| | 1. START WITH CO-FOUNDING PARTNERS FINANCING. |
| | Let’s say you formed a team of 5 key people with a strong business and artistic sense. |
| | If you had any even modest success in your career (any career really), finding $20,000 for each to put as a fist installment, should not be a problem. It can be your savings, personal loans, credit cards (last one is not your best choice). |
| | If none of those options look attractive to you, drop the whole idea of getting into a new venture and go back to school, kid. (I’ve invested hundreds of thousands of dollars in my projects and have never regretted even if the most tough times – a decade ago I immigrated from a country where one’s life’s savings could be spent in USA within few months, just to pay the bills). |
| | So, your funding up to now: $20,000 * 5 people = $100,000. |
| | 2. PARTNER WITH A SCREENWRITER THAT CAN ADD MORE VALUE. |
| | As you know you can do screenplay rights acquisition through royalty, equity or loan – fully or partially. Depending on the production team’s credentials young screenwriters can agree on 100% performance based compensation. |
| | Nevertheless if the literary material is really strong and the team doesn’t deliver, for a writer it is a $500K worth lost opportunity. So be fair, consider splitting the risk. |
| | For example in my case I would be willing to risk about 70% of the compensation. It means that I will require an option, and/or $100,000 upfront in case of acquisition of the rights. Another $100K would be in form of no-interest loan, and the rest is in low % royalty or deferred. Please see my work at olga-kostrova.com. My favorite screenplay up to date is “Anatomy of Loneliness”, a deep character-driven, emotional and thought provoking piece. In addition to the screenplay itself you would get my full support with marketing and further fundraising – cinematography is the only area where one can buy me cheap, and it’s all for the love of the art J. I also do photography, painting, costume design and manage industrial design. If you can monetize on either of it, more power to you. |
| | Funding equivalent up to now: $100,000 – $100,000 + $100,000 = $100,000. |
| | 3. FUND THROUGH PRODUCT PLACEMENT. |
| | Get your founding team, interns from film schools and volunteers on the phone and bring 10 Sponsors who can benefit from getting exposure of their newly launched product. Let each put $30,000. |
| | Those who say “can’t be done” 1) are lousy marketers 2) don’t know that more than 50% films are partially funded this way 3) don’t know that there are organisations that do just that – product placement for films. |
| | I am not saying you will make 10 calls and attract 10 sponsors. Dear, get out of Lalalend. You might actually need to make 10000 of calls to marketing Directors, have 100 meetings and find 10 small sponsors. It all depends on your story, lead actors, and of course your sales and marketing skills. |
| | Cash and funding equivalent up to now: $100,000 + $30,000*10 = $300,000. |
| | 4. HOST FUNDRAISING EVENTS. |
| | To provide your sponsors with immediate exposure as well as to gain followers, fans and supporters, host 5 fun fundraising events in major cities. |
| | Let’s assume that expenses for event management and marketing: $10,000 per event. Partner with large clubs that will be happy to profit from the bar sales while serving thousands of your guests. Spend on marketing wisely. Take advantage of social media (fan Page on Facebook, Twitter pages and contest, and all that jazz). |
| | Did you know that you can sell your tickets online and advertise your events with no or minimum upfront investment via affiliate network on Pay Per Sale basis? Engage your main actors in the events – give your fans the sense of direct connection with celebrities. Don’t forget to film all your parties, then Youtube them and create excitement on social networks, |
| | Cash and funding equivalent up to now: $300,000 – $50,000 + 5 events * 1,000 attendees * 50 donation = $500,000. |
| | 5. ENGAGE MORE SPONSORS BY OFFERING THEM ENTERTAINMENT BLOCKS FOR CORPORATE EVENTS. |
| | Now when you created a sense of suspense and excitement around your film, bring more sponsors when your production team has some materials shot, so now you can create a draft of a trailer. |
| | Many companies constantly organize large events to nurture their relationships with their business ecosystem: customers (new and prospects), suppliers, investors, employees. Each event has a significant enough budget to pay for various performance blocks in their program. |
| | You can offer them something fun with participation of your stars-actors. You charge for that, but at the same time keep promoting your future film. Tell interesting stories about the film in connection to the company-sponsor (any connection can be always made as you know), show them fun episodes that will not make to the movie – entertain and match performance with messages that a company-sponsor tries to deliver during the event. Take and distribute photos with attendees and management, make them happy to develop relationships for future projects. |
| | So, let’s assume you combined your pre-launch parties and multiple grand opening ceremonies with large corporate product lunches, conferences or other events of 50 companies, and charge each $10,000 for your entertainment block. |
| | The sponsors can be solicited via direct sales / telemarketing or a Pay Per Deal affiliate network that markets business-to-business offers. |
| | Also to a production team that will acquire rights to either “Anatomy of Loneliness” or “No name story“, I will gladly provide (as a bonus) a database of marketing executives (200,000 names) who can be approached for sponsorship of your next film projects. You can call to ask for permission to send your proposal and then bulk email to your opt-in list. Emails addresses will be provided for each database record. |
| | Cash and funding equivalent up to now: $500,000 + $10,000 * 50 events = $1,000,000 |
| | 6. CASH OUT ON YOUR FANS BY PRESELLING DVDS. |
| | Now when you get the public hot and wet, presell the DVD’s with a discount and an autograph of your starts, director and other team members. It’s not only more cash in your pocket but more advertising for your future film. |
| | DVDs can be easily marketed via affiliate networks. |
| | Of course you have to be damn sure that the film will actually be produced. |
| | Don’t have funs of your story yet? Then you have lousy marketers on your team. Spread the word using friends of friends via social media. Create a story, create the buzz, make people want to see your story on the big screen. Do you have the slightest idea how many people would pay to see Avatar a year in advance? Yes, your film probably will not have the Avatar’s budget, but you don’t need to raise $500Mln for your film either. |
| | Consult with your attorney how to protect both yours and public interests in this case. Investigate if there is any insurance that is available for this case (I have no answers on this one). |
| | Cash and funding equivalent up to now: $1,000,000 + 10,000 buyers * $5 profit per DVD = $1,050,000 |
| | 7. ASK YOUR FANS FOR THE LOAN. |
| | Get additional funding by offering your fans free tickets for the opening week (you have to negotiate with the theatres how you will reimburse them). Free tickets should not come free, of course, they will be a reward for a small loan. |
| | The offer is as following: “Loan us $20, get it back with 2 free tickets for an opening week in your local theatre”. The beauty of this approach – no interest is paid to loan providers, moreover you add more word of mouth ambassadors to your community of supporters. Don’t forget to manage your email lists and on-line communities spread wide across the net. |
| | This offer as well can be sold via affiliate networks. Be ready to pay 10$ commission on raised amount thou in this case. My calculation below won’t include it in the math for now. |
| | Some people will tell you “this can’t be done”. Don’t buy into it that fast. Asking for a loan is not selling securities. You definitely have to have solid declaimers and think things through with your lawyer. Look at some microfunding web 2.0 sites, see how they are doing it, learn from that and creatively use for your own venture. |
| | Cash and funding equivalent up to now: $1,050,000 + 10,000 fans * $20 loan = $1,250,000. |
| | Note: |
| | You have just raised over a million dollars without giving away your equity. |
| | Now it’s time to do so to raise more. |
| | 8. PREPARE TO PRIVATE PLACEMENTS. |
| | Prepare with your attorney a Private Placement Memorandum and issue let’s say 5,000,000 shares priced at $1 per share. I will write a separate article about this process shortly and post a template of PPM document, a draft of the one that I have used in the past. |
| | 9. GET PRODUCT MANUFACTURERS ON BOARD. |
| | Find profitable manufacturing companies – local or in Asia, that in exchange for equity will produce merchandize for you or give you a loan worth of $500,000. Use part of this commitment to produce merchandize specified below, the rest after the film launch. |
| | Cash and funding equivalent up to now: $1,050,000 + 10,000 fans * $20 loan = $1,750,000 |
| | 10. CASH ON YOUR FANS SELLING T-SHIRTS AND OTHER MERCHANDIZE. |
| | Sell t-shirts “I am the founder of the film “___________(name)” and other merchandise produced and marketed before the main launch of the film. |
| | Cash and funding equivalent up to now: $1,750,000 + $10,000*10 profit = $1,850,000 |
| | 11. DISTRIBUTE EQUITY TO YOUR TEAM AND SUPPLIERS. |
| | Initially you might have made a verbal or contractual agreement about partnership. Now as your Private Placement documents are ready, you can officially distribute shares to every crew member who agreed to work in exchange for the equity in your production firm. |
| | It can be your stars or 2nd tire actors, equipment suppliers, marketing company, event management company, PR company, casting agents, production insurance company or other contributors. |
| | Let’s assume that all work and donated equipment is worth $1,150,000. |
| | Cash and funding equivalent up to now: $1,850,000 + $1,150,000 = $3,000,000 |
| | 12. RAISE CASH FROM PUBLIC. |
| | Now it’s time for official Private Placements. Till now you know that you can not sell shares to public, only to accredited investors. Let’s assume you will raise from each investor a very small amount, since you might not have strong credentials, but you will compensate it all in volume of investors. You can engage all your connections that you have made so far from all efforts above but be ready for a hard core cold calling. |
| | If 5 of your team members each call to 40 lawyers or doctors per day (most of them belong to an easily targeted segment of conservative professionals that can get excited by the offer that takes them away from their daily routine. Majority of them is sophisticated investors), it will mean that you will make 20,000 calls during 5 months. With 0.5% call-to-sale conversion ratio (and trust me, with a good pitch you can do way better than that) you will get 100+ investors buying into the deal. Please not, cold calling is a grey area for the fundraising via private placement, so consult with your attorney on the best way to execute it. You might want to engage a security brocker for that to fully comply with SEC’s regulations. Alternatively see an article How to engage a Pay Per Deal affiliate network in Private Placement and raise startup funding for technology and film projects. (The article is coming soon) |
| | Cash and funding equivalent up to now: $2,500,000 + $5,000 * 100 investors = $3,000,000. |
| | 13. SELL YOUR HEART TO A MAJOR STUDIO. |
| | Now you might be ready for a large deal. Your project has progressed so far till now that with a top rated screenplay, great cast and truly creative director you will be a desired target for many large studios. You can go and raise additional $2,000,000 from a major player or sell the project outright. |
| | Cash and funding equivalent up to now: $5,000,000. |