How Does Individual Investor Motion Picture Financing Work?
As an independent filmmaker, you probably realize that there are a lot of different opportunities to secure funding for your film. The average film is financed through a variety of different funding sources including investment financing, bank loans, distribution agreements, pre-sale arrangements, and other forms of capital investment. When it comes to individual investor motion picture financing, the film will seek funding from a single, private investor, but how does it work?
Private Equity Film Financing
Sometimes referred to as private equity film financing. Individual investor motion picture financing involves securing film financing through a single private investor. That puts forth their cash for the film with the intention or hope that they will ultimately profit from the investment in the future.
Independent, individual investor motion picture financing represents one of the key areas of investment capital for major production companies. Who tend to often work closely with the same investors time and again.
Financial loyalty between the investor and the production company is often the result of a proven track record of success in the past. Individual investor motion picture financing.
Thus results from the production company striving for success with their film projects. And proving to the investor that, although there are always risks to such an investment? They have a solid track record of achieving success with the films they produce and distribute.
How Individual Investor Motion Picture Financing Works
Wondering how individual investor motion picture financing works? It’s generally a matter of filmmakers coming up with ideas that cannot be turned down. And finance investors having close relationships with these producers.
The producer basically raises money for pre-production and secures the basics to bring the film idea to the individual investor.
The individual investor provides motion picture financing for the production. Often funding the project entirely. Or at least filling any gaps in other capital that has been raised for the purpose of production.
Paying in Full
The investor provides funds with an agreement. In the form of an individual investor motion picture financing contract. That states the ROI which will be provided in exchange for the investment capital. In the event that the film is profitable.
Investors will not receive their investment funds or any ROI until after all budgeted expenses for the film have been paid in full.
In Summary
However, once the film has paid back all budgeted expenses including any deferred compensation to producer, staff, agents, or other participants in the production, the investor will begin to reap the rewards of their investment.
They will receive compensation from the income that is generated through various sources including box office revenue, DVD sales, and other licensing fees for distribution in other territories or through other forms of broadcasting.
Individual investor motion picture financing is not for everyone. But it can be an incredibly valuable opportunity for both the film producer and the investor.
In the event that the film is produced and successful. It’s certainly a consideration among the many options of film financing available.
