Investing in Low Budget film - advice?

corda1983_2

Hello all,

I hope this post does not contravene any rules here, though after checking the sticky on the basic rules of this site, I don't believe it does.

First off let me start by saying I'm not here offering an investment, but looking for advice and guidance on how and where to offer an investment. I am producing a very low budget film (roughly £400k) which we are currently raising finance for. We have around £50k of money from 'in-kind' financing in the form of service/facilities houses offering their resources to the film in return for equity investment in the project. The basic structure we anticipate using to find the finance is as possible:

Co-Production/In-Kind Support: £50k
Public Funding: £120k
Private Investment: £230k

We also anticipate being a culturally and economically eligible "British" film, and thus eligible for UK tax relief (either a write off of 100% of the Production Budget against profit, or a cash tax credit of 20% of the Production Budget should the film make a loss, basically). We anticipate cashflowing this portion of the financing through the Private Investment.

My questions to those on this board are fairly simple. Although I have raised money before, it has never been remotely on this scale or for a project of this kind. What, as a potential investor, would you want to see in the Investment Prospectus for a low budget film? Naturally guaranteeing huge returns or, for that matter any returns, isn't really viable because film is a hugely erratic industry. Most low budget films struggle to make a financial return, but then very few can make potentially huge financial returns. To this extent what would you feel you would want to see in the Prospectus that may make the company and project something that was interesting to you. Currently we have these things in place:

- A trailer, which incidentally can be viewed at: http://www.youtube.com/watch?v=aIbKgrCkVa4

- The company should become EIS eligible within the next month, and thus all private investment should be eligible for EIS relief.

- We are currently discussing the project with several quite big named actors, although I would stress that nobody has been cast or attached yet.

- The £400k Production Budget also includes all Sales and Delivery costs, so this is not a film that has to be financed to get made, and then financed to get sold at a later date.

I was hoping that a few people on here might have invested in film or be involved in the industry in some way and be able to offer guidance as to what is imperative to put in the Business Plan, what should be avoided, or have prior experience that would be beneficial in putting everything together.

I thank everybody in advance for their time!

ianmr65

Not wanting to appear facetious, and to give you the courtsey of an answer, investing in something that has a 99% chance of failure, and not paying back even the stake, is not an investement. It's a gamble.

I think even if you spend lot's of money on a prospectus it will not do you much good.

I can sum up a simple proposal, that might work, for you to pitch in a sentance:

Are you seriously rich, love film and a fan of (named actor) : And do you want to almost certainly write £400k off against tax?

corda1983_2

I totally appreciate what you're saying. Naturally we feel there is a chance of returns otherwise I wouldn't be making the proposal in the first place.

As we put the package in place things will hopefully become clearer. Having a named actor or two (which we anticipate) will make packaging and selling the project easier, and even potentially lead to selling the project before it has been produced (pre-sales). There are potentially hundreds of territories out there, each with a multitude of formats (Theatrical, TV, DVD, ancillary etc.) and so there is the potential for sales, and even good returns.

That having been said, the problem with supply and demand in the film industry is a big one. Every year there are thousands more films than there are spaces in the market, and so no film, not even a well funded and well produced project, is guaranteed to make money (just look at 'The Golden Compass', which was produced on a huge scale and has performed dismally compared to forecasts).

Our film is absolutely not on the scale of 'The Golden Compass' or even remotely working towards that sort of release, but I remain confident that sales could be made, and as a Production Company providing suitable and interesting delivery materials and marketing resources is a high priority for us.

Low budget films have been made and continue to get made, for budgets above and beyond our own requirements, and many of these films look generally quite poor (just look up 'Flick' and 'Dolphins', two low budget films which in my opinion are unlikely to reach a very wide audience at all). To this extent, I was wondering if anybody had been involved with low budget films and knew of pitfalls, opportunities and ideas for funding them.

All filmmaking is a gamble at any level, but nevertheless these gambles are made year in, year out at all budget ranges. I'm trying to find out what factors people look for in making the gamble and, more importantly, what we as a company can do to make our business proposal as watertight and fair as possible, without offering false promises of guaranteed worldwide distribution or the proverbial "massive box office hit".

For a recent example of a minor success story just look at the film 'London to Brighton'. Shot for around £500k with no well know faces, nevertheless the film has been a critical success and has also held up commercially. I'm confident we have an exciting project and wanted to know if anybody knew of ways to make the whole business proposal as interesting and exciting as possible to an investor, or where to go to find investors in this sort of thing.