Why people invest in entertainment

Every week, I speak with producers developing their film or theatrical projects who struggle with the big challenge: finding the financing. In many cases, they've come to me as an entertainment lawyer, thinking I have the magic solution. Sadly, I don't. In fact, most film and theatrical attorneys steer clear of helping clients find the money, focusing instead on the deal structures needed to lock-in the financing, once the funding source is identified.

As often as not, these folks are looking for the bulk of the project's funding to come from private investment. But, these producers frequently miss the mark when pitching their project to prospective investors.

In my two decades of experience bridging the gap between the creative and business sides of the entertainment industry, I've learned a thing or two about what really drives investment in entertainment.

Investors put their money into entertainment product for any number of reasons. Often among the least important of these, it turns out, is the profit motivation. Sure, it's of interest, and it would be very nice if the investment generated a meaningful return, but that is rarely the big motivator, In this article, we'll explore some of the other reasons behind the decision to invest in a film, play or musical.

Friends/Family Support for the filmmaker or others involved in the project

  • Often, the first place producers find money for their projects comes from their immediate family, and their friends. Who else, after all, has a greater interest in supporting a budding filmmaker or theatrical producer's career?
  • Sometimes, the investor backs a project for the opportunity it presents to a family member to appear in or work on the project.
  • Occasionally, the writer or director of the picture will contribute to the financing in order to advance his or her own career
  • As cliche' as it sounds, it's not at all uncommon for a financier to attach ‘strings' to his money, requiring a role for a spouse, girlfriend, or child as a condition on the investment. Sometimes, the financier actually expects the role for him- or herself.

Breaking in

  • Some people back projects because doing so offers an opportunity to “learn the ropes” in anticipation of a deeper involvement in future projects.

Social Status value of association with the project

  • Investors in film and theatre projects may become involved simply out of an attraction to the glamour of the business. The opportunity to say he or she was part of the production can be a powerful motivator.
  • Likewise, the opportunity to rub elbows with the cast and crew, perhaps even visiting the set, and certainly attending premieres and festival screenings is often a driving force behind the decision to invest.

Social and Community Consciousness

  • Some investors select projects based on the topic or message communicated by the material. Advancing a particular social cause through entertainment is a very worthwhile endeavor.
  • Sometimes, the motivation to invest comes from the desire to provide economic stimulus to the community where the project will be produced. Film and theatre productions provide jobs, attract audiences to patronize nearby businesses, and generally create a “buzz” around a community.

Boredom

  • Sometimes investors choose to put their money into entertainment out of sheer boredom. After all, chatting over cocktails about your investment in ordinary businesses is far less interesting and stimulating than engaging in a discussion about a movie, theatre or other entertainment property, and how you'll benefit if it's a success.

Conclusion

People are complicated. While it might be nice to think that investors make their decisions about where to allocate their assets on the basis of sound, rational thinking, the mere fact that anyone invests in theatre or film proves that there are other factors at work. Playing to a prospective financier's other motivations is important to securing financing for your next project.

Need help developing your strategy to attract investors to your project?

Sign up for the next Film Finance Boot Camp, an all day intensive designed to get your financing plan organized, and ready to pitch to your prospects.

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