Transcript FPM-2 Fundraising Crowdfunding and the Business Plan

FUNDRAISING, CROWDFUNDING
& THE BUSINESS PLAN
http://www.fsproducingclass.com/fpm2/
THE BUSINESS PLAN
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”
RULES TO FILM FUNDRAISING
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?
INVESTOR DEDUCTIONS
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.
SECTION 181
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.
CROWDFUNDING
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-scenario
Good 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 deadline
Backers 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 reward
The $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
WHAT TO AVOID
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.
THE BUSINESS PLAN
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 TEMPLATE
Budget Breakdown for the Investor
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 BUSINESS PLAN
The Distributor Approach
Try to split the rights into foreign and domestic and offer that as
payment.
A Negative Pickup
Negative 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 RISKY SIDE
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 DRIVE
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
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