It is highly regarded as common sense to “not put all your eggs in one basket”. Yet most film investors, win or lose, get out after just one or two investments. This is not good for them and it is not good for the creators, either.
Just like the filmmakers, investors in Indie Film tend to be driven by passion. Generally film investors are family and friends of the director driven by a dual bottom line, this time with the second one being advancing the careers of their loved ones. Because they are driven by this personal connection, these investors generally are not looking at the long term. They just want to see their child’s (or lover’s or friend’s) movie get made. And they have given film investment a bad rap as a result.
It takes such good fortune for an independent film to make a profit. You can do everything right and still not have your work work. You can do a few things wrong and have the film pop. Timing accounts for a great deal. Audiences are fickle. There is an overabundance of leisure time options competing for eyeballs, hearts, and minds.
There are certainly best practices to be followed in releasing a film and extracting revenue from the work, but new tools and techniques are being refined or developed every minute. It does get better. But it is so easy to make a mistake or get blindsided too. As with any bit of chaos, there is nothing like experience to be your guide out of the storm. Common sense helps too. So how does an investor gain experience and common sense?
Let’s say you have evaluated your discretionary capital and you’ve determined that barring an economic collapse you have $500K to invest in something fun, something beautiful, and something that can improve the world. Let’s say your goal is simply not to lose money or look stupid. Why would you put all that money into just one film?
Let’s look at the following as a “business plan”:
Year One: 4 films, budgets of no more than $250K each, each investment at $25K. One of these investments is for release, one for post, and two for production funding. As a result, the first would play out within 6 months, the second in 12, and the other two within the next year. Total spend: $100K. Total knowledge gain: TBD.
Year Two: 2 films, budgets of no more that $750K each, each investment at $75K. One film is in post, the other for production. Again, you will get a similar seat as the one above. Total spend: $150K. Total Spend to date: $250K. Total knowledge gain: TBD.
Year Three: you have $250K to spend. You have 6 films you have already experienced. You are a seasoned investor. You can afford to be opportunistic. You know that experienced pickers generally have a 1 in 8 real success ratio. You have gained a lot of knowledge. You have relationships in the industry. I think you will be in a much better position for success than you were three years earlier.
Time flies. Three years will zoom right by. And who knows, one of those early bets may have hit gold. You might have even more to invest. But the important thing is if all the eggs you invested in broke, you’d still have a great deal to show for it. 8 films, not 1 or 2. And remember each one of your babies aimed to create beauty and make the world a better place. And maybe you even got to go out with one of the actors or actresses in the process. Fun!
Of course you wouldn’t even be able to do this process of small bets unless you already cracked that initial code of how to have access to quality projects, consistent deal flow, so you can have a portfolio approach to film investment. It ain’t easy, but it is possible. You just need a little common sense and a method to gain some experience.
Read:
Towards A Sustainable Investor Class For Film Culture And Business
Staged Financing MUST Become Film BIz’s Immediate Goal
Towards A Sustainable Investor Class: A Portfolio Approach
