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Responsibility to Investors

Contributed By Glen Berry

According to Michael Harpster, a 30-year veteran of film finance and distribution, the producer has two responsibilities to his investors. The first one is to get the film made and the second is to make money for the people who helped get it made. Period. According to Mr. Harpster, “Many films can be made with a relatively small amount of capital if leveraged properly but a lot of attention must be paid to making money for the participants and that always involves distribution.”

One can look at filmmaking as a five step process, consisting of:

  1. Development/Finance
  2. Pre-Production
  3. Production
  4. Post Production
  5. Distribution

Although Development/Finance and Distribution are on opposite ends of the equation, an intimate link exists between them. The first question an experienced investor will ask is what your plan is for distribution, since that is where their opportunity to recoup their investment comes from. You can bet your bottom dollar that “I’ll submit it to Sundance” is not an answer that will satisfy them. Many finance organizations will require that a Letter of Intent be signed with a distribution company. A Letter of Intent is not a binding contract but rather a formal (but usually conditional) expression of interest in a project.

“The most effective way to get the film made and to make money is to use all distributors as pure mechanics -- not financiers,” according to Mr. Harpster. “This means that you must be in a position to drive the process -- not let it drive you”.

Driving the process forward on your own means putting all the items in place that make your project viable. The following list describes many of the items that participants will be interested in: Business Plan, Budget, Letter of Intent from international stars, Letter of Intent from a known director, clear copyright chain, Completion Bond, Distribution Agreement or Letter of Intent from Distributors.

Investors want to minimize the risk behind their investment and these items make a certain level of success probable. Of course, all of these items are not required to secure financing but the more you have in place, the easier it will be to convince investors to back your project. Unfortunately, no one can link you with private investors. Agents will represent you to production studios but if you want to be at the helm of your film, you will need to find your own funding sources. How is this accomplished? Networking. Show your short films at festivals, become active in local arts organizations, throw fund-raising parties. Use your creative side to dream up ways to catch the imagination and attention of the people in your community.

The most important thing is planning for the long-term. “Remember that the business is more about staying in the game than just making one film,” Harpster said. “Getting times at bat is crucial”.

For many filmmakers, raising the necessary funds to make their movie often takes longer than the entire production process. The independent producer should be prepared for an extended campaign instead of one pitched battle. Spending several years in development is not unheard of and a long, slow grind that one ought to be prepared for. Patience and perseverance is the name of the game even when it seems like no progress has been made. On the upside, there are thousands of ways that the deal could come together and victory will come eventually if you are willing to stick it out and make adjustments to your game plan.

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