Three Critical Lessons on Securing Film Financing Every Filmmaker Should Know
Navigating film financing can make or break your filmmaking career. Over the years, I've learned valuable lessons that can help filmmakers avoid common pitfalls and set themselves up for sustainable success. Here are three critical insights every filmmaker should know:
1. Never Invest Your Own Capital (or Your Loved Ones’ Money)
It may seem tempting to fund your project through personal resources or to seek investment from friends and family. However, equity investments in film rarely, if ever, result in returns. No matter how passionate or confident you feel, don’t risk your personal finances or the hard-earned money of those you care about. The emotional and financial toll of unsuccessful equity financing is significant and often irreversible.
2. Equity Financing Is a High-Risk, Low-Reward Option
Equity financing typically doesn’t pay off due to the structure of film revenue distribution known as the waterfall schedule. Before equity investors see a penny, numerous expenses must be covered—CAMA (collection account) fees, guild/union residuals, sales agency fees, distribution expenses, marketing costs, distributor premiums, debt repayment, and deferral pools. Only after all these costs are covered does equity repayment begin, making returns extremely rare. Even if you manage to find novice investors willing to risk their money, losing their investment could permanently damage those relationships.
3. Budget Your Film with a Clear, Realistic Market Value
If your film’s estimated market value, determined by your cast and sales agent projections, isn’t enough to cover your budget plus at least a 20-30% buffer for sales fees and unforeseen expenses, you shouldn't proceed. This may sound harsh, but not every film is viable. Casting choices significantly impact market value—some actors provide more financial leverage than others. A realistic market assessment is crucial. Remember, as a producer, you bear the ultimate responsibility. You own the LLC, sign financial agreements, and will face the consequences if financiers aren't repaid. It's far better to carefully select financially viable projects, ensuring a sustainable and profitable career rather than facing a short-lived career burdened by financial failures and lawsuits.
— David Brown, Founder of FilmMoney