers who cannot afford a PPM, and let's say your film budget was 25k and to draw up a PPM by an attorney it's 25k, it kind makes no sense to raise 25k. Of course there is always crowdfunding, but that's not a route I'd like to go.

I just wanted to see from example other film makers who've raised money from private equity and see if there is an easier alternative route.

 

[IndiePaul]

... and see if there is an easier alternative route.

Trying the cloud funding sites? If you engage actors, crew etc they can also reach out to their social networks and extended networks; money can then start flowing in.

It's far from easy though and engaging with cast and crew without having the funding sorted up front is possible but obviously more difficult.

I have seen many castings that occur without funding being sorted. Sometimes the short/feature goes ahead; often it does not.

 

[Sweetie]

I suggest that you don't focus on non-active equity investors or focus on people who you already have a relationship with. When you have an active investor, it's a different ballpark. At a minimum, have a business plan with most (if not all) of the presentation points found in a PPM.

Crowd funding isn't an easier option, though it is an alternative.

Another point of the PPM is also to make you design an investment pitch that makes sense for an investor. If you went through the process, I think you'll find that you're not going to be able to put together a package that makes sense to an investor for $25k. It's too little money for the filming industry in which there will be a reasonable expectation of return on investment.

You may be better off looking for a benefactor.

 

[stephenlevi]

I suggest that you don't focus on non-active equity investors or focus on people who you already have a relationship with. When you have an active investor, it's a different ballpark. At a minimum, have a business plan with most (if not all) of the presentation points found in a PPM.

I'm with you on this 100%. I never planned on going after active investors.

Crowd funding isn't an easier option, though it is an alternative.

I crowdfunded my first feature, which was a shit ton of work. In the end, I sold my film and used the earnings to jumpstart my second feature. Anyway, I don't like begging people for $20. I'd rather get a handful of people to invest a couple grand.

Another point of the PPM is also to make you design an investment pitch that makes sense for an investor. If you went through the process, I think you'll find that you're not going to be able to put together a package that makes sense to an investor for $25k. It's too little money for the filming industry in which there will be a reasonable expectation of return on investment.

I'll respectfully disagree with you on this point. If a film is made in a marketable genre, for a low price, with high quality it's more likely someone will make a return on their money.

You may be better off looking for a benefactor.

This would be good too.