Feature Film Funding - Complete Guide

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Finding film funding is often the hardest part of making a movie. But it is not impossible! Once you have successfully financed your first film, you will know what it takes to fund future endeavors.

Unless your project is being entirely funded by a major studio, it will be classified as an independent film; and in most cases, it’s up to the producer to secure the funding to make the film. 

It’s important to understand that most independent feature films find funding through a combination of sources. For example, filmmaking grants, crowdfunding, and state tax incentives.

Below you will find a list of methods you can use to fund your film, from least risky (soft money) to most risky (hard money). 

Counting-Petty-Cash-on-Film-Set

1. Crowdfunding

Ten years ago, crowdfunding was the new trendy way to fund your indie film. It’s still one of the safest methods you can use, as funding is often without strings attached or interest. To begin, create a crowdfunding campaign on your chosen platform. You will need to let people know why they should donate to your project and create audience incentives.

Crowdfunding is an excellent short film funding method. However, you will likely struggle to raise big money this way. Usually, feature films that get wholly funded from crowdfunding already have an inbuilt audience. Still, it is possible to partially fund your film through crowdfunding, such as using crowdfunding for a single aspect of your movie (For example, post-production/completion costs or the costs to hire a well-known actor to appear in your film). You will need to get creative and give people a good reason to donate. One way to do this is to offer people the ability to appear in your film or invite them to be special guests at the premier. 

A list of popular crowdfunding platforms for filmmakers:

Feature Film Funding - Complete Guide

Feature Film Funding – Complete PDF Guide

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2. Private Investors

Having someone invest their own money in your project is a no-fuss way to fund your film. The easiest way to do this is to ask friends and family; people are more likely to give you money if they know you. Many filmmakers have previously funded their films through a series of small investments from personal acquaintances (for example, Darran Aronofsky’s debut feature film Pi). However, this is all dependent on you knowing people who have money to give. 

It is also possible for strangers to privately invest in your film. A person might do this for several reasons, such as wanting to support the film’s cause/core message, or perhaps they just have money to give away. You will need to market investment opportunities, which you can do by holding a fundraising event.

While crowdfunding is a donation, investors might wish to get their money back. The terms on which you accept a private investment must be negotiated in detail before you receive payment. You should be upfront about the risks because there is no guarantee that people will make their money back. If possible, hire an entertainment lawyer to draw up contracts for all investors, especially if they give you a significant sum. 

3. Equity

Another type of private investment is called equity financing. This requires you to sell interest in either your film or company in exchange for film funding. Equity is the measure of how many shares and ownership a person has of a product, which is represented in percentages (for example, if you give me $10K, I will provide you with 10% equity). 

Importantly you will need to decide exactly what that percent means, which is most likely to be your film’s overall profit. Once again, make sure to write up any financial deals and the terms and conditions into a contract. You can download a free contract template in our pre-production bundle, but it is advised that you have an expert look over all agreements. 

Some filmmakers also use equity to pay their crew and cast wages. Percents of the film’s ownership can be used as incentives to get talented people on board. You might only be able to pay an actor half of their preferred rate, but you can make the rest up by giving them equity. Keep in mind there is never any guarantee that a film will profit. On the other hand, if your film is a surprise hit, you will still need to pay back your investors the same equity percent. 

Making-Movies-Takes-Money

4. Filmmaking Grants

There are lots of filmmaking grants and competitions out there where you can apply for film funding. These take place year-round and include both fiction and documentary funding. Often these have terms and conditions for filmmakers (such as the film exploring a social issue). However, the best thing about grants is that you don’t need to pay them back. Bookmark this updated list of US film funding grants and a list of UK film funding sources

It’s a good idea to apply for any grants you are eligible for, as they do get hundreds of yearly submissions. Most importantly, you need to carefully read the application rules, as many of them have strict criteria. If you are making a low-budget film, using a mix of soft money options is your safest bet. To get more significant investments, you will need to have evidence that your movie can profit (e.g., having a well-known actor on board or a pre-distribution deal). 

Lucky for you, we have already put together a list of the best film funding grants.

See also: The Best 15 Film Grants for Funding in 2021
Feature Film Funding - Complete Guide

Feature Film Funding – Complete PDF Guide

Professional Free Customizable

5. Product Placement

Watch any blockbuster movie, and no doubt you will see many examples of product placement. Big brands are willing to pay in the millions to have their product on the screen (Heineken was rumored to have paid $45million for placement in James Bond Skyfall). Large sums like this are only for big-budget Hollywood movies, however independent films can still take advantage of product placement. 

There are two ways to go about this: 

The first is to accept the product for free, and in return, you get a free prop or use of a location. For example, perhaps your film takes place in a nightclub, the owner of a nightclub might let you use the location for free, so long as you advertise their business. The second is to get cash for showcasing products in scenes. 

To do this, go through your script and highlight any props in your film that could be a product. Next, you will need to contact marketing agencies and see if you can find a partnership, you can also contact brands directly. To get a decent sum of investment, you will need to convince the marketer that your film will find a large audience. After all, product placement is just another type of commercial advertisement.

Film-Tax-Incentives

6. Tax Incentives

Did you know that your choice of filmmaking location will save you money on tax? You can also get bonuses such as equipment and local business discounts. These are called tax incentives, and most regions worldwide will have their own version of location incentives. These incentives were created to encourage filmmakers to shoot locally and not film abroad. This benefits a state by increasing local employment and tourism. You can save a lot of money by using tax incentives, so long as your project meets their requirements. 

You will need to go through each state and weigh up the benefits of shooting locally or filming elsewhere. These incentives are not for very low-budget films, and each state has a minimum production spend. Some states require you to hire a local crew or film within a particular area. Most independent films use tax incentives to part-fund their film. Tax incentives are also very attractive to equity investors, as they know part of the film funding has already been covered by the state. 

Bookmark our complete state-by-state breakdown of United States film tax incentives.

See also: Film Incentives State By State Breakdown 2021

7. Pre-Sale Distribution

One way to guarantee that your film will find an audience is to already have a distribution deal in place before you make it. Pre-sale agreements are contracts made with film distributors before a film is produced. You can contact film distribution companies directly or through a sales agent and ask if they would be interested in investing in your film. A distributor will assess a project’s profit potential based on the script, attached talent, and producer’s previous work. 

It is possible for a distributor to fully finance a film. Although more often, a pre-sale distribution means that when the film is complete, the distributor promises to buy the film for a set price. As a producer, you can then use the pre-sale agreement as collateral to get out a bank loan or entice investors. This approach is high risk because you will need to pay back the distributor in total if you fail to complete the film.

Film-Producers-Meeting-About-Finances

8. Negative Pickup

Another form of pre-sale in filmmaking is a negative pickup deal. This involves creating a pre-sale distribution deal with a film studio. The studio agrees to purchase the movie from the producer at a given date and for a fixed sum. Depending on the agreement, the studio will receive full distribution rights for the film. In contract deals like this, the producer will need to negotiate how much profit they will receive from distribution. 

A negative pickup deal often only happens if the film is deemed as being bankable. It’s unlikely that a studio will help fund an independent film unless they know it will sell. The easiest way to ensure that a film will sell is to get a major actor attached to the project. A movie star’s face on a poster can be enough to guarantee distribution deals and film market success. With any pre-sale agreement, the producer runs the risk of owing the studio money. Similarly, if the production runs past its completion date or is over budget, the producer might have to pay additional costs to the studio.

Bank-Financing-For-Film-Production

9. Bank Loans

It is possible to use bank loans to fund your film, but you will need to guarantee that you can pay the bank back. Large companies will have more luck when taking out loans as they have assets to use as collateral. As an independent producer, you will have to be careful with loans, as you might end up losing your house if you can’t pay back a bank. One way to convince a bank to loan you money is by having a pre-sale agreement. A bank will add up your film’s marketing potential to decide if it’s worth giving you a loan. This is why it’s a good idea to have well-known talent both in front and behind the camera. 

There have been many credit card movies made in the past. But this is not a sensible option for independent filmmakers. For every success story, there are tens of thousands of films made every year that don’t turn over a significant profit. Make sure to carefully read through all contracts, and know what to expect if you can’t pay back a loan. 

10. Gap Financing

There are lots of different terms for using banks to fund your film. One notable strategy is gap financing. Gap financing is when a filmmaker gets out a small loan to fill the ‘gap’ between what they have raised and what they need to make the film. For example, you might have raised 95% of your film through a mix of soft and hard money methods; you then get out a bank loan for the extra 5%. Since filmmaking is a high-risk venture, loans tend to reflect this risk with high interest and charges. It’s worth mentioning that interest is less likely to be fixed. 

Another strategy is called slate financing, this is a new and complex film funding method. This involves a producer making a deal with a studio to create a collection of films. In doing so, the studio increases their chances of making their money back (make five films, and maybe one of them will be a hit). This type of funding makes sense when making a film series (e.g., Harry Potter, Lord of the Rings). Slate funding comes from various high-risk sources, including hedge funds, private equity, and bank loans. 

 

Feature Film Funding - Complete Guide

Feature Film Funding – Complete PDF Guide

Professional Free Customizable

Conclusion

As you can see, film funding is not so simple. Film schools (unfortunately) don’t usually teach filmmakers how to attract investors and secure distribution deals. As a producer, you will need to teach yourself the business of film financing. This is why it’s a good idea to start with a lower-budget film and soft money funding options. If you plan on making a higher-budget film, invest in an experienced producer and entertainment lawyer’s advice.

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Amy Clarke

Amy is a film blogger based in Liverpool UK. She worked on numerous productions, working her way up from independents to major budget feature films. Amy now works as a blogger writing about the film industry. You can follow her work at amyclarkefilms.com

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