23 December 1998 - 12 April 1999
Uses of Investor Financing
Jerry Morgan
9:19 am Wednesday December 23, 1998
What are some of the ways you see investor financing being used by independent filmmakers today?
JM
re: Uses of Investor Financing
John Cones
8:52 am Thursday December 24, 1998
JM:
As the production costs of motion pictures continues to rise, I see investor financing of independent film (i.e., producers raising money from a large group of passive investors) mostly limited to low budget films and investor-financed development deals. Generally speaking, the limited liability company and limited partnership offerings I see are for projects at or below a million. On the other hand, for the higher budget projects, some producers are using investor financing to raise money to cover the costs of acquisition, development and packaging, then approaching traditional industry financing sources with a fully developed and packaged project.
John Cones
Feature Film Financing
Shyree Latham
5:28 pm Thursday December 24, 1998
Do you know of any investment/securities lending bank who would be willing to participate in the financing of a multi-feature film project to be collateralized with cds and a treasury bond portfolio? Please advise.
Thanks,
Shyree Latham
Shyree:
Each year one or both of the industry trade publications (The Hollywood Reporter and Variety) publishes a list in a film finance special edition of many of the banks that are involved in entertainment lending. Check with the Academy library to see if they can tell you which issue those are.
John Cones
Canadian Financing
Edward Johnston
6:02 pm Wednesday January 6, 1999
I have a few related questions:
Why are so many productions being finance in Canada? What is the deal there that seems to be so enticing to producers? What effect does the passage of NAFTA have on this if any? Thank you...Ed.
re: Canadian Financing
John Cones
9:24 am Friday January 8, 1999
Ed:
I have no real expertise in Canadian film finance. However, various Canadian provinces have taken aggressive positions relative to providing tax incentives and subsidies to encourage film and television provision on location in Canada. These incentives result in substantial production savings for companies who shoot there. Beyond that I can't help. If you need additional information, contact the film commission offices of these specific Canadian provinces or other representatives of the Canadian goverment. I'm sure they will send you lots of information about such incentives upon request.
John Cones
active partners
Daniel Stevens
6:50 pm Thursday January 7, 1999
Can investors be solicited by phone for the purpose of seeking active partners in a feature film without drawing a red flaf with the sequrity laws
re: active partners
John Cones
9:29 am Friday January 8, 1999
Daniel:
Yes, if you are truly seeking active investor partners (people who will be working with you on a regular basis and helping you make the important decisions associated with the project, and the offering is not structured as a passive investor offering) you are not likely to be selling a security (i.e., raising money through a security vehicle) therefore the securities laws relating to whom you can sell interests in such an investment will not apply. That means that you can pick up the phone and call anyone you like to discuss the possibility of investment, including people that you did not know prior to the start of the solicitation. On the other hand, you have to be careful about how many active investor partners you bring in, for two reasons: (1) too many active decision makers tend to lead to creative problems in producing a film, and (2) too many active investors may make it difficult to keep all of them truly active, and if one is properly characterized as passive, you have sold a security. My recommendation is that you keep the number of active investor partners down to one or two.
John Cones
Bank Guarantees --&-- Financing
W. Moore
9:07 pm Sunday January 10, 1999
John, could you explain bank guarantees & how they relate to financing. Especially any thing to be wary of, concerned about, ect. Can you tell how to protect yourself in "the deal" and recommend possible representation for an upcoming deal I have. i would appreciate your advice.
re: Bank Guarantees ----&---- Financing
John Cones
9:49 am Monday January 11, 1999
W. Moore:
A bank guarantee is a promise by a bank to take responsibility for the payment of a debt or performance of some obligation if the person primarily liable fails to perform. Banks my issue a guarantee letter that guarantees payment. But, the bank guarantee will have to be backed by deposits or some other hard asset to protect the bank. These financial institutions are not in the business of taking risk. If an investor promises money that is backed by a bank guarantee, the bank is accepting responsibility for payment if the investor does not pay. Unfortunately, some unscrupulous promoters in Hollywood sometimes use schemes including a purported bank guarantee to lure unsuspecting producers into an arrangement whereby the producer ultimately has to put up some of the producer's own funds. Once that's done and control of the producer's funds is available to the financier, the producer's money is taken and no film financing is forthcoming. Be very careful. Ask the financier for the documents that support the deal and have an attorney review the documents.
John Cones
offering your film to investors
Carrie Pavlin
1:42 am Saturday January 16, 1999
I am currently in pre-production on an independent feature with a budget of $1.2 million. We are seeking passive investors- which I understand means we are offering our film as a security. Could you point me in the direction of either books or websites that offer more information on what a security is and what laws pertain to a film as a security?
Thank you.
re: offering your film to investors
John Cones
10:19 am Saturday January 16, 1999
Carrie:
For an overview of the federal and state securities law see "Securities Counseling for New and Developing Companies" by Stuart R. Cohn. For information on state securities laws and regulations see the Blue Sky Law Reporter published by Commerce Clearing House. For an overview of film finance including chapters on relevant aspects of the federal and state securities laws see my own book "43 Ways to Finance Your Feature Film".
John Cones
re: offering your film to investors
Mike Shields
11:35 am Saturday January 23, 1999
This is great stuff. Are any of the first two available on the 'net, and how much for your book, and where can I find it?
Thanks,
Mike
seeking a sample investment package
Roger Nader
10:16 am Tuesday January 19, 1999
We are currently in the process of developing a feature legnth indy film. At this point in the process we are putting together a package to present to potential investors. I would appreciate a sample package that we could use for format, etc.
Any help will be greatly appreciated.
Thanks!
Roger Nader
rmnader@mail.idt.net
re: seeking a sample investment package
John Cones
9:03 am Wednesday January 20, 1999
Roger:
The term "investment package" is a bit too vague. You need to specify whether you are putting together a business plan that will be used to raise funds from a few active investors or whether you are putting together a securities disclosure document to raise money from a large group of passive investors (using either an LLC, LP or corporate stock offering as the investment vehicle). There's a big difference between the two documents and their associated exhibits (what you term a "package"). Also, if you are planning to conduct a private placement securities offering, that will be somewhat different from a public offering. In any case, you can get copies of similar public offerings filed with the SEC by contacting Disclosure, Inc. in Washington, D.C. They will charge a fee. Also, a copy of a feature film private placement offering memorandum appears in my book "Film Industry Contracts" available in book form (100 sample agreements) or on diskettes. Call Rivas Canyon Press at 310/477-6842 for information on that. Otherwise, you just have to find another filmmaker who has conducted such an offering and who is willing to share their disclosure document with you. You must be careful, however, that the document is a good model, otherwise you will be making the same mistakes as the former film offering.
John Cones
Investors/Financing
Shaun Newton
8:51 pm Wednesday January 20, 1999
JCD Productions has just fininshed writing a script for a full- length feature independent film. We hope to start shooting in March of this year (1999). We are looking at a proposed budget of $200,000.
Please write back if you are interested or have any information.
We also have a website: www.freeyellow.com/members5
re: Investors/Financing
John Cones
9:00 am Thursday January 21, 1999
Shaun:
I have lots of information, but on this Investor Financing Q&A site, I can only respond to specific questions. If you are asking prospective investors to respond, this is not the appropriate site. We're here to answer your specific questions regarding how to properly, legally and effectively raise money to finance either the development or production stages of film projects. One of the first things you must recognize is that if you post a solicitation or an ad on the Internet and then get the interest of a passive investor who invests, you have probably violated the federal and state securities laws.
John Cones
Financing
Daphne Wright
7:49 pm Thursday January 21, 1999
Mr. Cones How would I go about get a sponsor to finance a film from the writing of the script to the actual production? I have an associate degree in Business Administration and Speech and Drama. I will have my BA in Film and Video minoring in Theatre in May 99. I have one complete screenplay and five synopsis for other to be written. Thank you Daphne
re: Financing
John Cones
1:32 pm Friday January 22, 1999
Daphne:
As a securities/entertainment attorney who regularly works with independent feature film producers seeking investor financing of their film projects, I do not think in terms of "sponsors". The term "sponsor" suggests an "angel" or some sort of "grant". Those sorts of arrangements do not fall within the scope of investor financing, thus I can't help you with those possibilities. However, if you or someone associated with you wants to wear the producer hat for this film (and it is not unusual for a low budget independent producer to write and produce his or her own script) then you may want to consider a development offering designed to raise money from a group of passive investors for the purpose of paying all costs associated with (1) the acquisition of rights to the story (if any), (2) the development and polishing of the script, and (3) packaging of the project (i.e., attaching elements to the completed script). Additional sums could be raised in such an offering to cover some of the pre-production costs relating to the project. For a good overview of the techniques used in such offerings you may want to take a look at my published overview of film finance entitled "43 Ways to Finance Your Feature Film".
John Cones
An Observation
Mike Shields
11:52 am Saturday January 23, 1999
It seems like this forum is mistitled, and I admit that I came here to solicit funds as well. Almost every post that I just read was a solicitation for financing, to which you John replied essentially, that's not what this site is for.
Now, this is not to say that I won't be back, I'm just thinking that a more appropriate title for what this forum can accomplish for producers like myself is in order.
Mike
"I'm Batman." -- Mike Shields
re: An Observation
John Cones
9:22 am Monday January 25, 1999
Mike:
Thanks for your observation. However, the purpose of this site is clearly explained in the introduction to the site. What we need are producers who will take the time to read. Film producers must recognize that they are likely to have to spend almost as much time on film finance as they do on creative endeavors. In other words, you need to do your homework. No one in the film industry has done more to help independent feature film producers gain a better understanding of what is involved in film finance than I have. My four books and eleven years of lecturing on the topic are evidence of that. You should not be frustrated because I have also not taken one more step toward doing your job for you. Thanks again for your observation. Best of luck with your project.
John Cones
Public Offerings and other non-violation
Art Vandask
2:45 pm Tuesday January 26, 1999
I have a question for anyone whom can answer: I wish to start soliciting my film to investors, of any and all natures. I've heard through the grapevine that I need something called a Public Offering (much like stock IPO's) before I can even mention the words, "money", "invest", or any synonyms thereof. Is this true, and where (what dept.) can I get this from (IRS, State, etc).
Second question: If I'm just establishing a production company, what do I need in order to do business legally? I know this is a vague question, but I'm referring to things like the PO, do I need special permits?
Thanks,
Art
re: Public Offerings and other non-viola
John Cones
9:24 am Wednesday January 27, 1999
Art:
If you are seeking to raise money from U.S. residents that are passive investors (i.e., people who will not be working with you on a regular basis, helping you make the important decisions relating to your film project), then you are probably selling a security no matter how the offering is structured. Thus, you must learn about and comply with the federal and state securities laws. You can conduct a public/registered offering by filing a registration statement in advance of the offering with the Securities and Exchange Commission (at the federal level) and with the state securities regulatory authorities in each state in which you wish to sell or offer the securities. In the alternative, you can seek to qualify for an exemption from the securities registration requirement by complying with all of the conditions and limitations imposed on the use of such exemptions (again at both the federal and state levels). These exempt offerings or often referred to as private placements. In either case, you will have to prepare a disclosure document, setting forth important details of the offering in writing and provide a copy of that document to each prospective investor prior to their investing.
Creating the company is a separate transaction from the offering of the securities. You may choose from a number of forms of doing business: sole proprietorship, corporation, limited partnership, limited liability company and so forth. You need to sit down with an attorney and discuss the advantages and disadvantages of each form of doing business (considered in combination with your plans to raise money from investors).
John Cones
Comparable Budgets and Revenue
Kerry Zook
1:30 pm Saturday January 30, 1999
I am in the process of putting together a business plan to send out to potential investors. I am looking for a place to find movies that where made within the same budget, that also lists the foreign and video/tv sale revenues. Any lead would be welcome. I would also like to say that the service John Cones is providing on this web-site is wonderful!! I thank you very much!!
Kerry Zook
Krunchie@aol.com
re: Comparable Budgets and Revenue
John Cones
9:23 am Monday February 1, 1999
Kerry:
Try the Paul Kagan & Associates film industry newsletters, Entertainment Data, Inc. and/or the Academy Library.
John Cones
Re: The 2nd Part of the Question....
Art Vandask
12:17 pm Sunday January 31, 1999
John:
First, thank you for answering me. Your board is a Godsend.
What I meant by that second question is this: I have already created a corporation/corporate entity to house the production company. Since it's a federal corporation... do I need a license to do business in the city that I'm located in, even if I'm just shuffling paperwork? Do I need an occupancy permit even if I don't have an office? What other city and state governed things am I overlooking? And other than tax returns and EIN's, what other federal/IRS/SEC oversights plague me? I've done a lot of research into this type of thing... frankly I don't have a lot of money, but I'm getting "the shaft" (polite term) from the government and everyone else, as far as hitting me with legalities are concerned, not to mention the cost thereof.
I guess my main concern are the investors... we took care to incorporate in a state which does not disclose the identity of the investors. The main contributor is overwhelmingly paranoid, and after all, this is Hollywood (gen. term), where people like to "shaft" each other just for the heck of it. You can never be too safe. I guess a secondary issue is that all of these documents that are being filed are public record. How do you get around that? How do we file for everything without disclosing who owns everything? (I run everything, and don't really care if people know that or not.)
So yeah, I was wondering, is there anything I've overlooked, and are there any ways to get around it?
Thanks again,
Art
re: Comparable Budgets and Revenue
John Cones
9:23 am Monday February 1, 1999
Kerry:
Try the Paul Kagan & Associates film industry newsletters, Entertainment Data, Inc. and/or the Academy Library.
John Cones
re: Comparable Budgets and Revenue
Kerry Zook
0:02 am Tuesday February 2, 1999
John,
Thanks for the quick response. I will look into the places you suggested right now!
Kerr
re: Canadian Financing
JM Felio
5:49 am Thursday February 4, 1999
:Why are so many productions being finance in Canada? What is the deal there that seems to be so enticing to producers?
The low Canadian dollar (US$1 = CND$1.50) for comparable services plus 25% of budget returned to producer as a tax credit.
This means that US $1 million in production value shot in Canada is equal to US $2 millions on the screen.
a copy of a REAL film/miniseries treatme
A. D. Godbee, Esquire
2:46 pm Saturday February 6, 1999
Film treatments are the 'business plan' of script writing, I think, and I would apppreciate locating a few pages of a real one that was written for either a TV miniseries or a feature film to get the gest of what they contain and the general format they use. Most script writing book fail miserbly in this stage of writing scripts. I am aware of the secrecy of providing any material prior to the films 'lock up', but even one of the past would be appreciated. Maybe a film school or university has a copy for loan out. THANKS MUCH for any help.
Raising funds in Canada
Stuart Rankin
6:35 am Sunday February 7, 1999
With respect to an earlier posting suggesting 1 million US dollars of resources used in Candada = 2 million dollars US on the screen -- I am in search of financing for my first feature film (in Vancouver Canada) and wonder, outside of the Canadian arena, where would I look for investors? Considering I am a major risk to anyone putting money into my film. I have credentials in video and am supervising editor at a tv station...how does this translate to folks such as yourself? How do attorneys look at a situation like me? Meaning, how does the establishment view us little guys with a dream and a good idea?
Thanks for any replies.
Regards
StuartRankin
movie@hon
re: Raising funds in Canada
John Cones
9:47 am Sunday February 7, 1999
Stuart:
It is hardly accurate to think of me as part of any "establishment". On the other hand, for all of those independent filmmakers seeking to raise funds from investors, if you do not know enough investors to raise the amount of money you need (at least with respect to U.S. securities laws), you either need to conduct a public offering which allows you to advertise and conduct a general solicitation, or you need to bring into your organization (as upper level managers) persons who do have the necessary relationships to allow you to conduct a private offering. Other than that, you may have to utilize the services of securities broker/dealers, but generally they have not shown much interest in raising funds for independent film. One other possbility, also based on U.S. law is to go out into the marketplace with a so-called generic business plan, ostensibly seeking investment from one or two active investors, and during the course of using that generic business plan you may establish the necessary pre-existing relationship to permit a subsequent private placement offering.
John Cones
re: Canadian Financing
C E Testar
3:54 am Monday February 8, 1999
:I have a few related questions: :Why are so many productions being finance in Canada? What is the :deal there that seems to be so enticing to producers? What :effect does the passage of NAFTA have on this if any? Thank :you...Ed.
: : : : JM Felio took the words right out of my mouth. "Canadian production" is misnomer, especially on the west coast where up to 90% is US film and television fully financed elsewhere, with imported scripts, directors, stars and (of course) studio executives. They're here for the undervalued dollar, the expert crews and the longer shooting hours relative to LA (in summer), the relatively unpressured environment (low crime rate, etc.) and the fact that English is the first language in most Canadian production centres. What impact has NAFTA had? Well, it's served primarily to assure American producers that Canada's best craftspeople will be available to their enterprise. It also serves to insure that very little competition will ever emerge from talented Canadian screenwriters, directors, performers and, of course, producers. These are the folks whose work has always been plagued by very low budgets, the lack of a population basis that can adequately support media programming, the extraordinary influence of powerful American cultural expression on our daily lives, including the nearly total stranglehold on cinema distribution by the American majors. So if you're thinking of shooting in Canada, join the crowd. It's safe, it's pretty; you can watch American TV, just like at home; and we have a terrific 55% off sale on our dollar.
short films
Chris Lundy
8:23 pm Thursday February 11, 1999
John,
If one tried to get an investor for a short film whose budget is below $10,000, do you think they could get away with some comparitively simple contract that specified how the investor could recoup the investment? Obviously, something more formal could cost more than the films worth. I'm sure it may still technically violate securities law, but for such a low sum is there truly a danger? Otherwise, I'll have to throw it on the credit card.
Thanks for the help.
Film Financing
James G. Borden
11:55 pm Friday February 12, 1999
I am looking for financing to produce my screenplay as a movie. Byline: Jesus Christ returns in modern times to warn humankind of impending world doom if people don't change their destructive behavior. This time, Jesus shows that He won't be a sacrificial lamb. Jesus' Mission is to give His message before the United Nations General Assembly in New York City.
Interested parties may contact me at: jborden@shaka.con and I will gladly email them an one page synopsis of the script.
re: Film Financing
Chris Lundy
6:11 pm Saturday February 13, 1999
I am taking the initiative here to speak for Mr. Cones and his website. This is not a place to pitch your film ideas and look for funding. It is designed to allow a discussion of investor financing and the legal issues that relate. If you would take a moment to read the opening page of this site you would have realized that. Besides, with a general solicitation such as yours, you're most likely violating some SEC regulations that you could learn about by reading what Mr. Cones writes on this site.
I do not represent this website or Mr. Cones, I am just annoyed with posts not related to the discussion at hand and would expect more from people purporting to be producers when they obviously aren't doing their homework.
Just an observation
Chris Lundy
Christian Post
James Jaeger
7:55 pm Wednesday February 17, 1999
:I am just annoyed with posts not related to the discussion at hand.
Mr. Lundy,
Are you more "annoyed" at the Christian or at the off-topic post BY the Christian?
I notice you did not "speak up for Mr. Cones" on the other off-topic posts such as "Investors" wanted for horror films.
James Jaeger
re: short films
John Cones
8:54 am Tuesday February 16, 1999
Chris:
You could probably modify the sample Investor Financing Agreement found in my book "Film Industry Contracts" to suit your short film financing purposes. That agreement is to be used with one or two active investors, so the securities laws would not be involved. The involvement of the right active investor may not hurt you too much in the production of a short film.
John Cones
A question about financing
Jason Sutter
9:21 am Tuesday February 16, 1999
I am with a small production in Michigan the film is our first feature and it is of the horror genre. We have studied every aspect of film and probbably know just as much, if not more than people who go to film school. Anyway we are looking for financing and was wondering if it is possible to get funded by a source other than yourself on your first feature film. If yes, do you possibly know anyone in the financing aspect of it that could possibly help us out.
Thank You,
Jason Sutter
re: A question about financing
John Cones
9:17 am Wednesday February 17, 1999
Jason:
Based on my 11 years of experience in film finance here are a few suggestions. First you must decide on certain priorities. Are you trying to use this film as your first opportunity to produce or direct? If so, is that more important than seeing someone else produce your movie? Again, if that's the case, then you must recognize that it is much less likely that you will be able to obtain so-called traditional industry financing for a project controlled by a first-time filmmaker. To tell you the truth, the Hollywood film-making apparatus is really designed to take control of projects deemed to be "worthwhile" and those that originate such projects seldom are able to exercise significant control over the actual film production. In any event, if it's creative control you seek, then you may have to set your budget at a low enough level to obtain financing outside the Hollywood system. If you want to produce your film yourself, independently of Hollywood, you will probably have to do it for less than a million. It is feasible in today's economic environment to raise something less than a million for a feature film project from a large group of passive investors. That would also involve a securities offering so you would need to find a securities attorney to guide you through the process. Another possibility, if your budget has to be more than a million, is to first conduct a so-called investor-financed development/packaging offering to pay for the costs associated with acquisition or story or script rights, script development costs and packaging costs, then take the fully developed and packaged project to the industry for production financing. In that scenario, you will want to talk to bankers, completion guarantors, international distributors (see the AFMA list of members) and/or foreign sales agents, because you will be seeking a loan to cover the production costs. Such film finance methods (involving a production loan) may take the form of worldwide or domestic negative pickups, foreign pre-sales, gap financing, super-gap financing, insurance-backed schemes and so forth. You have to investigate each form of film finance enough to determine for yourself what is the method most likely to lead to the successful financing of your film project considering your own personal goals.
John Cones
Christian Post
James Jaeger
7:55 pm Wednesday February 17, 1999
:I am just annoyed with posts not related to the discussion at hand.
Mr. Lundy,
Are you more "annoyed" at the Christian or at the off-topic post BY the Christian?
I notice you did not "speak up for Mr. Cones" on the other off-topic posts such as "Investors" wanted for horror films.
James Jaeger
re: Christian Post
Chris Lundy
8:53 pm Wednesday February 17, 1999
FYI, I couldn't care less what the plot of the film was about. I simply noticed that post while looking for a reply to a question I asked. I didn't bother looking back a few days or weeks to chastise any previous posts that were looking for funding. I am just annoyed with posts not related to the discussion at hand.
Mr. Lundy,
re: Christian Post
James Jaeger
7:24 pm Friday February 19, 1999
I understand. Thank's for clarifying that.
James Jaeger
FILM FINANCING DILEMA
Rod Belle
6:48 pm Monday February 22, 1999
HELP! For five years almost we have been struggling with this, I know first time is always the hardest but isn't there a way to finally make it happen. We have been shoppping this screenplay around, with an effective bussiness package. We have attracted interest from distributors as well as a known director. But it seems that that isn't enough. It seems to be a catch 22 situation. To get the financing secured. We approach talent and they want to know is the financing secured.We approach investors or financing specialists and they want to see a distribution contract or elements(talents, etc attached.) At this point we ahve a director,and interest from a distributor but no contracts or agreements yet. But still that isn't enough. My question is how can you get through the red tape in order to make the film finally happen. Someone had recommended sales agents but isn't that enougher obstacle. We don;t want to spend enougher 5 more years still at ground 0 on this.We want to start building a record now. So in the future we will have established ourselves. We know it has to start somehwere. The credit card routine is nada. How about pitch parties, etc? Any info you could give to help us get this finally off the ground will greatly be appreciated.
How does size change financing alternatives?
Steve Page
3:20 pm Wednesday February 24, 1999
I am interested in the general differences that I will face in trying to raise money for a $50,000 film versus a $3,000,000 film. In both instances I am interested in maintaining the greatest level of control possible.
Specifically, does the optimal investment vehicle differ based on the size of the film, and what is the point at which private placements are no longer feasible?
Thank you!
Steve Page
re: FILM FINANCING DILEMA
John Cones
9:42 am Thursday February 25, 1999
Rod:
Some producers use an investor-financed development/packaging offering to resolve this very common dilemma. With that approach you spread the risk that no production financing will be ultimately obtained amongst a large group of passive investors, so that each investor is only risking a small amount of discretionary monies. Then you use those funds to obtain firm committments from the director and recognizable name talent. Presumably, this package will attract the production financing you seek and you're off and running. The type of financing may involve a production-financing/distribution deal at the studios, worldwide, domestic or international negative pickups, foreign pre-sales, so-called gap financing (or other variations on lendering financing), or if the production budget is small enough, a subsequent investor-financing production money offering.
re: How does size change financing alternatives?
John Cones
9:53 am Thursday February 25, 1999
Steve:
The fact that you are interested in maintaining the greatest level of control possible suggests that you seek financing from passive investors (i.e., through a securities vehicle like an LLC or limited partnership). With those investment vehicles, the investors are prohibited from being involved in significant management activity or decisions. On the other hand, it is not likely in today's market, and considering the reputation of the film industry for not returning profits to outside investors, that you would be able to raise more than $1,000,000 from such investors, unless you have some very high powered fund raisers on your team who already have pre-existing relationships with a lot of wealthy investors who are willing to invest in high risk ventures. On the other end of the range you set out ($50,000), it is more difficult to make economic sense out of a private placement securities offering since there are some costs associated with the securities attorney, copying, binding, notice filings and marketing, that may turn out to be out of proportion to the amount of money being raised. At this low level, you might want to seek financing from a single active investor using the Investor Financing Agreement, a sample of which appears in my book "Film Industry Contracts".
John Cones
Another question
Rod Belle
3:20 pm Sunday February 28, 1999
Thank you for that resourceful info. But I have a main question. You mentioned a deal between a studio-distributor etc. How does one go about securing that deal? Usually often for a distributor to be interested either the financing has to be in place or picture completed, etc, It's more these days than just a screenplay. Also what about sales agents? Someone said that may be a good avenue as well. How do you approach a sales agent, and do you need anything in advance? Or any other info you could provide. Maybe something are overlooking or haven't thought of that will help make this project finally take off. Thanks again.
re: Another question
John Cones
9:33 am Friday March 5, 1999
Sorry, your questions are not specifically directed to investor financing so they are not appropriate for this site. In addition, you are really asking for a full discussion of major forms of film finance. That's already been done in my book "43 Ways to Finance Your Feature Film". Check that for the answers you seek.
John Cones
investor package
Judy
2:34 pm Friday March 12, 1999
I'm in a catch-22 situation. I want to put together an "investor package" to entice passive investors but I was told not to form an LLC until there is some money--because of the costs of setting up an LLC. Since the package is not a Private Placement Memorandum, can it talk about seeking investors for the film? Can it include financial information such as the minimum investment amount and return on investment? What about comparables and revenue projections?
re: investor package
John Cones
9:10 am Sunday March 14, 1999
Judy:
So long as the document you are presenting to prospective investors does not purport to seek passive investors and you are not soliciting passive investors, then it is not likely that you are conducting a securities offering, thus you can talk to anyone you wish. It is also true that some of us who do a lot of these securities offerings (whether through limited partnership or passive-investor LLC investment vehicles) structure them so that interests in an entity "to be formed upon funding" are being sold. That way, the entity (LLC or LP) is not formed until at least the minimum of the offering is raised. The document must contain the proper language in order to do that, however. In addition, you must be aware that a passive-investor LLC is a securities vehicle (i.e., interests in a passive-investor LLC are securities), thus you would have to comply with the federal and state securities laws.
On the other hand, if you are seeking a few investors to participate in an active-investor LLC, then the interests offered may not be considered securities. In any case, the document can include financial information such as the minimum investment amount, but as a practical matter, if you try to raise money from more than one or two active investors, you are running a risk that some state securities regulators will take the position that one or more of these investors are actually passive, and therefore you've sold a security no matter what you call it.
I generally advise my clients to stay away from discussions relating to "return on investment" with film offerings. It's ok to include box office comparables so long as the proper disclaimers are included, and financial projections are appropriate, but I recommend that you include at least three possible scenarios (i.e., poor performance, good performance and excellent performance). That way, it is clear to the prospective investors that you are not predicting the financial outcome of an investment. You should also include all of the assumptions on which your projections are based (in writing) and these assumptions must be reasonable (i.e., based on the realities of the marketplace).
John Cones
Broker Agreement / Indy Financing
D. M. O'Dell
3:27 pm Thursday March 18, 1999
I'm seeking some form agreements to start with in a Broker Agreement (with producer) from which individual investors will be sought for Indy financing. Any assistance is greatly appreciated.
Broker Agreement / Indy Financing
D. M. O'Dell
3:27 pm Thursday March 18, 1999
I'm seeking some form agreements to start with in a Broker Agreement (with producer) from which individual investors will be sought for Indy financing. Any assistance is greatly appreciated.
re: Broker Agreement / Indy Financing
John Cones
8:30 am Monday March 29, 1999
C.M.
If you are a licensed NASD/SEC broker-dealer or registered rep, you should already have the forms you need to sell securities, but if you are not, you shouldn't be selling securities. Most states have provisions in their laws stating that persons not licensed as NASD/SEC broker/dealers cannot be paid any transaction-related remuneration for the sale of securities. If, on the other hand, you are trying to raise money for the producer from one or two active investors, and you are acting merely as a finder, then it may be permissible to be compensated for that activity. You need to carefully check the state law in the state in which you are working. Just getting your hands on a "form agreement" may not be enough. There is a sample "finder's agreement" in my book of "Film Industry Contracts".
Good luck,
John Cones
From someone's book into a script.
Anji
2:43 pm Sunday April 4, 1999
I read a lot of books. Lately, when I am reading good books, I can easily visualize the character, the setting, the details that was not included in the writings, but had it been a movie it would have been important information. I have run across a really good book that would make a GREAT movie, and it undoubtedly the type of movie that would generate a lot of interest for movie-goers. I am checking into schooling to learn screen-writing and all that, but I want to know what the legalities are for screen- writing someone else's book. What steps must be taken before I start writing the script? Thank You.
re: From someone's book into a script.
John Cones
9:42 am Tuesday April 6, 1999
Anji:
This is not an investor financing question, so I would suggest you get the catalog of books available from Samuel French Bookshop in Hollywood (on Sunset Blvd.) and select some that may offer the kind of information you seek. You can also go to a law library and check entertainment, copyright and intellectual law sources. Otherwise, you will want to talk to an entertainment attorney, as opposed to a securities/entertainment attorney (i.e., someone like me who works with independent feature film producers on investor financing of their projects).
John Cones
can't find your book on tape
Charles Whiteside
8:33 pm Sunday April 11, 1999
I'm dislexic and can not find your book "43 Ways to Finance your Feature Film" on tape and was wandering if you could help me locate it so that I can buy this, I already own the book, but I need the tape so I can understand it when I read! Thank you for your time I look forward to hearing from you!
Sincerely,
Charles B. Whiteside IV
re: can't find your book on tape
John Cones
10:36 am Monday April 12, 1999
Charles:
I'm not even sure that my book "43 Ways to Finance Your Feature Film" has been made available on tape. You might check with the publisher (Southern Illinois University Press). They can be reached at 800/346-2680 or 618/453-6619.
John Cones
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