Let’s say you were one of Twitter’s initial hires. The IPO has made you a multi-millionaire. Being in the Bay Area you’ve had a front row seat (courtesy of The San Francisco Film Society) how strategic film investments at critical times can make great cinema live (BEASTS OF THE SOUTHERN WILD, FRUITVALE STATION, SHORT TERM 12, TEST, and so on). You have an idea that if contribute a bit here and there you can help bring the Bay Area Cinema Renaissance into being. Now you are trying to figure all you need to know about investing in film. Where are you at? What more do you need to know?
You already believe that Staged Financing can do for cinema what it has for other industries. You want to access quality projects and are trying to figure out how to do just that (good luck with it!). You are committed to maintaining a portfolio approach if only you can find enough worthy projects. But what else do you want?
Surely, you want third parties to vet the projects for you, and ideally 3rd parties of both integrity and a track record. This is a tricky goal to achieve generally unless you hire someone, and then you run the risk of them pursuing their own personal agendas and passion projects. Another solution is to never be the sole investor or even a minor investor. You need to both have skin in the game and make sure others have skin in the game.
If you make it your policy to never invest more than 75% of the equity, or that 25% of the equity must be experienced industry investors, those investors do the vetting for you. If they are putting their money where their faith is, they are demonstrated their belief in the project.
You want your collaborators to be experienced though. If they are neophytes they are potentially friends and family of the filmmakers and are in for other reasons than just the financial or creative viability of the project.
Similarly, you don’t want to be one of many small investors in a project, generally speaking. If no one has significant funds in the project, they many not have enough at stake to be betting on it’s success.
It complicates things a bit when you are looking for that third party verification to be done by someone with integrity. I mean it’s challenging enough to find real integrity in the film business. Even if you are looking for it, where does it show it’s head. What can you really learn by looking at someone’s filmography? You can see some films that had to be made for the passion and others that are made because of the deal. Passion is close to integrity, but they certainly are not interchangeable.
How can you tell that someone does not have another agenda or interest in recommending or supporting a project? Financial compensation certainly complicates things too, but again you want people to have skin in the game.
It’s a complicated process, but what’s clear is you don’t want to do it alone. You’ve got to either get the other kids to play in your sandbox or you must be willing to play in theirs. And either way you want to bring enough shovels for everyone to be able to dig themselves out afterwards.
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
