What VC are looking for to fund projects.

Since I'm now in a good three film financing groups and have spoken with a film investor in person at a Pizzarea Uno's and been to NATPE and varius industry gatherings, I am sharing information on what money people want to see in a pitch.

The YT clip I shred under Sales and Marketing hits the nail on the head with what you need in your pitch: a distributor already attached, a well-known successful writer with a proven track record of writing material that generates money, and experience people running the show.

New writers will not get work with the studios, television, or independent films financed with structured funding. All of these get their money from the same source, Venture Capitalists and Angel Investors. They don't want to hear about the potential to make money. They want to know the nuts and bolts of how they will get their money back. A distributor already attached is the answer they want to hear. A distributor will give a letter of intend if they see enough value in a production to invest, such as a write who has a track record of writing scripts or story bibles for series that are hit after hit. They allow no room for new undiscovered talent with original ideas.

Only very small cable TV networks who cannot afford their own studios are looking to take a chance in low cost independent content.

There are many posts about how hard it is to get financing. That is because the people with the money have money from not taking risks. They want the sure bet with people who have a pre-existing fan base from previous success.

And this is pretty much what came today from someone who runs a web site where VC get to meet people with iron clad business plans and have pitches that tell the VCs what they want to hear to invest with as low a risk as possible.
 
low risk = low returns
big risk = big returns

I know of a lot of people who are rich because of risky investments. Risky will always be risky but they tend to have the best pay out. People who are self made millionaires got their money because of hard work and educated business decisions. Gotta find the ones who are willing to take a risk! They ARE out there.
 
I've seen low risk/high return. Someone I talked to bought some desert land in the outskirts of Las Vegas for like 25K. The area got developed with housing complexes 5-9 years later and the land eventually went to $400,000 I think people ARE willing to take chances if they are passionate about something. There are rich people that love movies!
 
Low risk is easy money to VC.

VC don't want risk. Follow the money and look at their track reccord. They would rather fund a re-image or remake over taking a risk with something original by someone new to the industry.

There are some small investors who are willing to take a chance with a small film. The big money VCs will not take the risk. And, as the power brokers with the money, they dictate the terms and decide what gets funded.
 
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You can have low risk and high returns, but they're few and far between. Over time, you'll have to face the tradeoff of high risk for high returns. I think that, if you can get a distributor, you should be able to get the funding for a movie that's not too high budget.

Modern Day, you said

I'm now in a good three film financing groups

So you know three film financing groups?
 
They are for people looking for film financing and investors who fund films. Someone who has a site for VC and Angel investors gave us a presentation of what the people who got films financed with the VC presented to the VC to get their funding approved. The VC know high risk presenters who offer "potential" are rookies.
 
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You can have low risk and high returns, but they're few and far between. Over time, you'll have to face the tradeoff of high risk for high returns. I think that, if you can get a distributor, you should be able to get the funding for a movie that's not too high budget.

Modern Day, you said



So you know three film financing groups?

Would you consider Wall Street's $675 Million investment in eight movies by Marvel Comics a high risk when they showed annual sales figures of their comic book titles to investors and already had the success of the X-Men movies behind them? Marvel's The Avengers was on that slate along with the Iron Man, Thor, Captain America, and last Hulk movies.

They also had Paramount Pictures attached as a distributor.
 
Low risk is easy money to VC.

VC don't want risk. Follow the money and look at their track reccord.

Low risk, low reward - that might be easy money, but it's a small amount of money. VCs in general aren't looking for a small amount of money. They're looking for a 10-100x multiplier on a multi-million dollar investment, and that kind of money only comes with risk. VCs expect to fund a dozen projects and have 11 of them crash and burn, because the one that hits big will more than make up for the rest.

Which is why VCs don't generally invest in independent films. Indie films are generally high risk, low reward - which doesn't appeal much to anybody. Thousands of indie films are made every year. Most will lose money, a few will be profitable but not significantly so, and every 5 years or so one will generate that 100x multiplier. That's not high risk, that's basically throwing money down a hole.

For instance, out of the 601 films that got theatrical release in 2011, more than 2/3 made less than $2 million. Far more films were made that didn't even get a theatrical release. So if you're a VC, and looking to invest $1 million or more in a project, why would you waste your time with independent films? There's no upside there.

Frankly, I'd consider VCs a waste of time for independent filmmakers. We're just not even in the same world when it comes to the kind of money and returns they're looking to make.

The VC know high risk presenters who offer "potential" are rookies.

Everyone's offering 'potential'. It's just a question of having something to back that potential up. If all you've got is your sincere belief in your project then yeah, you're out of luck. If you've got a name star, or a distribution deal in place, then it shows independent confirmation of that potential - and that's what investors need. But make no mistake - even with that confirmation your project is still very, very high risk for your investors.
 
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There are many types of investors, unfortunately most of them are the ones you described. I do believe you can find ones that take a bit of a risk, but they are like a needle in a haystack....Most people who have "make it" in the business are very discouraging to up-and-comers but I wouldn't let that deter anyone who has hope of getting their project financed....
 
Twenty years back VC's made money on one of the seven investments. I dealt with them for number of years and a lot of things you gusy saying is just... speculation.

From the inside of VC's view: They look at inflated numbers and a LOT of bullshit that comes across the desk. What amazed me they keep picking projects that had zero chance to get anything back. I don't consider myself a VC but I worked with them for thirty years or more and I can't say they make 'good decisons' most of the time. That's the reason they strike out most of the time.

When one project comes in the money, it does NOT offset the loosers. Hey, it's not their money it belongs to other people. Investors are quite OK to lose money in this pool and don't seems to get upset. If you'd know half the shit going on with these VC firms you'd be floored.

I was involved in a 35 million investment in a hi-tek Silicon Valley project and the company didn't have world-wide market of five million dollars providing all the competitors closed down.
Yet this was the third round of financing ! There was no hope ever getting back a nickel yet they funded the companyand they promptly went out of business when the money ran out in a year.

How was this done
The CFO of the company was pressured to sign the proposal and the projection that was pure fiction. He refused and he was canned. The next CFO they hired didn't know what he signed.... or he may have, I don't know.
Does this sound like what's happening in the real world?
Ya bettcha!
I was there and saw everything first hand.

Investing in a trendy feature (movie) is soooo much safer and the VC will get some money back, no matter how bad were the return. If I were to invest in anything, I'd invest in movies in a heartbeat. I do know what I like and there are so many talents out there. I'd not invest purely on the 'experience' of the people involved. In fact I'd go out of my way to find talents who has something to offer that's unique. There are many times I see work from really young people who has maybe a year of experience holding the camera... a cheap one at that, and it blows me away with the story telling capability.

Experience is over rated in my opinion.
Look at VC's and how many years they've been doing this?
Still can't get it right. It's not rocket science.
 
When VCs invest in high budget features, they tend to do so via funds with otherVCs, so they spread the risk. Most if these funds now deal exclusively with studios and a handful of mini-majors.

When they invest in lower budget features they tend to do so as angel investors but hedging the risk by spreading it among other investors is still important. The majority of indie films, and I don't mean guerilla micro-budget, are put together with piecemeal finance to spread the risk which makes the project less of an overall risk.

You also have to do some other things to limit the risk. Attach a sales agent who can give you a sales estimate. Film investors know that you will not get a distributor attached prior to filming for a lot of indie films, especially not those who are operating in 2M+ range for the first time. It will help you if you have a genre script or name actor for drama who is suitable for your budget. Often indies think that means getting A-list actors, it does not. If you are in that budget range for the first time, you will need the best DP and Production Designer you can get your hands on. They are your bankable creative team and having them gives confidence to investors and also helps with the next bit. You MUST get your film bonded. Nobody will put a penny in movies over 500K without this. The bond company will also be able to identify the risks and weaknesses in your production. Talk to them early and do what they say. You will also have to talk to a tax accountant about company tax structures and tax relief for investors. All of this needs to be thoroughly planned and put in a document. You must present this to investors. If you don't, they will NOT bring it up, they will walk away from your meeting thinking that you don't know your business though.
 
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