On Financing Movies

 

TENNYSON E. STEAD

WRITER/DIRECTOR/PRODUCER

 

Before we even start talking about the process of financing your film, there is something I need to make abundantly clear.  I am not your lawyer.  Film Courage is not your lawyer.  On this website, nobody is offering you legal or professional advice.  Neither myself nor Film Courage claims to have the experience or expertise necessary to properly advise you on career development, matters of finance, or anything else.  If you should decide for yourself that we DO have that expertise, and that these articles ARE worth taking to heart…

Then that is a decision for which you are completely, personally liable.

So… am I saying that my ten years of experience in financing independent films, some of which have probably borne a general resemblance to your own, does not buy me the necessary authority to give you some pointers?  Am I saying that the work it has taken me to get produced as a screenwriter, to win awards as a director, and to build my production company carries no actual, valuable lessons with it?  Am I saying that 20 years of experience telling stories on stage and screen is meaningless?

Certainly, it has meaning for me.  What I am saying is that the decision as to whether it has meaning for you is not one I am qualified to make.  I write this article because experience and available evidence strongly suggest to me that it will be useful for you… but whether or not you trust the value I place in these words is entirely up to you.

 


(Watch the video here)

Whether or not you decide to invest in this article is not something I can be accountable for.

See, there are laws protecting people from the threat of being lied to or cheated in business.  As an executive in independent film, I have been very fortunate to work with companies and individuals who value their investors, and who value the risk their investors take so film companies can progress and everyone can make money.  Certainly, I have met “independent filmmakers” who are more concerned with raising money than they are with making movies.  There are investment scams out there, and the laws do offer a measure of protection against them.

At the same time, most of the legal violations I see are from filmmakers who simply don’t know better, or who do not want to be concerned with the details of conducting an investment.  With the best of intentions, tons of indie filmmakers are out there committing investment fraud.  Not only do these oversights open filmmakers up to getting sued by their investors regardless of how their film performs – they also reflect very poorly on the industry as a whole.  Hollywood has a reputation for financial fraud and bad business, and the reputation is well-earned.  If most of it is innocent or unintentional, that fact does nothing to change the problem.

 

Listen to Tennyson E. Stead tell his ‘Arriving in L.A. story here.’

 

Here’s three basic ground rules I work by, and the reasons for them:

1. NEVER GENERALIZE

Say that I’m financing a film that has the agreements needed for theatrical distribution in place.  Many films fail because they don’t have access to distribution, so having that in place is a pretty big deal.  Does that mean my film will succeed?  No.  Does it mean my film is likely to succeed?  Not necessarily.  All it actually means is that the risk that our movie will not show in theaters is no longer a factor in whether or not our film makes money.

But does securing distribution earn me the right to say otherwise?  Is it a big enough accomplishment to buy me some slack?

Hell no.  There is no such slack.  There are no magic bullets, and there are no shortcuts.  Stick to the facts, and make them as clear as you can.  “Sir, plenty of films fail because they do not adequately address the risk of distribution.  Here, that risk is already handled.  Now, let’s talk about all the other risks we need to address!”  Your job as the manager of this investment is to identify EVERY SINGLE INDIVIDUAL RISK to the success of your investment and either eliminate it, mitigate it, or turn it to your advantage. Take pride in this, and trust your investors to see the value in your professionalism and creativity.  Treat your film with the respect to plan thoroughly for its success, and then to execute that plan with all comprehensive diligence.  Then, treat your investors with the respect to allow them to see your movie for the opportunity it is.

2. NEVER DISCUSS “INTEREST”

If a classic car dealer asks me, right now, if I am interested in buying a Mercedes Benz 300 SL Gullwing… the answer is YES!!!  Hell yes.  I’ll test drive that f*cker right now!

As I write this, Ebay is selling one for $850,000.

Now try asking me for $850,000.

My interest in buying this car has absolutely no value.  Chances are good that the same is true of Hugh Jackman’s interest in your script, or Fox Searchlight’s interest in your feature film.  Keep your discussions with investors limited to those people and resources that are actually COMMITTED to your project.  Better yet, keep your discussion limited to those commitments that can be confirmed through third parties, like the press or the IMDb.

“But what if the people and resources committed to my film aren’t enough to get the money we need?”  If that’s the case, your investment sucks.  Your problem isn’t not having money.  Your problem is that your film community is not strong enough to support the project you have undertaken.  Focus on smaller projects, and earn the trust of your peers.  Prove to the people around you that you can finish what you start, and that you are the great storyteller you hope you are.  Then try this project again when more people are willing to jump on and leverage their own relationships on your behalf.

Don’t ask people if they are interested in your movie.  Ask them if they’re willing to join the production and make your movie with you!  Get the commitments.  Then, talk to investors.

3. NEVER ADVERTISE

Talking about your film investment on internet bulletin boards or forums is illegal under the Securities Act of 1933, Regulation D, Rules 504-506.  Look it up, and talk to your lawyer before you start to look for investors.  Stocks and commodities are traded in public markets, where the purchase and sale of these securities can be regulated by the SEC.  Places like Wall Street.  Your film will never be a public investment, and there are strict rules by which the SEC regulates and audits private investments.  What they want to avoid is the notion of people marketing “get rich quick” schemes to people who don’t know better… and most investors will see your project in precisely this nasty, scammy light until they get to know the details.

Just the same, you need to find these people and convince them.  Do not simply put the word out, and hope to those people willing to overlook the obvious risks will come to you.  Think about it!  Those folks too naive or inexperienced to ask the really tough questions are exactly the people our government is trying to protect!  Looking for those people to invest in your movie will only reflect badly on yourself and the industry at large.  Writing online forum posts or making websites about your search for film investors will not lead to capitalization, and it makes film investments as a whole look much shadier than they are.

Instead, you need to build an investment that approaches the risks of film production and distribution in a smarter and more comprehensive way than any of the other private investments being shopped around to production companies, finance companies, and private individuals with the liquid capital to invest.  Your job here is not to show these people the possibility of making money.  They’ve got plenty of possibilities already.  What you need to show them is the overwhelming likelihood of making money – and specifically, you need to show them the likelihood of making at least 200% of what they’re investing in a 3 year timeframe or so.  Put together a film that accomplishes this, and folks will be much more willing to take your investment seriously and share it with their business networks.

Check out more videos from this interview series
with Tennyson
here!

In the end, this is how the government expects you to find film investors. Talk to people you know, and get introduced to people they know.  If those people do not have the ability or the willingness to invest, ask them for recommendations in turn.

The basic idea here is that there are no shortcuts in film finance.  Making a movie means having ten different careers at once, and this is one of them.  If you’re looking for the easy way around the work, then you’re cheating your production and your investors both – and in this particular case, that’s a mistake you can get sued for.

Or MAYBE you can just ask me if I have any interest in making money on your film!

Sure I do.

If you’d like to ask questions, pose “what-if’s,” rebuke me with experience or hearsay, or just flirt from the safe distance of your personal computer, you can always find me at Tennysonestead.com.  To find out more about me, my ensemble, and my stories, we welcome you to our online community at 8sidedforum.com – and please, please support our upcoming feature, Quantum Theory.  Quantum Theory is the story of two brilliant, snarky women of science who develop a prototype that gives them the power to change reality itself… until it’s snatched from under them by a defense contractor with virtually limitless resources.  Stealing it back means winning a shell game of changing realities against a foe who does not lose. The future of our world depends upon their success!  You can find out more at here, and at Quantummovie.com.

 

BIO:

Tennyson E. Stead is a writer, director, and producer of film and transmedia.  In his childhood, he spent all his time building cardboard spaceships and rescuing his sister in them. These days he does basically the same thing.

For any production to realize its full creative and financial potential, every creative element must reflect the overall goals of the project. Every great collaborative work was produced by a team of talented people, united by a common intent.

8 Sided Films
and the 8 Sided Forum represent our collective stewardship over the stories born from intent too multifaceted, specific, or unique for studio production, and our commitment to honoring that intent as the foundation for a more personal relationship with our audience.

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Check out Tennyson’s prior Film Courage articles:

Find Your Built-In Audience

Why Nothing In Film Has Changed in 1,000 Years & Why Anyone Who Say Different is Trying to Sell You Something.’

A Screenwriter Prepares

Ten Things They Don’t Teach You About Actors in Film School

‘Never Ask For Money’

 ‘Never Play to Genre