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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.


  • 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.


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.

Crowdfunding: How to do it right

Crowdfunding: How to do it right

Earlier this year, Congress passed, and President Obama signed into law, the JOBS Act, which among other things, legalizes both debt and equity based crowdfunding. Later this year, the SEC is required to promulgate new rules which will allow companies seeking investment capital to use portals similar to IndieGoGo and KickStarter to solicit investments from qualified people.

Obviously, this represents a very exciting opportunity for startups and small businesses, who’ve previously been shut-out of the marketplace for investment funding. This is especially exciting for producers of theatre, film, television and musical entertainment product.

But, even with the relaxed rules expected soon, Crowdfunding in the investment and debt financing space will be much more complicated than in its donation-oriented counterpart.

Preparation is Key

The key to successful crowdfunding is, as in most ventures, preparation. By getting organized now, entrepreneurs planning to crowdfund their projects can get their ducks in a row, and be first to enter this exciting new funding arena.

How to get ready now

Here are a few things you can do now to get ready.

  1. Form your entity, and structure it properly for the capital structure you are expecting. Having your LLC, Limited Partnership, or Corporation in place, with stock or membership units ready to be issued will put you well ahead of the pack.
  2. Have a plan. A business plan is absolutely essential to the process of attracting investors. The law requires that companies present business plan, financial statements and disclosure documents to the SEC, but having a comprehensive plan is also just smart business. Just be sure the plan is flexible enough to allow you to adapt to changing market circumstances. Also, care MUST be taken that the content of the plan be complete, and absolutely truthful.
  3. Hone your pitch. First impressions are all you get in this game. Not just the business plan, but every message you put out there needs to be carefully crafted and designed to move prospective investors closer to a deal. One key advantage of crowdfunding is that you’re able to create multimedia presentations using video, audio, powerpoint, text, and in-person contact to make the deal. Be sure you use these all to your best advantage.
  4. Get your figures figured out. The law requires that, if you’re raising more than $500,000, you prepare an audited financial statement, so get this started early. Audits (even for brand new companies) aren’t fast. Also, your financial statements need to be realistic. Especially your financial projections. It’s crucial that your financial documents be accurate, complete and that they not omit or misrepresent any material facts. Get good, qualified, professional advice. The valuation process can take a very long time—so get started early.
  5. Build your network/list. Generally speaking, the most successful crowdfunding projects are those whose principals are able to raise 1/3 or more of their funding through personal networking contacts. Crowds tend to follow crowds, so having your personal network of both online and offline contacts primed and ready to go is crucial. Marketers call this “social proof”. Investors are more likely to invest in projects to which others have also committed.

If you’re planning to get into crowdfunding for your next project, now is the time to get started.

Crowdfunding Boot Camp

One terrific resource is the upcoming Crowdfunding Boot Camp being held in Las Vegas next month. (October 9th and 10th). Participants can walk away from this event with a plan in hand and the resources and connections to make it happen. There will be representatives from all of the major crowdfunding platofms, as well as law firms, accounting firms, VC firms, Angel investor groups, and professional service providers all giving out advice and free services to ensure you are prepared. And, there’ll be a pitch contest with a prize package worth over $10,000.

Save 10%

You can save 10% off the regular admission to CrowdFunding Boot Camp, by visiting and using the promotional code ELU2012 when enrolling. (We receive a small commission for every customer we refer).

What you absolutely must know before you approach investors for your film / play / musical.

photo via flickr (bschmove)  under Creative Commons License

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. Continue Reading

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