Financing / Crowdfunding : Questions to Financiers On Here! by Vincent Romano

Let me turn that question around and, in addition, ask working film makers how often they meet or interact with "funders" only to find such people have never actually funded any film and don't have a clue about independent film production or marketing. I have had to learn to filter out "money people" very quickly to get to legitimate investors or legitimate producers/financiers." I am going to say, with 20+ years in the industry (including as entertainment lawyer) behind me, that easily 95% of people advertising themselves as having "financing" expertise or as "investors" are actually inexperienced and incapable of either. While some are honest enough, on discussion, to admit they don't know the space, most fall back on parroting the same industry myth & cliche that every member of the general Hollywood audience learns (which reveals their lack of sophistication.) Sadly, a great many are hoping not to invest or or find funding, but to insinuate themselves into a project which already has interest and fundability with little or not effort and no investment of their own. Or again parrot industry cliche in an attempt to find easy targets to charge for pitch package preparation or other services... which they have no ability to take anywhere.

Thanks for your input Shadow. You raise some good points. I’ve had that situation with a few “money people” as well. How did you learn to filter out those “money people” and find true investors, however difficult it may be?

Vincent Romano Good question. It is often difficult to tell legit people from those who are playing you, or from those who don't have a clue. Because all three groups are present at all levels of the industry. I have the advantage of being in it for a very long time, and had a wide artistic and business background before that, and years of experience as an entertainment attorney including litigation. My BS meter is highly tuned and almost always active. Here are my comments, from the perspective of independent film:

Foremost, if you have a viable film or series project, you are offering an opportunity to an investor and financier to make money, maybe lots of it. You are NOT begging for them to donate to your non-profit passion project. (If you are... then maybe professional film making isn't for you). That means you have to vet your financiers like you would any other serious business partner. Now independent financiers and prospective Executive Producers as a group have cultivated the idea that they are more knowledgeable about things than mere film makers. The truth is they can throw their money where they want (query IF THEY ACTUALLY HAVE MONEY). And many of them do know exactly how to get things funded. So you should play ball with them... a little. But at some point, preferably early on, they have to agree that you are bringing them value and that your project is worth being a part of. There are lots of people with money besides them who want a good project. Film making is a collaborative effort, even from the early financing, and all parties need to respect each other from the start, including the money people.

The following points are off-the-cuff, so take them for what they are worth.

1. THE CARDINAL RULE for ALL private investment of any kind (including whether a legitimate funder will even begin to work with you) is that an investor must believe in YOU. It's personal. It's not about the documents or the attachments or even the script. Although we talk about "believing in a project," no one ever really believes in your project or buys into your project. They are buying into YOU. So you are never selling your film, you are always selling YOUR SELF. Taking this to heart shines a different light on everything else in your development and pitching process.

2. LISTEN VERY CAREFULLY to your potential funder. What do their questions and observations say about them and their knowledge (as opposed to about your project)? This is vital. What they ask about and what they focus on reveals very much about their actual knowledge, and about their motives. Is this person assessing me and evaluating my skills and my project? Or are they simply trying to get information from me? Are they contributing something of value that they actually know, or are they simply parroting something they hear in popular media or from other industry? Are they trying to figure if my project is the kind that they know how to fund? Or are they apparently willing to jump on board without any real analysis?

3. ASK DIRECT QUESTIONS of your potential funder. If the answers don't make good sense to you, or if they avoid answering, there's a flag on the play. Don't assume the "financier" knows anything about producing... or distribution... or for that matter, film finance, NO MATTER HOW MANY YEARS THEY OSTENSIBLY HAVE IN THE INDUSTRY. I have spoken to senior executives at NBC-UNI and much smaller corporate producers who haven't a real clue about any of that. They have no personal contacts. They have no deep insight into the business. Their corporate employer insulates them from bad decisions, and also requires them to think and talk like the corporation thinks and talks. They may have all the lingo down, but not be able to produce their way out of an indie film-making paper bag.

4. The things your "funder" focuses on in your pitch reveals something about their level of skill. Here's some real examples from my own experience:

(a) a feature film about a personality who has a built-in audience across the whole English speaking world and whose current demographic spans from age 6 through 90. Because it's true, that fact gets financiers smelling money. Then they find out it's an African American personality. The first reaction after that (only and always from producers who see themselves in the "mainstream") is something like, "perhaps we can get investors who need a tax write-off." At the heart of this reflex is a structural industry bias. It is originally a purely racist bias, but now it is industry myth, accepted without question (and against clear evidence) among people who haven't examined the financial history of film. This response reveals to me: (1) this person doesn't know the financial history of biopics, (2) or of Black film, and (3) cannot override an industry reflex they somehow absorbed, even given their own favorable assessment of the commercial strength of the project. I cannot afford to deal with them on this project, because they will never be able to sell it. A formulaic project might be better suited to pitch to them. But I don't do formulaic projects. And I don't have time to educate other professionals on industry facts they should already know.

(b) Many indie filmmakers have heard they should have a corporation in place before pitching. On the other hand, many financial reps first question is "is the property owned in an LLC?" - both of these groups are unsophisticated. The former has likely already wasted their money and time. The latter are asking the filmmaker to waste their money and time. Why? Because incorporating early this puts the cart before the horse... in fact it's buying a cart before the horse is born. Every legal structure is superfluous if an investor doesn't believe in YOU first. And if they do believe in you, then an appropriate legal structure can be put together literally in a day or two. Putting any kind of corporation together in advance puts legal concrete over the kind of finance that can be raised within that structure. Every legitimate investor has their own tax situation and preference as to how they want to proceed. So setting up a corporation in advance is, frankly, silly.

(c) Some financiers ask to see not only an LLC, but a PPM (private placement memorandum) before they talk to their investors or even read the pitch. This is a serious red flag for me, even assuming they aren't running a securities scam. Which they possibly are. Why would I create a written-in-legal-concrete offer to sell securities to an unspecified group of people I haven't met, who haven't met me, and who haven't even heard of my project? People asking for such things early on might have heard it's "the legal way" to raise money. But they are not thinking about the actual business at hand (or film finance in general). Nothing is likely to come of any dealings with them.

(d) You pitch an independent film with a budget of $3 million. The "financier" asks, "Do you have anyone from the A-list attached? Like Brad Pitt maybe? Or Hally Berry? Or Gary Oldman?" The abject stupidity of such a question should be plain to you, as should the naivete of the "financier." My come-back is something like, "Do you have access to investors for a 60 million dollar film? Because as I told you, this is a 3 million dollar film." And that's if I want to be polite. This financier hasn't a clue about film costs, industry politics or distribution models. It's far too much to expect them to be able to sell your project to investors with possibly even less knowledge. In reality projects with "name talent" is a game for the A LIST, which is a miniscule group. The financier you are approaching is likely NOT in that game, even if they think they could be. (Note I am not commenting on packaging considerations here, or on the desirability of "recognizable names" in general. But people with outrageously weird expectations in a given budget range are unsophisticated to say the least, and there are LOTS of them in the industry).

AND FINALLY, BE ZERO TOLERANCE. If ANYONE pretends your project is below them, or insults you or your background, know they are not worth dealing with. Ever. Write them off and make sure others whom you respect know about them(!). Most legitimate producers and investors at ALL levels of the industry will go out of their way to give you at least a little bit of time out of their day, without trying to belittle your project or embarrass you for daring to approach them. The crap might rise to the top, but of course so does the cream.

run away from anyone claiming they are Investors/Angel Investors/Financiers/Venture Capitalist. They are all grifters. Legit Money people don't come to you. YOU have to meet them in their place of business, hobby events, charity benefits, car auctions, strip clubs.

Now if you want to find easy marks with deep pockets, go to a Dentist Convention.