What’s a Film Investment Agreement and Why is it Important?
Understanding the terms that are set forth in a film investment agreement is an important step in the process of securing investment financing for your production. The film investment agreement represents a unique document. Which outlines the terms of an agreement which is entered into between an investor and a filmmaker.
In which security interest is granted in exchange for an investment into the film which is typically used to cover the costs of production or other essential costs involved in bringing a screenplay to the screen.
What is a Film Investment Agreement?
Essentially, the film investment agreement demonstrates your knowledge and understanding with regards to film financing. Film investors will typically provide financing or funds in exchange for a security interest in the film project.
But in doing so they want to know that they are investing not only in a film that will be successful, but that their investment will be safe with you.
A Demonstration
The film investment agreement demonstrates your ability and understanding of film financing, budgeting, and the film industry. While the investor may realize that the chance of profiting from a film is quite slim.
They want to know that the money they invest into the production is going to be handled with absolute care. The film investment agreement provides this peace of mind. As it outlines the basic terms designated to protect the investment and the film. Regardless of circumstance.
What’s in the Film Investment Agreement?
The Film Investment Agreement will generally outline the terms of which an agreement is made between the investor and the filmmaker. Specifying how net profits will be calculated as well as how expenses are to be covered.
Backend profits are typically distributed in a 50/50 split between the filmmaker and the investor on the backend after expenses have been subtracted from the profit.
The film investor agreement includes:
- Details on the investment that is being made into the film.
- As well as details on how the profits are to be split between the filmmaker and the investor.
- Details on distribution of profit shares which are typically equal to the percentage of the investors contribution to the budget.
- Who controls the creative and financial matters of the production (this is usually the filmmaker). There should be a note stating that the investor is not purchasing the project from the filmmaker but rather investing.
In Summation
As you can see, the film investor agreement is an important contract that is entered into. Between the investors that provide budget associated financing for a film. In exchange for a percentage share of the profits (if any) that are made back when the film is distributed.
While there are different details that can be included in the film investment agreement. The overall purpose of this financial based contract is to provide details as to the agreement entered into between an investor and a filmmaker.
Thus, before accepting any investment, you should secure a film investment agreement contract signed by any and all investors to ensure your safety and security.
