What is Private Equity Film Financing?
If youâre a filmmaker that is seeking financing for a film production that youâve had under your radar. Youâre probably looking into many different types and styles of film financing that could potentially work for your needs. Private equity film financing represents one of many unique means of film investment financing. But what is private equity film financing and how does it work?
This incredibly complex and unique means of financing a film is extremely useful, as long as you know what youâre getting into.
What is Private Equity Film Financing?
In simplistic terms, private equity film financing represents a unique means of film production financing. One that is generally exchanged for a credit. Or some other type of tribute to the film.
Whereas other forms of film financing will have distinct boundaries and rules attached. Private equity film financing represents a very unique means of financing support for a film. In which anyone can invest and any amount can be invested.
It’s That Simple
As soon as an investment is made, the investor becomes a private equity investor. YES, itâs that simple! All it takes is an investment. And it could be a large investment or a minimal one.
The point is that private equity film financing provides access to funds by the investor. And in exchange the investor becomes a partial owner of the production.
How Does Private Equity Film Financing Work?
To help you understand how private equity film financing works, it makes sense for you to first understand what equity means â equity generally means an investment.
Therefore, private equity means a privately placed investment. And since the investment is in a film, the result is private equity film financing.
With private equity film financing, anyone can invest. This means that you could have your uncle invest in your film project, or you could have someone you have never met before invest.
It also means that your friends, family, coworkers, and basically anyone else could potentially invest.
What Happens to the Investment if the Film Fails?
Private equity film financing is not backed by the same protections that other forms of film financing such as loans are protected by. This means that an individual who invests their own funds (private equity) into a film production.
And then later realizes that the film is not going to be successful or was not successful, will face challenges relative to the attempt to recuperate their investment.
Since private equity financing provides an agreed upon percentage or other form of equity in the film should it be produced and succeed in the film industry.
When a private equity film is financed and the film fails, the investor faces substantial risks and essentially loses the investment.
In Summation
SO, what is private equity film financing and what does it mean for the filmmaker? Private equity film financing represents investments from anyone that has interest in a film.
And which will provide the investment in exchange for some form of ownership. Equity investors will not put up their money unless it appears that the film has enough equity to mitigate risk.
However, minimum guarantees are not always significant enough to cover the total equity investment that was provided.
