Presale

L

legstud

Hi there,

I have a micro-budget screenplay that is perfect for my niche market. We only need to raise 15K more, but I don't know any investors so I spoke with a distribution company today about financing. They said that if the story is good they have investors who they will approach on my behalf.

I tried to find out how I will get paid, but she just said each deal is different.

I know if we make the film ourselves, we can sell it and see some money in the way of an advance. But I'm worried that if we start involving more people then, we, the filmmakers will never see a dime after investor, distributor, P&A...

How does the filmmaker make money when the distributor finds investors to finance?
How long does the process take?
Should we just try to raise the extra 15K? Any suggestions on where to find investors?
What are some other good questions I can ask this company? to make sure our interests are protected.

thank you
 
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Pre-sales usually won't occur until you have a name actor attached, legally with binding letter of intent, etc. and then you can pre-sell territories for home video or theatrical rights.

You'll only get 10% up front and the rest of the money will sit in escrow until you complete and deliver the film. You will still need private investment, but with money in escrow, you're a LOT more likely to get investors because it's a riskless investment comparatively speaking.

Presales are NOT easy.
 
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How does the filmmaker make money when the distributor finds investors to finance?
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As the distributor you spoke to said; each deal is different.
There just isn’t one answer to this. What YOU will do is try to
make a deal in your favor - the distributor tries to make a deal
in their favor. One possibility is the distributor will find the
financing and pay you (the filmmaker) to make the movie. Highly
unlikely for a filmmaker without a track record.

Another is the distributor will find the financing and then buy
you out. You will no longer be connected to the project.

Frankly, it’s very, very rare that a distributor finds money for a
movie at all. A distributor is in the business of distribution -
not financing.
How long does the process take?
Click to expand...
How long is string?
Should we just try to raise the extra 15K?
Click to expand...
Yes
Any suggestions on where to find investors?
Click to expand...
They are everywhere. And nowhere.

Not the answer you’re looking for. But if there was a clear answer
to this question, we would all just follow it and have all the
investors we need. where you find investors is different than
where I find them which is different that where sonnyboo finds
them which is different than where Kevin Smith finds them.

You will find investors in places I cannot.
What are some other good questions I can ask this company? to make sure our interests are protected.
Click to expand...
A company approaching investors on your behalf is in the drivers
seat. Without them you have nothing and they know that. I’m not
suggesting they will scam you, I’m saying they are in the business
of making money for their company NOT in the business of
protecting your interests.

I don’t have a series of questions that you should ask. I can say
that when you get in a contract meeting with them, do not make
quick, emotional decisions. Creative people very often get so
thrilled by the prospect of their project getting financed that
they ignore the business side of the business.

If you don’t like any aspect of the deal do not take it. You risk
losing the only chance you have seen so far.

You are correct; the more people you involve, them more the money
is split up. If your goal is to control most of the profit then
YOU need to find most of the money. Every 1k someone else finds
for you is 1k you will not have total control of.

Some of us (well, me anyway) are fine getting paid up front for
the work and taking less on the back end. Some of us want to
control more of the back end. How those different people make the
deal is why there are so many different answers to your questions.
 
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My personal take on this is, unless the film you're working on is 'the one' (i.e. the unique exciting project that you can die happy once you've made it) then take a deal that covers all your costs for making the movie and gives you a decent chunk of change for kickstarting the next project.

The general feeling I get in Indie circles is that the advance is the best you're gonna get - if you hold out for points on the back end then you're going to be disappointed - take what you can up front.

Now by all means - if this film is 'the one' and you sincerely believe it'll be big enough that the back end is worth the risk then go for it. I've got three features planned at the moment and we're working our way up to the big one. The first two will be the best damn movies we can make but I'll still be taking whatever I can get up front on them.

Filmmakers rarely make the big bucks from their movies (compared with the distributors) - the best we can hope for is to build a reputation which makes it easier to find funding and pays a good salary.
 
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Our film screened at the LA ScreamFest (10-16-10) and we are talking to several Distributors at this time and had meetings with several in LA during the ScreamFest. And I will tell you that right now unless you have A listers in your film you're not getting much of an advance. With the economy and dwindling of the DVD market The distributors are holding on to their cash. There are a lot of 50-50 offers with no upfront for all rights or just VOD rights, and these are Lionsgate companies. Actually the smaller distributors are offering more advance monies that Lionsgate Companies. It may level off in a year or so when everyone figures out whats going to happen to the DVD market. I'm going to AFM in Nov, and will know a tiny bit more of how the international market is working. Also I'm also going to pick our Sales Rep's mind to get a good overall view of the 'state of the market' if that is possible- lol.

My advice is to raise the $15k yourself. With that small of amount (in movie money it's not much) you should be able to get family to invest if that option is tapped out then Dentist, Restaurateurs and Attorneys are another good source (caution with attorneys LOL). According to how your business entity is set up you could sell 10 units for $1500 which is a low enough amount -so the risk is smaller. Even though the risk is small still expect it to be difficult in this economy. In the investors mind they may never see that money again.

My other bit of advice is become good friends with an Attorney- preferably one who practices Entertainment law! You'll be glad you did.

Being a first time filmmaker is always hard. Until you have a track record and then it will still be hard to raise money, but not impossible.
Good Luck
 
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