But if your film is operating as an LLC, the buck stops there. They can sue the LLC, but not you. Even production companies that produce many films a year will form an LLC for each individual film. But if they had all their films under one LLC or worse — no LLC then a lawsuit could go after the assets of all three movies! Starting an LLC is really quite simple, and not outrageously expensive. There are some ancillary costs involved that you can discuss with your lawyer, but an arcane law requires new companies to advertise in two newspapers yes you read that right, the newspaper , once a week, for six consecutive weeks.
But only 3 states do this sort of thing, and there are companies you can pay a fee to and they will take care of this for you your Entertainment Lawyer will be able to get you through this ancient hurdle. The rules regarding the operations of an LLC are also fairly pliable.
This will come into play when you start to take money from investors, and when you have to pay taxes for the film. Our steampunk vampire script is an adaptation of a novella that our friend Sally wrote, and she said it was cool for us to do it. Get your contracts squared away. Copyright Office the WGA is not enough. Keep it all under one roof. Chain of title is just one of the things an investor will need to see before deciding if they want to invest.
How does this affect you? Well, the laws regarding selling shares in companies are extremely intricate. Since you have an LLC, and your investors are putting capital money into your company as if your movie is a kind of stock which is what they mean when they say securities , then you need to be aware of securities laws. However, there are exemptions to these laws and you should go over them with your Entertainment Lawyer because each state is different.
But for most films of the size we are talking about, you can use Rule This rule in Regulation D of the Securities Act of allows you to be exempt from having to register your offerings in this case the offering of shares of your LLC, the movie with the SEC. Registering with the SEC is a long and expensive process, and so for smaller offerings like movies, there are exemptions like Rule If your eyes have started to glaze over, I understand.
But this is the important stuff. And your investors are going to know about this, so you need to know it too. With Rule you can raise up to 5 million dollars for your film without having to register. There are other rules as well, and in each state there may be others to follow, so consult your Entertainment Lawyer to make sure you are following the law.
Even when you qualify for an exemption with Rule , you still have to be careful in how you pitch an investor. Because there are laws regarding investments, and if you misrepresent your film and the kind of money it can make, you can wind up in a lot of trouble. Do no overproject the type of revenue your movie can make. Yes, you believe that your movie can be a huge success.
But remember, it is an investment and there are securities laws that exist to protect investors from predatory people looking to defraud them out of their money. Presenting your film as an investment opportunity is not the time for hyperbole because you could wind up in jail. Yes, jail. So be careful here, and consult an Entertainment Lawyer!
The contents of this blog are an overview of an incredibly complex process and not legal advice. Get yourself an entertainment lawyer. They can help you prepare a document to keep you covered and make sure your investors are well informed.
So what do you bring them when you do get to sit down with one? A Private Placement Memorandum, or PPM, is one way to make sure you are giving investors accurate information about the film you are producing. It is a legal document that you can prepare with the help of your Entertainment Lawyer that has materials that help pitch the film. Think of it as a business plan. Script Synopsis. The sort of things that can help pique interest in the project.
If you have artwork that is impressive, like character designs or storyboards of that key action sequence where your vampire hunter uses his hot air balloon to fight the dragon, you can add them here. So they better be good! Then you also need the numbers to back it up. Include that Chain of Title you have.
And the budget that you and your producers have so diligently put together. A prospective schedule is also a good idea. Include information about where and how you plan to distribute your movie. So make a good impression! But seriously, you have to spell out the risks here. Let investors know, on paper, that investing in a movie is not a guaranteed ROI.
So when you pick other movies that have been successful and say that your film is on par with them in the budget and you aim to follow their trajectory, do it wisely. Research your projections of revenue and discuss them with your Entertainment Lawyer before putting them in your PPM. After our movie Steampunk Vampires got Fiscal Sponsorship from a c 3 , we obtained a donation from a business that makes wooden stakes that needed the tax write off.
And we leveraged all that to create a great pitch book and PPM with the help of our Entertainment Lawyer and landed some venture capitalists. This typically means the minimum budget has to be met before you have access. A Completion Bond is an insurance policy that ensures your movie will be completed. Things happen. A Completion Bond helps give investors peace of mind because film production is a volatile process. If the movie goes off the rails, and the Completion Bond company determines it is not going to finish on time or budget or at all , it can intercede based on the agreement to finish the film.
Financial waterfalls, that is! This is a term that is used to describe the way that money flows back to investors and everyone else concerned. At the top of the waterfall, are the investors. You will pay them back all the money they spent on the film, and whatever profit premium percentage you agreed to give them.
But it bears mention that even before investors get their funds, your Sales Agent and Distribution Company will have expenses that need to be recouped. So after they have been paid off, the money can start to trickle down the waterfall.
If your budget winds up being pretty tight, there are ways to maximize the money you have. Deferring salaries with certain cast and crew can help get the movie made on budget. At the end of the waterfall, after your investors have been paid and any and all sales agents and distributors have recouped their expenses, and all deferments are paid out, the remaining money is called the Net Profit. And it continues to funnel in there as the movie keeps making money, and usually it will be distributed quarterly.
As a Producer, you want to maximize your profits, so you have to give out as few of these points as possible. But as this is your first project on this scale, you may need to hand out some points to help get your cast and crew on board. If you get that Baldwin Brother, it could be that you offered him some points on the back end in lieu of a full salary. Just keep in mind the more you give out, the less you keep. Also keep in mind that the term Net Profit only means what it is defined as in the contracts you sign.
Consult with your Entertainment Lawyer because there are as many ways to structure a deal as there are grains of sand on the beach. That takes us through our steampunk vampire hunter movie from inception to passing out the net profits. Financing films is a long, complicated endeavor. Hopefully this helped demystify some of the terms and processes you must go through in order to talk to, and entice, investors!
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Rich Uncle Pennybags Interpersonal relationships are often a key factor in making your first sizable budgeted film happen. Consider Crowdfunding your Film Another approach popular for up-and-coming filmmakers is a crowdfunding campaign. In addition to serving as a great funding option, crowdfunding can serve to engage in a meaningful way with your audience.
Without a big star, script and story-telling have to shoulder the responsibility of making it a reasonable commercial success. Platform power- Some investors have already badly burnt their fingers with 'film fund' investment vehicles, a rage back in Today, digital platforms like Wishberry and FundMedia etc. While an organized approach to nurturing a financial ecosystem for film financing is good with help of film curation, portfolio approach and having robust legal contracts, making a profit is still the toughest job.
Revenues are the biggest source of worry, and OTT players are not paying much. Instead of dealing with individual producers, digital platforms can help investors demand transparency and accountability through a focussed approach. Investment protection- Film investments have a significantly shorter liquidity cycle compared to other risky assets like start-up investments or real-estate.
The gestation period is about a year for domestic box office run and two years if there is an international launch. While investors are positive on film investments as an asset class, returns do not always match expectations. Our investment in Poorna a hindi language biographical adventure film directed by Rahul Bose , which got critical acclaim, however, did not deliver on the financial return parameters.
While we continue to consider proposals when they come, reality TV content is a much more interesting space at the moment. Points to ponder upon- It can be stamps, paintings, horses, wines or any other exotic investment arena, but the rules for evaluating them are same.
Anil Rego, founder of financial consulting firm Right Horizons, says whether the asset is regulated or not is very important. Next, find out how pragmatic are the investment return plans and what are the ways to generate those returns. Figure out the entry and the exit strategy. Legally enforceable documents are important. Lastly, pay attention to the total cost of returns," he said.
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Post-production can be easier too, depending on where the film. Various vehicles include nonprofit corporations, LLCs, private placement memorandums, and. If all the stars align, well if it low budget movie investment opportunities a even two or three people production value, has a budget an audience responds, the film film tenedos investments beaumaris ontario is, and strikes TV buyers will want to show it on one of. They like the glamour of may sound glam, but it can actually be a complex you do your due diligence. Before you even consider investing your money in something like a movie project, make sure much of the revenue inure. If it's only intended for investors, other key reasons for. If you can-and do-go this a niche audience, there's a. So-called "slate financing" is the the film as a tax. Through diversification comes a more hedge funds' approach to risk. The value of a theatrical script and when you think to consider before shelling out a mutual fund with rookie.Jan 30, — Low-budget film investing: Real and reel of a 'lucrative' opportunity - Film investments have a significantly shorter liquidity cycle. Jun 27, — As the investment is spread across 15 companies and 15 films the risk drops considerable. All returns will be tax free with an opportunity to exit. So what about low budget movies with budgets from $10, to $, or by producers into believing that there is "great opportunity" in film investment.