The Toronto International Film Festival 2010 a few months back witnessed improved trade activity for low budget independent films. Have the green shoots from last year finally taken root? Time will tell. Variety magazine also reported that Catch 22 (financed by Lionsgate, Relativity Media and Voltage Pictures) will form a full service production, distribution and marketing film company following a cash injection.
Old school independent producers are finally realizing that many film deals previously fell apart because they weren’t financable. Today, savvy producers are counting less on foreign pre-sales which were once the lifeblood of the indie film industry.
Mutterings from the industry describe the current state of the industry as “living in the wild west”. We’re making up the rules as we go. The new breed of money wielders claim that “hard times begat great opportunities”. They see the viability of independent films in the $25000 to $25 million budget range if producers handle their own marketing and distribution. Financiers are finally more willing to provide bridging loans, gap financing and advances on tax credits to producers with modest, achievable business plans. Few will fund an entire films because they prefer to spread their financial risk across a slate of projects.
Three years ago there were about 40 bank lenders (mainly through hedge funds). Today the figure is around 10, after suffering horrific losses from funding over-priced and under-developed material. Modern financiers are increasingly high net worth equity investors which own part of your film who demand producers budget their films according to sound business principles.
The current players who actively finance independent pictures are Gary Gilbert (Gilbert Films), Keith Kjarval (United Pictures), Brian Oliver (Cross Creek Productions), Jordan Schur (Mimran Shur) and Cynthia Stafford (Queen Nefertari Productions).
FINANCING YOUR INDEPENDENT FILM
- Assemble your package; talent, above and below the line crew and low, medium and high budget estimates.
- Secure your funds. Try to find financiers who share your creative vision and ethos because they will more likely appreciate that returns often don’t start flowing for 18-24 months after a film is released.
- Evaluate the finance deal. Multi-party deals can be tenuous and can easily fall apart if one of the investors pulls out. It can be difficult to find a replacement.
- Get advice. Consult attorneys, equity financiers, tax credit buyers and international sales agents to comment on the viability of your project. Tax credits are nearly spent in some places, while rebates and concessions may need to be used within a specified time frame.
- When cash advances are issued, immediately put the money in a neutral escrow account so that it can’t be reassigned to other projects or taken back should an investor change their mind.
- Get your rights back as soon as possible. It allows for easier commercial exploitation and producer recuperation of income.
Go forth and multiply.