I am often consulted by film and stage producers who tell me they're ready to start work on raising the financing for their films/ plays/ musicals, or what-have-you, but often as not, as we get to work, it becomes clear that they're not as ready as they think. Before going out to investors, it's important to have your ducks in a row.
Knowing the following six things before you start raising money will dramatically streamline the process, and get you closer to funding, faster.
1. Know your product.
What is a producer's product? Well, it seems obvious, right? A film/show about X, Y and Z. But is it really? Well, at this point, you're talking about maybe someday making a film about X, Y, and Z… but that's not a product (yet)… it's a dream. Right now… while you're “in development” your product is an investment opportunity. Now, of course you've got to have a script, a crew, cast and a plan… and you'd better know who's going to come see the thing and why.
2. Know your customer(s):
So, who's your customer? At first blush, you might revert to thinking about your audience, and obviously, you DO need to know where your audience is and how you'll eventually sell them a ticket… but again, right now, you're selling a dream. That opportunity mentioned above. Who's going to buy that?
If you answered “Investors”… your partially correct. But, if that's all you said, you've got a lot of work ahead of you. What does the ideal investor look like to you? What is his or her name, age, job, marital status? Do they have kids? Do they travel? Where? How Often? Where do they congregate? How will you meet this person?
It's incumbent on you, the producer, to answer the question, Why would this person invest in your project? What motivates him or her? What would be the most persuasive thing you can say or do to get him or her on board?
3. Know your budget.
It's amazing to me that people think they're ready to go around asking people for money for their projects before they even have a clear picture of how much they'll need, and where that money is going to go. The job of producing is essentially the job of managing the finances of a project. Leaving aside the fact that you need this information to prepare the legal documents… you need this information for your own internal purposes. Too often producers figure, I'll do my project with whatever funds I can raise… but haven't got a real plan. Would you invest YOUR hard-earned cash in someone who says “I don't know” to the question “How much do you need?”
4. Know your market.
Now we're talking about how you're going to sell your project, and to whom. What will the market bear? What ticket price is the “sweet spot”. Will distributors buy this project for distribution? Will they pay sufficient money to make the project financially feasible? Will audiences like it? Will they PAY to see it? Will they TRAVEL to see it? Why? Why not?
5. Know the rules.
Too many filmmakers jump the fundraising gun and post notices on facebook, twitter, or their websites saying “we're now looking for $1 Million” to produce this film/show.” Guess what… game over! Most film/theatre projects are financed through a ‘limited' or ‘private' offering' exemption from the otherwise expensive and time consuming securities registration requirements. Under these exemptions, advertising the offering is NOT allowed. Other restrictions address WHOM you may approach, and what information you must provide.
If you haven't studied these rules, and figured out how you're going to comply with them, consult an entertainment attorney or securities lawyer who handles this kind of thing. Doing it yourself is a recipe for disaster.
6. Know what you're really offering, and how you're going to sell it.
Sure, in #1, we talked about your product, but is that really what you're offering/selling? Investment opportunities abound for folks with money. So, what is it really that you're offering? You're selling not just an opportunity to invest in any old business… You're selling the chance to be a part of a film, play, musical or whatever. Maybe even to have a credit as an executive producer, or just a “special thanks” mention. Regardless, you're selling a fantasy… a dream. Do you know how you're going to do that?
Once you're armed with this knowledge, you'll be ready to get started developing your financing plan (more about this in a future post), and you'll be ready to start work with your entertainment lawyer to pull the paperwork together.