FUNDRAISING, CROWDFUNDING & THE

BUSINESS PLAN

http://www.fsproducingclass.com/fpm2/

Indie Filmmaking…

Digital filmmaking has opened the floodgates and they are producing amazing results.

The unfortunate side of history is showing us a majority if not all of these INDEPENDNANT projects are just downright awful.

These awful films give investors a reason to have caution. They believe that “investing in indie films, and you’ll lose your money”

THE BUSINESS PLAN

Lessons of Film Fundraising:

Never hand over the (entire) reins of the process.

Never take credit for bringing anyone (or anything) to the table until they have closed their part of the deal.

You can’t sue anybody (sorta)….

RULES TO FILM FUNDRAISING

The Rules to Film Fundraising:

Rule 1: The absolute best time to raise money for a feature film is when you are actually in production.

Rule 2: How can you make a bunch of money, if you haven’t made a little bit of money. You have to have proven yourself and have the evidence to back it up.

RULES TO FILM FUNDRAISING

The best ways to raise money for a film…

Be carful and stay away from anyone who is already associated with the “film business”. They will put their own interests ahead of yours (and the project).

Look for people outside the industry looking to break in. These people look for a connection to the “stars”, so that they can call them a “friend”. People who want to be “in the club”.

Do you research on your investor and follow up on everyone interested in investing.

RULES TO FILM FUNDRAISING

The best ways to raise money for a film:

What to watch out for….

Investors who aren’t truthful about what they have invested before.

Investors that wait on writing checks to the production

Question to ask:

How you invested in films (or project type) before?

RULES TO FILM FUNDRAISING

SECTION 181:

You’ve heard of farming subsidies. A few years back savvy film lobbyists created subsidies for the film industry. As they outlined the dangers of runaway film production to Canada, Eastern Europe and Australia, Congress passed legislation that resulted in Section 181 of the IRS Tax Code.

Put simply, Section 181 states that investment in a motion picture shot in the US is 100% tax deductible for the investor in the same year invested.

INVESTOR DEDUCTIONS

Here are some Investor broad strokes for the Section 181 Tax Deduction:

100% of the project costs are deductible in the same year of investment.

75% of the project must be shot in the US to qualify for Section 181.

TV pilots, TV episodes (up to 44), short films, music videos and feature films all qualify for Section 181.

There is no minimum film production budget cost.

SECTION 181

Here are some Investor broad strokes for the Section 181 Tax Deduction:

Section 181 can be applied to active income or passive income.

Investors can be either individuals or businesses.

Section 181 is retroactive.

The production company issues Schedule K-1’s to the investors so they can take advantage of Section 181.

Schedule K-1: A tax document used to report the incomes, losses and dividends of a business's partners or S corporation's shareholders. Rather than being a financial summary for the entire group, the Schedule K-1 document is prepared for each partner or shareholder individually.

SECTION 181

Crowdfunding has its origins in the concept of crowdsourcing, which is the broader concept of an individual reaching a goal by receiving and leveraging small contributions from many parties.

Crowdfunding is the application of this concept to the collection of funds through small contributions from many parties in order to finance a particular project or production.

(Show Kickstarter Clip)

CROWDFUNDING

Do’s and Don’ts…

DO: Budget money and time Not only for the film, which goes without saying, but also for the combined costs of producing and shipping your promised rewards.

If you intend to send postcard updates and/or thank-yous, then how much will postcards and stamps cost? Moreover, how long will it take you to write and address the postcards?

CROWDFUNDING

Do’s and Don’ts…

DO: Budget for the best-case-scenarioGood news! You've funded your project with $40,000, double your original $20,000 goal. Bad news! Now, in addition to making a movie, you have to deliver two or even three times the expected goodies.

Presumptuous as it sounds, anticipate everything for which you might be on the hook when the crowdfunding dust settles, and double it when hammering out your awards structure. And if you don't use the allocated resources for the rewards, then guess what? More money for your project.

CROWDFUNDING

Do’s and Don’ts…

DO: Set a best-case-scenario deadlineBackers of hugely successful projects are known for their flexibility, but only because too often, production delays mean they don't have any choice. In crowdfunding, as in life, creators owe backers realistic timelines.

Don't be That Project. Think you'll need 12 months? Give yourself 18. Think you'll need 18? Give yourself 24.

CROWDFUNDING

Do’s and Don’ts…

DO: Nail a $25 rewardThe $25 pledge is generally regarded as the most popular on Kickstarter, Indiegogo and most other crowdfunding sites. It's a modest, low-risk commitment for a backer who's intrigued enough to eventually want to watch your project but not intrigued enough to bid on a speaking part or some other top-shelf perk.

The upside is twofold: The more backers you get here, the likelier your campaign is to sustain its visibility among crowdfunding site admins (who can feature you on their home page) and prospective backers alike.

Better still, you can allocate more of your revenue to creation and distribution instead of filling time-consuming orders for expensive swag and other gimmicks.

CROWDFUNDING

Do’s and Don’ts…

DON’T: Water down your credits Pretty much everyone knows that $2,500 won't get you very far in the conventional film world. So why accept that in exchange for producer credit for your crowdfunded project?

But doubling the price point and cutting the number of available producer slots gets you more money for less work, plays up the reward's exclusivity, and appeals directly to the well-heeled backer you may already know and who -- let's face it -- doesn't want to pledge thousands of dollars to your project just to share the screen with a half-dozen other names. Use the popularity of your awesome mid-level items to attract two or three key backers for the top-level items.

CROWDFUNDING

How do you separate your production from “everyone else's”?

Discussion

CROWDFUNDING

If anyone asks for an advisory fee or a consultant fee, avoid that person at all costs.

Fees are given after financing is achieved.

Upfront fees do not exist in legitimate financing.

WHAT TO AVOID

Would you invest?

Before you discuss the project with investors, you need to have a business plan ready to be viewed.

The Script…

There are agents always looking just to purchase scripts, so have 3 or more people read it, and give you feedback

The Market (target audience)…

At the indie level you will have to outline at least three bullet points for the market of your script. The areas to clarify are the genre, category, the stars/talent, the crew and the idea that the project is “not location contingent”.

Be Realistic…

You need to outline the liabilities and what can go wrong.

THE BUSINESS PLAN

Budget Breakdown for the Investor

THE BUSINESS PLAN TEMPLATE

Review from Budget Lecture

FINDING THE MONEY

Finding the Money

Set up a database of investors.

Name, Company, Phone, Last Call, Email, Title and more

Go Until you get a No. Keep contacting investors with other projects until you get a definitive no.

Look at Associations

These groups can have a vested interest in the success of the project.

Medical Groups: dentists, doctors, and other medical professionals are good sources.

Many of these individuals like the idea of investing in the arts verse giving their money to taxes/government.

The Finder’s Fee Approach

Give the person who finds the finances an Associate Producer title.

Be flexible with this person, since they are a big help, but only pay the finder’s fee when the check clears.

The Distributor Approach

Try to split the rights into foreign and domestic and offer that as payment.

A Negative PickupNegative pickup means a distributor’s guarantee or agreement to pay a specified amount for distribution rights upon delivery of a completed film negative by a stipulated date.

The distributor has no obligation to license the film if the picture is not delivered on time, in accordance with the terms of the agreement.

A negative pickup guarantee may be used as a collateral security to obtain a bank loan in order to meet the production expenses of a movie.

THE BUSINESS PLAN

Dangerous Waters

Too risky: Promising money to the talent and or crew that isn’t there

Too risky: give unrealistic deadlines to yourself

Too risky: not having any deadlines at all

THE RISKY SIDE

Creating your drive

Programmed obsession by forcing your mind to project only what you want, thereby giving you a powerful push

The steps to achieve this are….

Step 1: Think of your end result.

Step 2: Reinforce step 1 every day and by every motion

THE DRIVE

THE DRIVE

http://www.fsproducingclass.com/fpm2/