The way you finance your film can make or break the success of your project.

Understanding that there are many ways to finance your film is key to being a good producer and film investor. I'm going to outline a handful of different ways to finance your project - in no particular order - so that you can make the best decision for your project to both cover the downside and maximize the upside.

Begin With The End In Mind

The "Craftsman Mindset" is an "outcome-focused approach to creative work". With your film project, you need to think about the outcome you're after from the start so that you can be directionally correct from the get-go.

Are you seeking a theatrical release for your film? Will you pursue international or digital/streaming release as well? Are you looking to partner with or be acquired by a studio or distributor?

All of these considerations are imperative to talk through as a team before you invest in a project to ensure that everyone is in alignment with what kind of project you're making.

Once you've agreed on the outcome, you can start to structure your financing using the following methods, either entirely or together.

Crowd Funding

Kickstarter, Seed&Spark, and IndieGoGo democratized the crowdfunding model starting around 2009, and filmmakers and artists flocked to the site to submit their project and have their fans fund it in exchange for benefits or perks.

Essentially a pre-sale model, you're selling merch, tickets, dvds, posters, and even access to your fans. Kynan Griffin and Jason Faller from Arrowstorm entertainment were early adopters of this model and have used it to great success over a number of projects. You can hear our conversation with Kynan on the Truly Independent Podcast here:

Plenty of film projects have successfully raised their entire production budget through crowdfunding, but it's also commonly used to raise part of the funds. You can raise money for development, production, post, or distribution.

Kickstarter and other crowdfunding sites work best if you already have an audience. It's rare to find a creator with no audience succeed on the platform these days. So unless you have thousands of people (or hundreds of True Fans), realize that raising more than a few thousand dollars will be difficult.

Crowd Investing

You could call this "crowdfunding 2.0", as it's a newer addition to the funding landscape. Sites like Wefunder, Republic, Seed Invest, and the like have popped up over the last decade to help filmmakers and other creators raise money from investors. An investor can invest as little as $100 into your project or company, and earn a return upon a sale or other milestone.

These investment platforms typically structure your investment as a Regulation Crowd Fund (Reg CF), which has a cap of $5m from non-accredited investors. If you believe you can raise more than that, you can simultaneously or follow up with a Regulation D investment which doesn't have a cap, but is limited to only accredited investors.

Equity

The most-used structure for indie films is to find a single or group of investors that give you money to make your film in exchange for equity in the project.

A very standard structure for this is to offer the investors 125% of their investment from the revenues of the film before any split with the filmmakers, and after that has been achieved the rest of the returns are split 50/50.

This is the simplest way to fund a film, but also very risky because the investor(s) carry 100% of the risk, and the project has to earn much more than it costs in order for the investors to see a return.

Debt and Gap Financing

Typically used after the equity portion of the budget has been raised, debt financing is often used to fund the "gap" between the equity portion and the budget of the film.

For example, if you need $1m to produce your film, but have only raised $750k from equity investors, your "gap" is $250k.

In this scenario you can secure loans or lines of credit, but that puts you and/or your company on the hook. Some producers employ "gap" financing, where they lend against tangible assets like tax credits and minimum guarantees.

A tax credit or rebate is an incentive from a state or country given to filmmakers who spend money in their area.

In Utah, where I produced three movies between 2021 and 2023, we received a 20% tax credit for every dollar spent in state, which includes everything from cast and crew to hotels, equipment, locations, gas, food, and more.

If you spend $750k, the state will cut you a check for $150k. You simply hire an auditor to look over your spending, submit to the Governors Office of Economic Development, and - if approved - they send a check in the mail!

If you know you're approved for a tax credit or rebate, you can lend against that by working with lenders that do that type of lending.

Similarly, if you have a distributor with a track record who is willing to give you a "minimum guarantee", they're essentially guaranteeing a certain amount of sales or box office revenue. You can take that minimum guarantee to a lender and lend against it as well.

This "gap financing" is a loan, rather than an investment, that needs to be paid back with interest. That puts these lenders in a better position - before the equity investors and production company - to recoup. Once the gap financing has been repaid (with interest), the rest of the revenue goes to the equity investors and the filmmakers as mentioned earlier.

P&A Lending

P&A stands for "Prints and Advertising", and is short-hand for your marketing and distribution expenses.

There is a class of investors who prefers this type of investing over equity investing, which is why many filmmakers will raise this money separately.

Say your production budget is $2m, you might raise another $1m for your marketing and distribution expenses. Instead of the 125% and 50/50 split for the equity investors, this offering would be structured more like a loan. 10% return (instead of 25%), and no ongoing upside.

They would be in position before the equity investors, just like your gap financing lenders. How you structure the "waterfall" of who gets paid when is up to you and the agreements you make with the different investors and lenders.

(Reiterating the importance of defining the outcome at the onset of a project.)

Co-Financing

Co-financing is done between you and other companies who have an interest in a film. It may be a post-production or VFX company, a city or country, or another production company on the project. They bring some money to the table, you add that to your equity and other investments, and you're able to make your film.

I recently spoke with a connection who worked at Film i Väst in Sweden, where they have a fund specifically for co-financing projects that film or do post production in their country.

Film Grants

There are tons of film grants available from non-profit organizations, film festivals, institutes, and even individuals that focus on specific groups—like female filmmakers, minority voices, and often documentary projects.

These grants are given based on merit, and after a thorough application process, the best-prepared projects that align with the grant’s goals will receive the funding.

Pre Sales

Similar in approach but different in scope to crowd funding, "pre-selling" your movie to distributors and foreign buyers can bring in some money to offset the amount you need to raise from the sources we've already covered.

Film markets like Cannes and the American Film Market are set up to facilitate these types of sales, where all of the buyers and sellers gather in one place at the same time to make deals.

Sales Agents bring their films to the markets to sell to foreign buyers - TV networks, streamers, etc - for a fixed fee and a fixed amount of time.

The amounts vary depending on the size of the "territory" the buyer represents, the perceived value of the film in the marketplace, and the relationship between buyer and seller.

Negative Pickup Deal

A desired outcome for many filmmakers, a negative pickup deal is one made between a production company and a studio. The studio agrees to purchase the film for a set amount and a set date - generally after the movie is completed.

The production company then uses the negative pickup agreement to obtain a loan for the production of the movie. These can be complicated to put together (granted that you can find a studio interested in your project(s)), but you need not look further than the 10-year deal between Blumhouse and Universal as to the success it can bring to both sides of the deal.

Sponsorships

Looking even further outside of the standard funding options, sponsorships can be very lucrative and "cheap money" for producers to add to the financing of a film. If you can incorporate product placement, or work with an organization who would benefit from the movie doing well, you can sell that placement as a sponsorship in exchange for money.

It's not an investment, you're selling valuable screen-real-estate. It's a simple transaction that gives you more money for production without giving away equity or any of the revenue from the film.

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The most common objections I hear when I talk to investors and producers about this all reveal a limiting mindset. I've added my (curt) responses in parentheses:

• I don't have the connections (get some)
• I haven't done it before (now is a great time to start)
• I've tried but it didn't work (try again)
• No one is investing in my kinds of projects (that's either a) not true, so find the people who are, or b) true, so come up with a different project, make money, fund your passion project later)
• The market isn't investing in films right now (you don't need an entire market. You need 1-10 investors and some resourcefulness. If you can't do that, this might not be the right path for you.)

For producers reading this, realize that there is more than one way to fund your films. Get resourceful and take action, and keep going until you have the money you need to make your film.

For the investors reading this article, the best support you can give to a producer or production company is to help them raise the funds. This is a world you're familiar with, so along with your investment, offer to go out to your network and tell your people about the opportunity and help raise the rest of the money. You have more access to investors and lenders than most producers.

If you're looking for projects to get involved in, check out Producer Fund I.