13

Other People’s Money

Them That Has the Gold Makes Some of the Rules

There are almost as many answers to what investors expect as there are investors. Whether individuals, companies, or nonprofit organizations and no matter where they are in the world, each has their own criteria and idiosyncrasies. Specific customs of relating to individuals and doing business may be different from country to country, but investors are similar in terms of their goals. Since the business plan is a sales (not a legal) document, it is your job to learn as much as you can about your potential “customers” and focus on their needs.

How Do You Find an Investor?

The Sayles quote above has always been one of my favorites, as it emphasizes that you may find your money immediately or it may take a very long time. If investors all were similar and lived in the same place, I wouldn’t tell you where that place was. I’d be a very rich person funding films. Even finders—people who find money for films for a living—will tell you that it isn’t easy. If a finder promises the money or insists on money upfront, you may want to move on to someone else.

While many filmmakers go to Los Angeles or New York to seek equity investors, they find that others are throwing business plans at people in those two centers of commerce every day. Any potential investors in those towns have already been approached by too many friends and neighbors. If you are from Fort Wayne (IN), Hibbing (MN), or Cincinnati (OH), my advice is to go back home. You have more connections there and, hopefully, less competition from other filmmakers.

What Do They Want?

Artistic Expression

Some investors are drawn to films that have more literary qualities than mainstream films. The definition of literary is in the eyes of the beholder. We used to call these art films, but specialty is a better term. Normally, the term is assigned to films that appear to be based on a higher level of expression and writing. Or they are experimental.

You should make an attempt to create realistic expectations for both you and your investor. If you are lucky, her desire to be associated with quality will outweigh the high return she wants for her investment. On the other hand, if she cannot afford more money and does not want to join with additional investors, move on. Put your energy into finding partners whose outlook and resources are a match for your project.

Filmmakers still tell me (and the investor) that their film is “just like” Merchant-Ivory’s A Room with a View. It still is held as an example of an artistic film. After all, it is based on a novel by E. M. Forster. Unfortunately, they want to make it at 1986 prices ($850,000) and reap the box office of The Help ($213 million worldwide). The budget of The Help was $25 million. Your rationale may sound good to the investor, but it isn’t a good portrayal of the real market for your film.

Special Interests

If you can find an investor whose sensibilities agree with the theme of your film, you may be able to create a workable collaboration. If your story takes place in western Texas, then a good choice is to go to people in that area first. Other projects are funded by individuals because the film emphasizes a hobby or passion of theirs. As I mentioned in a previous chapter, many sports figures have become fascinated with film. Currently, I have several clients with football-, baseball-, or soccer-themed films. The first contacts they are making are with players and owners of teams.

The line between business and altruism can be a thin one. Still, few people will become involved in a feature film without considering its commercial possibilities. Jeff Skoll, for example, who was the first president of eBay and named the wealthiest Canadian by Forbes, formed Participant Media to make films on current social and political topics with the express purpose of inspiring social change. In many cases, the company even co-distributes with its focus on social media. The company still looks at the viability of the project beyond its societal interests.

Nonprofit organizations have funded all or part of for-profit films that fit with their particular mandate. The increase in the success of inspirational films with themes of good versus evil and redemption has brought more charity-based religious and nondenominational organizations into the market. Having been involved with writing several business plans for filmmakers who were seeking money from such organizations, I can assure you that most look at the project as a whole, not only as their special interest.

Big Returns

People do invest in films with the primary purpose of making money. Independent films that are more mainstream in terms of story and demographic appeal are likely to appeal to investors to whom a big pay day is the biggest attraction about putting their money into film. Like a gambler in Vegas, this type of investor is playing the odds. As a matter of fact, several well-known poker players have become investors in films.

Pitching Your Project

The “Elevator” Pitch

In a seminar, a filmmaker asked me what kind of pitch you do if you are not in an elevator. The term elevator pitch is not meant to be taken literally. The idea is that you may be in a social or networking gathering, or indeed in an elevator going from the first to second floor, and have 30 to 45 seconds to attract interest. You are at AFM. You and Eamonn Bowles, President of Magnolia Pictures, are the only people in the elevator. Or you are waiting for the valet to bring your car around after a film seminar, and Mr. Local Mogul is standing next to you. What will you say?

Plan now. Don’t wait until you are in the elevator or standing on the curb to think of something. Develop and rehearse it. Try it out on other people. You want to make a good impression, as well as create interest. In terms of the business plan, it is also the logline that you will put in the Executive Summary. This does not mean things like “It is Guardians of the Galaxy meets Hello, My Name is Doris.” You want a well-honed sentence or two that summarizes the idea of your film in a way that will make the investor want to speak or read further.

At the most basic level, an elevator pitch is a sales tool that helps you get the meeting you get the investor immediately interested in your film. Avoid the cookie cutter “insert your name here” templates that you’ll find on the Internet. You want your pitch to stand out and be unique. On the other hand, the listener has to understand what you are talking about. Make it both sensational and simple at the same time. Make it concise, clear, and very short.

The elevator pitch is like the logline. Leave out wasteful and non action words like when.

Or you can add a teaser:

A woman falls in love with the killer next door. What happens next?

Below are two examples from clients. They show the difference between an elevator pitch and a synopsis.

Fool Your Investor, Fool Yourself

I’ve been meaning to call the Centers for Disease Control about a virus in the air. It causes filmmakers to break out with foolish forecasting. Typical symptoms are seen in these recent comments:

I’m fairly sure the CDC doesn’t have a vaccine for it yet; however, I do think it is worth investigating. In the meantime, to avoid coming down with a pesky case of investor disappearance, here are some guidelines to follow.

Communicating Effectively

No matter how great your film project is, you may be unable to gain your goal—raising the money—unless you can communicate well with others. When you have a meeting, you think that the goal is to get money for your film. It is actually to communicate with the other person. Communication is a two-way street. In addition to how you are going to explain your project, you need to understand and think about what the other person is saying. Go in with a plan, but let the other person go first. You will probably give your short pitch first, but I advise letting the other person be first to speak about a potential deal. There may be a counter proposal you can make, rather than having the meeting end abruptly. Here are a few suggestions to aid your meeting style:

1. Don’t interrupt: Let the other person finish what they are saying before you speak. I’ll admit that one of my failings with clients is to interrupt due to my “psychic ability” to know what they are going to say next. Even if I am right, the rudeness tends to put people off.
2. Take a breath before speaking: Think about what you have just heard. It lets your investor know that you are taking what she said seriously; or, alternatively, it gives you time to form a reply. This comment applies to serious conversation, not if the other person merely says “hello,” or asks if you would like coffee or water.
3. Observe nonverbal cues from their mannerisms, tone of voice, gestures, and so on. At the same time, try to be aware of your own. Are you relaxed and smiling? Try nodding once in a while to show you understand what they are saying. Of course, be sure you do understand.

What They Say and What You Hear

Why am I quoting a nursery rhyme? No matter how old we get, we often seem to forget the art of listening to what other people are saying. Or, to be more exact, we think we are listening but don’t really hear what the other person is saying. It is the same whether it is an equity investor, the executive at a big production company, or a teacher in the classroom.

• What they say: It is an interesting script but not the kind of project with which I want to be involved.
• What you hear: He will give me the money if I rewrite the script and have Jennifer Lawrence, Bradley Cooper, and Johnny Depp in it.
• (Go on to the next potential investor. Unless he says anything after that sentence, don’t spin your wheels.)
• What they say: I’ve got $100,000 for development. Why don’t you start pre-production, and we’ll negotiate later.
• What you hear: It’s a done deal.
• (It is a done deal when you have a signed agreement and the cash is in the bank. Do not go forward until then.)
• What they say: I’ve signed the agreement you gave me, and here is a check for $4 million.
• What you hear: It’s a done deal.
• (You heard correctly. As soon as that check cashes, have fun filming!)

There are many good websites devoted to this subject. I suggest an hour browsing the Internet. In addition, have someone with business experience who can advise you. It is often difficult to be objective and separate reality from fiction.

Common Sense Is More Important Than Rules

The variety of possible conversations is too broad to make a lot of hard-and-fast rules for you to follow. That gets us back to the sticky point that the desire to raise the money for your film may chase all rational thinking out the door. As with the filmmaker’s experiences mentioned earlier, I would rather offer observations:

1. If an investor asks a simple question, give a simple answer. For example, if you are asked the total budget number, just say it. You’ll have plenty of time to go into other items in your pitch. A client was asked the budget of a film four times. She talked about all the wonderful qualities of the film but didn’t answer his question for 30 minutes. He finally ended the meeting.
2. What not to say is almost as important as what to say. Don’t be the first to bring up negative news reports. On the other hand, be ready with a response to items that you know have been in the news. If someone has heard that statement and asks you, agree that there is no guarantee that a film will make money. Then go into a short explanation of your financials.
3. Although you are a salesperson in this instance, the motto that “No is only an opportunity” usually doesn’t apply in this situation. Sometimes no means no. Thank the person for their time and leave. Later you can assess how the meeting went. You may find better ways to present your material. Then you can choose whether to go back to that person or apply your new knowledge at the next appointment.

Learn From Others

In Chapter 14, clients and other filmmakers share their experiences in talking to investors.

Take the time to read it. You will see that all investors are not cut from the same cloth, and you need to adjust to the situation.